WSJ What’s News - Trump’s Tariff Plans Take Shape

Episode Date: November 26, 2024

A.M. Edition for Nov. 26. Donald Trump vows to slap 25% tariffs on Mexican and Canadian imports from day one and an additional 10% tariff on Chinese imports, stirring currency markets. Plus, with the President-elect directly linking these new levies to the international narcotics trade, we ask WSJ correspondent Brian Spegele whether Trump’s hardball tactics on China will work to ease the fentanyl crisis. And the White House proposes a big coverage expansion plan for Medicare and Medicaid to pay for popular weight-loss drugs. Luke Vargas hosts. Sign up for the WSJ’s free What’s News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

Your teen requested a ride, but this time not from you. It's through their Uber Teen account. It's an Uber account that allows your teen to request a ride under your supervision with live trip tracking and highly rated drivers. Add your teen to your Uber account today. Donald Trump offers new details on his promised tariffs targeting Mexico, Canada and China. Plus we'll go inside Trump's plan to put maximum pressure on Beijing to stem the illicit drug trade.

If you are the Chinese leadership in Beijing and you do agree to effectively do what the Trump administration is asking you to do, to what extent are you going to look weak in the eyes of your own people, right? Many of the experts that we talk to about this say that's simply not how you get the Chinese to change their behavior. And the White House proposes a major expansion of Medicare and Medicaid's coverage of anti-obesity drugs. It's Tuesday, November 26th.

I'm Luke Vargas for The Wall Street Journal and here is the AM edition of What's News, the top headlines and business stories moving your world today. President-elect Donald Trump is promising to charge Mexico and Canada a 25 percent tariff on all of their U.S. exports beginning on his first day in office. A clear signal he wants to rewrite the terms of the U.S. MCA agreement, the free trade pact that he negotiated in his first term. Hosting on Truth Social, Trump added that all Chinese products bound for the U.S. would face an additional 10 percent tariff on top of those the U.S. has already imposed, though

he didn't specify when. It wasn't immediately clear what legal authority Trump will invoke to justify the tariffs, though he faulted America's neighbors and China for not doing enough to stop the flow of drugs, especially fentanyl. He also cited illegal immigration as a rationale for the measures targeting Canada and Mexico. A spokesman for China's embassy in Washington said that, quote, no one will win a trade war or a tariff war, end quote. Canada's government said it would keep discussing trade and border security issues with the

incoming administration, while representatives at Mexico's embassy didn't respond to a request for comment. Well, Trump's tariff threat is putting Mexican officials in a bind, as Chinese electric vehicle maker BYD finalizes plans for a factory in the country. While the BYD plant would normally represent a welcome foreign investment, officials fear the plant could suggest that Mexico wants to be a back door for Chinese companies to sell to Americans. According to people familiar with the matter, several Mexican states have dialed back incentives

they're offering to BYD to attract the plant, and we report the federal government isn't happy with BYD's timing, potentially jeopardizing necessary consent for the investment. And currency markets are moving today in response to Trump's tariff pledges, with the Mexican peso and Canadian dollar weakening and the Chinese yuan falling modestly against the dollar. Our Ben Dummett has more. Separately, we've seen other so-called haven currencies, including the Japanese yen, strengthening, though there are some analysts who know we just don't know yet what Trump's going

to do or what he's going to say between now and inauguration that actually could upend that so-called safety. That's especially true in Europe where analysts from ING for example noted that policymakers are particularly fearful that Trump could soon turn his attention to the continent's auto sector, a possibility that's already pressuring the euro lower today. Shares in Jeepmaker Stellantis fell more than 5 percent in morning trading in Europe, while Germany's Volkswagen, BMW, and Mercedes-Benz also saw their share slip. Speaking of the auto sector, California Governor Gavin Newsom says the state will intervene

to offer rebates for EVs if Donald Trump cuts a $7,500 federal tax credit for the cars, setting up what could be a long battle with the Trump administration. Newsom said the EV rebates would be funded by refineries, food manufacturing plants, and other facilities that pay the state to emit greenhouse gases. However, the Democrats' office said that cars made by Elon Musk's Tesla and potentially other manufacturers may not be eligible for the rebate program to encourage market competition. Tesla didn't return a request for comment. The Biden administration is proposing a plan for Medicare and Medicaid to pay for popular

weight loss drugs for more obese Americans, even if they don't have other diseases like diabetes. The White House says the proposed change would extend coverage of drugs such as Novo Nordisk's Wegovi and Eli Lilly's Zep-Bound to an estimated 3.4 million Americans insured by Medicare, and an additional 4 million by Medicaid. The plan to cover the drugs, which list for more than $1,000 a month, would add tens of billions of dollars in outlays to the programs and would need to be finalized by the Trump administration, which has pledged to cut federal spending. And federal prosecutors are charging long-time bond investor Ken Leach with fraud, alleging

he assigned more than $600 million in gains to preferred clients while offloading losses on others. The Securities and Exchange Commission is also charging Leach in a separate action, saying the so-called cherry-picking scheme involved placing trades and then waiting to see how they performed during the day before allocating them to client accounts. In a statement, Leach's lawyer called the allegations unfounded. Leach was, until very recently, chief investment officer at Franklin Templeton's subsidiary Western Asset Management.

The firm has been reeling from client outflows since disclosing that Leach was under investigation earlier this year. A company spokeswoman said Franklin is fully cooperating with the probes. Coming up with Donald Trump tying the threat of tariffs to the flow of illicit drugs, we'll look at how Beijing might respond to a more combative position over its role in the fentanyl crisis. We've got that story after the break. When Donald Trump vowed last night to impose tariffs on China and Mexico, he directly tied them to the issue of the international narcotics trade, particularly in fentanyl.

It's something he repeatedly brought up in the closing days of his campaign, vowing to tariff the hell out of China unless it helps to stop the flow of illicit drugs into the U.S. So how is Beijing likely to respond to Trump's hardball tactics? Brian Spiegel is a senior Wall Street Journal correspondent based in Beijing. Brian, the stakes surrounding the drug crisis, including around fentanyl, are about as high as they come, aren't they? Yeah, that's right. Last year it's estimated that more than 107,000 people died in the

United States of drug overdoses. And the majority of them were deaths from fentanyl and other similar drugs known as synthetic opioids. It's an absolutely tremendous number. And for multiple administrations now, it's been a tricky issue to solve. So back in Trump's first term, China was selling fentanyl itself to the United States illicitly. And Trump got Chinese leader Xi Jinping to classify or to regulate much more strictly fentanyl itself as a class of drugs. But the problem is that Chinese companies continue to sell the chemicals, the building blocks used to make fentanyl. And that's really become the central point of focus today. Right, which the Biden administration has also tried to tackle. Yeah, they basically said, okay, there's a whole host of things that China and the United

States disagree on. Counter-narcotics should not be one of those things. So why can't we use this as kind of a testing ground to see if we can build trust in the relationship, but also push China? You want to be seen as a great responsible power in the world? Work with us on this. Do it the right way. Right. So kind of using the carrot as opposed to the stick that we're going to talk about from Trump a little bit later, just give us a sense of what that has

looked like the last few years. Two things I would say. One is they've gotten China to regulate more strictly some of these specific chemicals that are used to make fentanyl. The Biden administration said it took China way too long to do this, but they are happy nevertheless. The second part is law enforcement cooperation. For a while now, the United States has been sharing intelligence with China saying, we know who are the bad guys selling these chemicals to the Mexican cartels,

and Mexican cartels are making the fentanyl and sending it to the United States. You should go after and arrest those people. Just recently, we've seen China beginning to make some moves. So that kind of cooperation can fall apart very easily, but it's been hard won by the Biden administration. And yet clearly, Brian, Trump thinks that approach is coming up short. And it's not just him. Trump's incoming national security adviser Mike Waltz claimed last month, in his words, that China is working with the cartels to infiltrate the US. What are we likely to see if Trump follows through on what he's been saying on the campaign trail? Yeah, I think that this is going to be a maximal pressure campaign against China.

It's an open question whether this is going to work. Back in 2018, when Trump did have some success in convincing China on fentanyl, China was very desperate to do a deal. Now the question is, as Trump comes back into power, is China basically going to conclude Trump's going to put tariffs on us no matter what? We did a deal for fentanyl with Trump back in 2018, and yet he's still threatening tariffs against us. Why are we going to play ball with you again? And Brian, from your reporting, it sounds like there are also some potentially sensitive domestic political considerations around all of this as well, right?

Which begs the question, if Trump's hardball tactics aren't successful, where might that leave us? So if Trump comes in from day one and is seen domestically as trying to bully or pressure the Chinese on this issue, there's a real risk that China is going to clam up and they're not going to want to continue to cut the channels that they had with the Biden administration. Now, that doesn't mean they're going to reverse regulation that they've already now implemented. However, we could see them freeze the sorts of law enforcement channels of communication that we've seen if they don't like the way that Trump is trying to approach this conversation.

More fundamentally, the way China views the situation is they think US politicians are trying to use China as a scapegoat for their own failures of dealing with America's opioid addiction crisis. China does not appreciate that whatsoever. Yet, nevertheless, they say from a humanitarian perspective, we are willing to work with the United States if we're treated with respect and the conditions are right. I've been speaking to Wall Street Journal senior correspondent, Brian Spiegel in Beijing. Brian, thanks so much for the update. Thank you.

And that's it for What's News for Tuesday morning. Today's show was produced by Daniel Bach and Kate Bulevent with supervising producer Christina Rocca. And I'm Luke Fargus for the Wall Street Journal. We will be back tonight with a new show. And until then, thanks for listening.