WSJ What’s News - U.S. Doubles Steel, Aluminum Tariffs to 50%

Episode Date: June 4, 2025

A.M. Edition for June 4. President Trump’s tariffs on imported steel and aluminum jumped overnight, leading industry players to warn of price increases and potential shortages. Plus, Journal finance editor Alex Frangos discusses the Federal Reserve’s decision to lift its longstanding cap on Wells Fargo’s assets, imposed as punishment for a fake-accounts scandal. And American Clean Power Association CEO Jason Grumet weighs in on the debate over phasing out clean-energy tax credits that’s dividing some Senate Republicans. Luke Vargas hosts.   Sign up for the WSJ’s free What’s News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

The U.S. doubles steel and aluminum tariffs. Plus, the handcuffs come off for Wells Fargo nearly a decade after its fake account scandal. And the potential phase-out of clean energy tax credits divides Senate Republicans as the chamber takes on the GOP's big, beautiful bill. There's right now, by our estimate, $328 billion of clean energy projects under development. And so the issue is when you have tax policy to encourage U.S. companies to make investments, if you rip it up too fast, you just strand a lot of investment, you create a lot of chaos. It's Wednesday, June 4th.

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. 50% U.S. tariffs on imported steel and aluminum are kicking in today. That is a doubling of prior rates for many of the world's largest metals producers, leading industry players to warn that the new rate may necessitate price increases from steelmakers or higher surcharges on aluminum purchases, potentially triggering shortages. The measures could also shake up trade negotiations with those in talks with Washington. Journal reporter Kim McRaele is in Paris, where EU trade negotiator Marosz Shefchevich is set to meet with US

Trade Representative Jameson Greer today at meetings convened by the OECD. For the EU, this is an inconvenient change in US policy, to say the least. It comes as they've recently promised to advance negotiations to speed things up. To have another increase on US tariffs is something that EU officials have warned could actually cause some problems for those negotiations. They've suggested as well that it could actually trigger retaliation by putting tariffs on US goods in response. EU countries are compared with some big steel exporters like India, Japan, South Korea, they are relatively smaller players. The measures nonetheless come at a very sensitive time for the EU as it tries to increase its economic growth, it's working on building up its defense manufacturing base, and obviously that's something that relies very heavily on metals production.

And those tariffs are now beginning to take their toll, with data showing that Australia's economy slowed sharply in the first quarter to just 0.2 percent. The slowdown follows an OECD report yesterday warning that global growth could stall amid US duties on trading partners like China, which is Australia's biggest source of export demand. The slowdown could heighten speculation of further rate cuts after Australia's central bank said it had considered an emergency 50 basis point cut in May due to the deteriorating outlook.

And investors will also be watching the Bank of Canada today, which is expected to hold rates steady as policymakers set aside weak domestic demand amid accelerating core inflation. Their decision is due at 9.45 a.m. Eastern. And major automakers say they're considering shifting some parts manufacturing to China in the face of export restrictions from Beijing on rare earth magnets used in everything from EV motors to windshield wipers and headlights. That would amount to a remarkable outcome from a trade war that was meant to bring manufacturing back to the U.S.

China in April began requiring companies to apply for permission to export magnets made with rare earth metals, though those restrictions don't cover finished parts. And for much more on the race to secure critical minerals, tune in to What's New Sunday this weekend where we'll be looking at the challenges facing Washington as it scrambles to catch up to China. You can find episodes of What's News Sunday on the very same feed you're using to listen to us now. The so-called Bernie Sanders of South Korea, E.J.

Myung, has been sworn in as president following snap elections that punished former conservative leader Yoon Suk Yul for attempting to impose martial law. At a ceremony in Seoul, Lee pledged to revive the country's economy and strengthen alliances with the U.S. and Japan while continuing his call for a better relationship with Beijing. That strategy could complicate President Trump's efforts to convince allies to help contain China in trade and security matters.

While South Korea's corporate giants are big investors in the U.S., China remains the country's largest trading partner. Elon Musk says that SpaceX is on track to record another significant revenue increase this year, reaching $15.5 billion. The company's launch operation, which revolves around its partially reusable Falcon 9 rocket, as well as its satellite internet business Starlink, have been fueling revenue growth in recent years. In a social media post, Musk said that commercial revenue at SpaceX would exceed the entire

budget of NASA next year. The White House has proposed cutting NASA's budget to $18.8 billion for its next fiscal year from nearly $25 billion currently. SpaceX is a major contractor at NASA, with Musk saying that about $1.1 billion of the company's expected revenue this year would come from the agency. And federal regulators have moved to lift an asset cap of around $2 trillion placed on Wells Fargo in 2018, an unprecedented punishment that had handcuffed the bank's growth after its fake accounts scandal erupted nearly a decade ago. This goes back to 2018.

