WSJ What’s News - U.S. and Japan Reach Trade Deal

Episode Date: July 23, 2025

A.M. Edition for July 23. President Trump says that he will set tariffs on the country at 15%. The WSJ’s Jason Douglas says the deal helps Japan’s crucial automotive sector. Plus, Trump lashes out at his perceived political enemies, including Barack Obama, as the president faces more questions about Jeffrey Epstein. And how younger individual investors are cheering on a new clutch of meme stocks. Azhar Sukri hosts. Sign up for the WSJ’s free What’s News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

Welcome to this year's championship game. This is the big one. With Amex Platinum, you have access to an annual dining credit to some of the hottest restaurants around town. Score! So you can raise the bar on game night. That's the powerful backing of Amex. Terms and conditions apply. Learn more at amex.ca slash y-annex. The US and Japan reach a trade deal. What we've had so far are deals with Vietnam, Indonesia,

the Philippines. These are all important countries, but Japan is really the first really huge country that President Trump has negotiated a deal with. He called it one of the biggest deals ever. These are all important countries, but Japan is really the first really huge country that President Trump has negotiated a deal with. He called it one of the biggest deals ever. Plus facing more questions about Jeffrey Epstein, Trump tries to turn the attention on his political enemies, including Barack Obama.

And investors cheer on a new class of meme stocks. It's Wednesday, July 23rd, I'm Azhar Sukri for the Wall Street Journal. Here is the AM edition of What's News, the top headlines and business stories moving your world today. The US and Japan have reached a trade agreement, with President Trump saying that he will set tariffs on the country at 15%. In a social media post, Trump said Japan will invest $550 billion in the US as part of the deal, and that the US will receive 90% of the profits from the investments, although

he did not provide details. Jason Douglas is our Tokyo bureau chief. He says in return Japan has agreed to open to trade in a number of sectors which will see the US lower the tariff rate Trump had threatened recently in a letter to the Japanese government. So those were going to be at 25% when they came in on August the 1st and Japan has negotiated that down to 15%. Crucially for Japan that includes autos, so the tariffs on cars are going to also be 15% and that's pretty important for Japan which as everyone knows has a powerhouse auto sector, so important for companies like Toyota,

Honda and Nissan. There's going to be more cooperation on what in Japan they call economic security, so that's really around supply chains, semiconductors, critical minerals. And then finally, Japan has agreed to buy more American rice, which was a key goal of President Trump. Japanese Prime Minister Shigeru Ishiba welcomed the deal, saying his government was determined to protect the national interests just days after the ruling coalition suffered a significant setback in parliamentary elections, which threatened to derail the talks. Jason says with the tariff reduction, investors are now viewing the blow to Japan's economy as less severe than previously feared.

The stocks are up, the stock market is up, shares of companies like Toyota are up, suggesting that investors think that having a deal is really going to put a floor under US-Japan relations and help the economy. But overall we shouldn't forget that this is a trade war and this means tariffs tend to mean higher prices for consumers, tend to mean over time less exports, tend to affect things like business investment and so on. So I think that although the US and global economies have been resilient so far in this trade war, the effects will still continue to play out. Well, as the self-imposed August 1st deadline for countries to agree trade deals with Washington draws closer, the Trump administration is using the threat of tariffs and promise of

access to the US market to stop multiple countries from imposing new taxes, regulations and tariffs on American tech firms and their products. According to people familiar with the discussions, measures targeting America's internet giants remain a sticking point in discussions with Brazil, South Korea and the European Union. Brazil is focused on resuming trade talks, not retaliatory measures, a government official said. The European Commission, which is in charge of EU trade policy, declined to comment, while the South Korean embassy didn't respond to requests for comment. Tech companies have waged a years-long campaign for the government to protect the sector, warning that what they call unfair taxes and regulations overseas could restrict the

amount they can invest in the US. President Trump is expected to give a major speech today on winning the AI race. It comes as the first of the so-called Magnificent Seven release their earnings later, with investors particularly looking out for updates on Alphabet and Tesla's AI investments. And as the journal's Roshan Fernandez writes, this year the Bellwether stocks are beginning to diverge, depending on just how they've leveraged the AI boom. Roshan, my favourite quote from your story is that of veteran tech investor Dan Ives, the MD of Wedbush

Securities, where he says, in the Mag7 there's the cool kids table and then there's Apple, Tesla and Alphabet, thereby the kitchen at the bad table wishing that they were at the cool kids table. Explain that for us. Yeah, I mean I asked a lot of investors whether the Magnificent 7 are breaking up. Is this kind of the end? And most investors said that no, we're not quite Yeah, I mean, I asked a lot of investors whether the Magnificent Seven are breaking up. Is this kind of the end? And most investors said that no, we're not quite at that point yet. They're in therapy.

You know, they need a little bit of help. And we're definitely trending in that direction. We're seeing a kind of divergence and a split in their performance, in their business fundamentals. You're seeing Nvidia kind of breaking off and obviously performing incredibly well. You're seeing Apple and Alphabet and Google having some issues, same with Tesla. Okay, so what is it that these companies are getting right or not in some cases? I think that with Apple in particular, they've been having a little bit of trouble kind of wooing investors with their AI efforts, just because, you know, their AI-powered Siri, their Apple intelligence service has kind

of come up short of promises. It's taken them longer than they expected to sort it out. Whereas you see companies like Nvidia and Microsoft and Meta immediately implementing that AI and being able to deliver it a little bit more directly and with a little bit more ease to users. Given that, you know, Apple's selling hardware mostly, I think that that's been some of the struggle there, just figuring out how best to package that and deliver it to the consumer. We're due to get results from Tesla and Alphabet today. What is the market expecting?

Yeah, I think investors will just be looking for updates in how much these companies have invested in AI and what kind of progress they've been making recently. Tesla obviously rolled out its RoboTaxi in Austin last month and they recently said that they were going to invest in XAI, which shareholders will have to vote on later this year. So I think Tesla is making a kind of interesting pivot here, perhaps with a little bit less focus on electric vehicle sales as a whole and a little bit more focus on AI, robotics, and what they can do kind of moving forward. And then Google or Alphabet will be interesting as well,

just given the fact that their stock has been down a little bit this year, but it looks like they're kind of making a recovery. They've been facing antitrust issues in Europe and the US and I think investors as a whole are just thinking more broadly about what chat GPT and some of these other chat bots will mean for Google's like search monopoly. They'll just be looking to see how Google's kind of pivoting and what kind of progress they've been making with Gemini. Right and most of the MAG7 are trading way above the S&P 500 in terms of valuations. Presumably that sets a high bar for those earnings. Yeah, I mean, I think that earnings are going to have to be particularly impressive to continue pushing these stocks forward,

just given the fact that I think as of Friday, six of those seven MAG7 companies were trading at 25 times more than their expected earnings over the next year. And S&P 500 averages about 22. So Alphabet is the one below that bar. But just given those lofty valuations, the earnings will have to be really spectacular to continue, at least in the short term, pushing these stocks sky high. That's The Wall Street Journal's Roshan Fernandez.

Roshan, thank you very much. Thank you. Coming up, we'll tell you about Donald Trump's latest political targets and its meme stock Frenzy 2.0. But GameStop was so 2021. Find out which stocks are hot and more after the break. of the Hill Season 14 coming this summer. All available to Disney Plus subscribers. Visit DisneyPlus.com to sign up and stream now. President Trump has lashed out at former President Barack Obama

and other Democratic leaders, including Hillary Clinton and Joe Biden, urging the Justice Department to investigate them. Speaking at the Oval Office yesterday, Trump delivered some of his harshest comments directed at his perceived political rivals during his second term. It's time to start after what they did to me and whether it's right or wrong, it's time to go after people. The president's response came as he faced questions from reporters about late sex offender

Jeffrey Epstein. The administration has been under pressure to release more information about the convicted paedophile. Trump said the real, quote, witch hunt that should be investigated are findings from the director of national intelligence, who alleges she found quote, overwhelming evidence that government officials set up what she described as a years-long coup against Trump. Tulsi Gabbard said Obama administration officials had suppressed intelligence, showing Russian actors didn't affect the 2016 presidential election and that she sent criminal referrals

to the DOJ. A bipartisan Senate committee and the Central Intelligence Agency have previously concluded that Russia intended to interfere in the 2016 election, while the DOJ-appointed special counsel Robert Mueller found Trump and his campaign didn't coordinate or conspire with Russia to meddle with the vote. A spokesman for Obama called Trump's claims quote, outrageous and ridiculous. We are exclusively reporting that regulators are investigating Morgan Stanley over whether

the Wall Street giant properly vetted its clients for money laundering risks. The probe by the financial industry regulatory authority focuses on the firm's clients, risk ranking and other practices from October 2021 through September 24. It adds to the possible fines Morgan Stanley is already facing from federal investigations into its anti-money laundering practices. A Morgan Stanley spokesman said the company has made substantial investments in its anti-money

laundering and other client vetting programs over the past several years. Now, on one level, it's starting to feel like 2021 all over again. You might remember the whole meme stock frenzy back then, well, it's back. This time though, it's companies like department store chain Kohl's and real estate platform Open Door Technologies that are gaining the attention of individual investors on online stock picking forums. Both stocks have rocketed higher recently. Markets reporter Caitlin McCabe says these traders have found a common enemy in the professional investors who've been betting against their favorite stocks. So in keeping with typical meme stock characteristics, we've seen some pretty eye-popping performances

in the stocks that are capturing investors attention right now. Kohl's finished Tuesday up 38 percent, which was its best one-day performance ever. And Opendoor, which has become another favorite, has jumped more than 30 percent or more in three of its last five trading sessions. Its shares are up more than 400 percent this month. And Caitlin says the macro backdrop provides important context on the performance of these stocks. We have all this tariff uncertainty right now. And yet US stock indexes are at all time highs. Bitcoin is trading around one hundred and twenty thousand dollars. And meme stocks are just almost this natural extension of that during these periods of market exuberance. I covered retail investors for many years and I think for many of them, they find it

hard to not get swept up when it feels like markets are just going to keep climbing higher. And that's it for what's news for this Wednesday morning. Today's show was produced by Daniel Bach and Kate Bullivant. Our supervising producer is Sandra Kilhoff. I'm Azar Sukri for The Wall Street Journal. We'll be back tonight with a new show. Until then, thanks for listening.