WSJ What’s News - Trump’s Economic Messaging Spooks CEOs. Why Are They Keeping Quiet?

Episode Date: March 12, 2025

P.M. Edition for Mar. 12. President Trump’s stop-and-start trade policy is prompting executives to call officials for clarity. WSJ White House economic policy reporter Brian Schwartz discusses what they’re hoping to gain. Plus, CEOs critical of the Trump administration aren’t saying so publicly. We hear from Journal management reporter Chip Cutter about what it would take to get them to speak out. And Canada and the European Union impose retaliatory tariffs after U.S. tariffs on steel and aluminum go into effect. WSJ reporter Kim Mackrael breaks down how the EU tariffs would work, and how they could affect the U.S. Alex Ossola hosts. Sign up for the WSJ's free What's News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

TD Direct Investing offers live support. So whether you're a newbie or a seasoned pro, you can make your investing steps count. And if you're like me and think a TFSA stands for Total Fund Savings Adventure, maybe reach out to TD Direct Investing. U.S. inflation rose less than expected in February, but tariffs are still looming. Plus, Canada and the EU impose retaliatory tariffs, and some may hit the U.S. where it hurts. And Trump's economic messaging is spooking CEOs, but in public, they're keeping their

opinions to themselves. CEOs are saying the stock market would have to fall by a lot for them to really say anything. And there was still a group of CEOs in those respondents said they didn't feel like there was any sort of room for them to speak out right now. It's Wednesday, March 12th. I'm Alex Osala for the Wall Street Journal. This is the PM edition of What's News, the top headlines and business stories that move the world today.

New data from the Labor Department show that consumer prices were up 2.8% in February versus a year earlier. That's lower than the January gain of 3% and slightly lower than economists' expectations. For more on these numbers, I'm joined by WSJ Economics reporter Justin Lehart. Okay, Justin, we've been hearing so much about the economic impact of Trump's tariffs. Are they affecting these numbers? Not yet. Most of the tariffs didn't go into effect until this month.

We had some new ones out today, steel and aluminum, so obviously those aren't affecting anything. So it's sort of a wait and see when it comes to that. Core inflation, which excludes food and energy prices, rose 3.1% in February. That's the lowest year over year reading since 2021. What does this mean for the Fed? Core inflation is sort of a measure of the trend of inflation. So the good news is that did cool. The Fed actually follows a different measure of inflation from the Commerce

Department, and there was sort of some bad news in the number today. A lot of the decline in that year over year core reading was due to a drop in airline prices. So the expectations on the Fed, they're not going to be cutting until June, investors don't think. And the danger is they may not even cut then. It really depends on how the data progresses in the months ahead, both for inflation and

then for the economy at large. It's comforting to see sort of that headline, but once you dig in, it's not as happy as you might have thought. That was economics reporter, Justin Layhart. Thank you, Justin. Thanks. Canada retaliated against the Trump administration's tariffs on steel and aluminum, saying it would impose an additional levy on more than $20.5 billion in goods imported from the U.S. Canada's finance minister Dominic LeBlanc said that the tariffs will target U.S. steel

products worth about $9 billion, aluminum products worth $2 billion, and other U.S. imports, including computers and sports equipment. Meanwhile, as we mentioned in this morning's show, the European Union plans to impose retaliatory tariffs on a range of American goods. In the Oval Office earlier today, President Trump said that, quote, of course he would respond to the EU tariffs. The European tariffs, which include 50% levies on goods like American whiskey, motorcycles, and motorboats, are in response to US steel and aluminum tariffs

that took effect overnight. Our correspondent Kim McRaele joins me now from Brussels. So Kim, break it down for us. How exactly would these tariffs work? The tariffs that they've talked about would basically come into effect in two sets. The first set would come April 1st and the next would come in mid-April. Worth flagging that for all of this, the EU has really emphasized the idea that if there was any way of coming to a deal with the U.S. to avert the steel and aluminum tariffs that the U.S. imposed,

they could not impose these retaliatory tariffs or they could take them away later on. I mentioned a couple of the goods that are up for discussion here, but are there any others that jumped out at you from the list? The EU has tried in producing this list to come up with products that will have a maximum influence and potentially maximum pain for the United States while minimizing the impact and the pain for Europeans. So a lot of them focus on, in some cases, Republican states, in some cases, products that they think that Europeans can find elsewhere from other countries.

You mentioned whiskey, motorcycles, motorboats. We've got cranberries, garden umbrellas, tablecloths, handkerchiefs, soybeans, which is on the list of potential tariffs. They're also a major agricultural export to the EU from Louisiana, which also happens to be the home state of House Speaker Mike Johnson. You can see a little bit of an attempt by the EU to make some deliberate choices there. That was reporter Kim McCrailal. Thank you, Kim. Thank you.