It was a very unusual regulation imposed on Wells Fargo for some very unusual behavior, which is that they were signing customers up to accounts and the customers didn't know that they were. And it caused a huge scandal and the Fed imposed this cap on them, saying basically until you've put your house in order, we're not going to let you grow. That was Finance Editor Alex Frankos, who says the U.S. bank will now be able to grow its balance sheet and redirect resources it had been pouring into efforts to fix itself

and repair its tarnished reputation. This has been a very punishing regulation for a bank that for years before had been one of the most popular banks for investors. Warren Buffett was famously an investor for a long time. So the investment community is excited about this bank having a foundation now to grow and catch up. Just look at the stock price of Wells Fargo since 2018 compared to its peers like JP Morgan and it's just so far behind and so maybe there's some catch up

to do if it can take advantage of its newfound liberation. Coming up as Republicans push to pass President Trump's so-called big beautiful bill, one stumbling block dividing some GOP senators, besides increased spending, is what to do about clean energy tax credits. We have got that story after the break. Members of the U.S. Senate return from recess this week with a major item on their to-do list — passing President Trump's big, beautiful bill, as some are calling it.

House Republicans narrowly passed the spending legislation last month, and they've urged GOP senators to go easy on any changes, lest they introduce issues that could crop up when the bill returns to them in the House. But that could be tricky, as we report at least four Senate Republicans have voiced issues with elements of the text, which would increase the debt ceiling by at least $4 trillion as a result of increased border spending and tax cuts. Another issue that's dividing Republicans is what to do about clean energy tax credits, which the House bill set to phase out in 2028. And here to talk about that is Jason

Grima, the CEO of the American Clean Power Association, an industry group representing wind, solar and energy storage companies. Jason, remind us quickly if you could where clean energy tax credits broadly stand now. What policy could we see shaken up here? So about three years ago, the Biden administration passed its own version of a big, beautiful bill. And one of the many things it did was try to really kind of accelerate the deployment of clean energy. It tried to do two things.

It tried to increase the deployment of clean power. And we now saw that last year, over 90% of all of the new electrons added to the grid were coming from these clean sources. And the other thing it tried to do is to really kind of supercharge American manufacturing so that we were making the components, the batteries, the solar panels, the wind turbines here in the U.S. And so the goal was just to kind of supercharge the clean energy system. We've done this with almost every aspect of energy in our economy has some different amount

of public support. And no, those credits, those incentives are up for some significant change, which shouldn't surprise us, right? The bill under Biden was passed with just Democratic control that makes these pieces of legislation vulnerable. There's been broad bipartisan support for clean energy. Most of the investment, most of the energy production is happening in conservative parts of the country.

But because the bill was adopted in this partisan way, using the reconciliation process, we knew that when we had a unified, flipping government, there was going to be an effort to unwind those credits. The question is how they make the changes and just how disruptive they are to existing investment. So the House bill, being looked at by the Senate now, would phase out these credits in 2028. What are you hearing about this from the companies you represent?

How could they stand to be affected? Well, so the House bill is kind of a 2028 head fake. It says 2028, but what it really says is if you're not starting to build the project within 60 days of the bill passing, you don't get access to the credits. And if that were not modified in the Senate, you would just see a lot of chaos, right? You would see energy prices go up, energy demand is really strong, and if we constrain supply, we will see some price spikes. But more than that, it would just be kind of commercial chaos. And if this actually goes forward, it's going to really chill investment for all energy infrastructure. Because who's going to invest tens of

billions of dollars in the United States if the expectation is that the law is in kind of this like green light, red light, stop start. And so I think the industry is economically competitive, right? We are happy to have clean power, compete in the marketplace with the cost of new natural gas. One of the things that people don't appreciate is how quickly you can build renewable projects, right? These projects can be up and running in 12 months.

There's gonna be more natural gas added to the system, but it's gonna be very difficult to add any of that during the Trump administration. So we're not anxious about the ability to compete as long as the US Congress doesn't intentionally harm US companies. Mentioning the economics of clean energy sources now, I'm looking at research by Bloomberg New Energy

Finance here showing that almost everywhere in the world now, new wind and solar farms can undercut coal and gas plants on production costs. What would you say to folks who say, well, given that, these clean energy tax credits, what's the point? They should be able to and maybe already can stand on their own. Yeah. No, look, I think that is a fair assessment. Now, the question just is, who's going to wind up paying for these bills? No one in this industry ever wanted credits forever. The expectation was that you would have credits that they would kind of enable us to really

increase the capacity to scale. And that's essential because energy is expected to increase in a way that it hasn't in generation, right? We're anticipating a 50% increase in electricity demand in the next 15 years. We just need a predictable phase out so that companies don't have to kind of tear up contracts and have half-built projects trying to figure out whether they're still economically viable, right? People made financial commitments based on the law. And when Congress changes the law, they need to do that in a way that honors

those commitments. Nat. Are you optimistic that is an argument that will be received well in the Senate? Jayson Johnson It is certainly being received well by, you know, eight or 10 senators who we're talking to who agree that we have to deal with the deficit. The deficit is like an overweight plane. It's inefficient, it's hard to gain altitude, but you don't reduce weight on a plane by taking off the engines, right?

The clean energy investment are engines that are driving economic growth. And I think members of the Senate appreciate that. We need to land the plane, not crash the plane. Jason Grimaire is the CEO of the American Clean Power Association. Jason, thanks so much for being with us on What's News. Good to be with you, Luke. And that's it for What's News for this Wednesday morning. Today's show was produced by Daniel Bach and Kate Bulevent. Our supervising producer is Sandra Kilhoff, and I'm Luke Vargas for The Wall Street Journal. We will be back tonight with a new show.

Until then, thanks for listening.