US stocks fluctuated wildly as investors weighed the latest trade skirmish with Canada and the European Union and the solid inflation report. Major US indexes ended the day mixed. The S&P 500 was up about half a percent, and the Nasdaq rose roughly 1.2 percent, while the Dow fell about 0.2 percent. European Central Bank President Christine Lagarde said earlier today that the bank is confronting new levels of uncertainty. In a speech made at an annual conference after the EU announced retaliatory tariffs, Lagarde made it clear that much of that new volatility was traceable to President Trump's administration,

though she didn't name him directly. Because our expectations have indeed been swept aside in the last few years, let alone the last few weeks. Established certainties about the international order have been upended. Some alliances have become strained while others have drawn closer. We have seen political decisions that would have been just unthinkable a few years ago, a few months ago, a few weeks ago, just to see them overturned the following day. So the level of uncertainty we are facing is exceptionally high. Coming up, why worried executives keep calling the White House? That's after the break. Hey, it's DJ First Dibs. I noticed you've been listening to a lot of summer vibes lately. I get it. You're dreaming about vacations.

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President Trump's stop and start trade policy has rattled some of his allies. It's also triggered a flood of calls from business executives pleading with advisors for clarity on the president's strategy. White House economic policy reporter Brian Schwartz joins me now with more. So Brian, walk me through this. An executive is worried and calls a friend in the White House, like Chief of Staff Suzy Wiles. What happens next?

Well, once word gets out the door that these tariffs are going to be coming down on these countries, Canada, Mexico, China, European Union, you name it, people like Suzy Wiles start to receive a flood of phone calls from CEOs and major business leaders with concerns about these policies. And the idea is that they're not exactly telling her, listen, we think that they should be completely removed, right? But they are trying to really be very clear that if these tariffs are put in place,

they will in fact hurt their industries. They will in fact potentially be a detriment to consumers because prices in a lot of these CEOs' minds will go up. Why are they not appealing directly to take off the tariffs? There has been historically really not great results from doing that with the president. And the CEOs learned from this in the first time around.

You think back to the 2016 through 2020 years with Trump, when he first started putting on tariffs as a really core part of his economic policy, they tried these campaigns and they really didn't do anything. So now it appears that because that failed the first time, they're trying to do this this way in their meetings. Does this new approach work? We have a scene from a recent meeting that took place between a variety of tech CEOs,

HP CEO, IBM CEO, you name it. And they were sitting down with President Trump, Elon Musk, and Howard Lutnick, Commerce Secretary. Their overall point is that, listen, we're trying to invest more in the United States, but many of our parts for our products come from abroad. So it's very, very difficult for these companies to shift immediately out of these markets,

because that just historically has been where, frankly, they've been able to build the pieces necessary for their products. These are major forces in the United States economy, major forces in the business sector, and they're trying to have a say here. And the president's response to them has always been, fine, you don't want to get impacted by the tariffs, you need to start making more of your goods in the United States. And that usually is the end of the conversation. That was White House economic Policy Reporter Brian Schwartz.

Thank you, Brian. Thank you. Okay, so as we just heard, CEOs are privately concerned about the administration's mixed messaging on tariffs, and they're reaching out to White House officials. But why are business leaders not making their views more open?

WSJ Management reporter Chip Cutter joins us to talk about it. Chip, there seems to be kind of a disconnect between what CEOs are saying in public and what they're saying in private. Why are they not more vocal? They're scared. They're worried they're going to be targeted. They're worried their businesses are going to suffer. They really just want to be very careful in this moment in terms of how they interact with the Trump administration. So you have a number of CEOs in private really just expressing so much frustration over tariff

policies, over national security issues, whatever it might be. But then in public, CEOs oftentimes say something else or don't say anything at all. What is it that they're worried about exactly? They just feel like there's very limited upside right now and actually speaking out and there's a lot of downside. So when you have these forums of executives, what's interesting is many feel like they can be a little more comfortable and they can share with their peers.

I was at a meeting of the Yale CEO caucus and there it was interesting. You know, you had frustration there with CEOs just saying that they wanted more certainty. They felt like this was an environment that was really tough for them to do business in. But then later in the day, when President Trump appeared in front of the business roundtable,

the environment was a little more polite. There wasn't as much pushing back, according to those familiar with the meeting. People were mostly just asking questions, but it wasn't necessarily a contentious meeting. Do we have a sense of what it would take for these CEOs to become more vocal and speak out about what they think privately?

Well, so it's interesting. There was a survey question at the SHIEL meeting, and the people there in the audience, the CEOs, were asked how much the stock market would need to decline for them to speak out collectively. And 44% of those in the room said it would have to fall 20%, and another 22% of people said the stocks would need to fall 30% before they take a stand. So, put that all together, CEOs are saying the stock market would have to fall by a lot for them to really say anything.

And there was still a group of CEOs in those respondents who said they didn't feel like there was any sort of room for them to speak out right now. So we'll see what happens here. It's the early days of this administration still. And I think a lot of companies are trying to figure out how to navigate this. But unlike the first Trump administration, when a number of CEOs were very vocal, we're just not seeing that this time. That was WSJ Management reporter Chip Cutter.

Thanks, Chip. Thanks for having me. Congress is working on a budget, and cuts to Medicaid are on the table. The program is mainly for low-income Americans, but deep cuts could affect state budgets and health care more broadly. What questions do you have? Send a voice memo to WNPOD at wsj.com or leave a voicemail with your name and location at 212-416-4328. We

might use it on the show. And that's what's news for this Wednesday afternoon. Christine Lagarde's audio clip was courtesy of Reuters. Today's show was produced by Pierre Bienamé and Anthony Bansi, with supervising producer Michael Kosmitis. I'm Alex Osola for The Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening.