P.M. Edition for Mar. 24. As President Trump ramps up his attacks on the legal industry, law firms are split on how to respond. WSJ national legal-affairs reporter Erin Mulvaney discusses the implications for the industry. Plus, Trump recalibrates his plans for tariffs on goods from particular sectors and says he might soften reciprocal tariffs on some nations, though the back-and-forth is hard on U.S. small businesses. Senior special writer Ruth Simon joins to talk about how small businesses are responding. And shares in Tesla, a longtime stock-market highflier, are down more than 30% this year. Reporter Hannah Erin Lang explains why. Alex Ossola hosts. Sign up for the WSJ's free What's News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices
Chapter 1: What are President Trump's new tariff plans?
Markets welcome President Trump's plan to limit his new tariffs. But the back and forth is making life harder for small businesses.
Even some companies that manufacture in the U.S. are feeling some softness because their customers are uncertain and they're not investing as much.
And why some investors have soured on Tesla. It's Monday, March 24th. I'm Alex Osola 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. First, the latest on President Trump's tariffs. Trump told reporters in the Oval Office today that he might soften reciprocal tariffs on some U.S.
trading partners while others might be exempt. Earlier at a cabinet meeting, Trump said the U.S. will announce tariffs on automobiles soon and pharmaceuticals at some point without offering further details. His comments came a few hours after Trump said the U.S. would impose a 25 percent tariff on any country that buys oil or gas from Venezuela, sending oil futures higher. U.S.
stocks were up today as investors welcomed Trump's latest pivot on tariffs. Major U.S. indexes all ended the day higher. The Dow rose about 1.4 percent, the S&P 500 was up roughly 1.8 percent, and the Nasdaq climbed about 2.3 percent. Well, the market may be into Trump's latest lighter-touch approach to tariffs, but the back-and-forth is tough on small businesses.
According to a survey conducted by Vistage Worldwide, nearly two-thirds of small business owners said tariffs would hurt their business, while 8% said they'd benefit from them. Joining me now to talk about how the changing U.S. trade policy is affecting small businesses is our senior special writer Ruth Simon. Ruth, why are small businesses affected more than large ones by these trade policies?
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Chapter 2: How are small businesses reacting to tariff changes?
There are a whole bunch of different reasons why that's the case. For one thing, small businesses have thinner cash cushions and they often operate with narrower profit margins than big companies. They also are just smaller. They don't have big product and big diverse product lines. to spread things around. They're more likely to have production concentrated in one or two places.
And perhaps even as important or more important, their staffs are small, so they don't have teams of supply chain experts. And when somebody has to focus on tariffs, it's taking them away from other roles that they might have, other things that they need to do.
And that makes what we've been seeing lately, this stop-start, today it looks like one thing, another day it looks like something else, particularly difficult for small companies to manage.
What kinds of small businesses are feeling the squeeze?
There is a wide range of small businesses that are feeling pressure. One of the most obvious ones are companies that do a lot of importing from China and who have things like, I talked for this story, to a hat maker. There are people who make aprons, who make all sorts of stationary products, all kinds of different things.
But we also have companies that get components from China or components from Mexico or have moved some of their manufacturing to Mexico because they thought, hey, there are going to be more tariffs on China and suddenly Mexico is in the crosshairs too. Even some companies that manufacture in the U.S. are feeling some softness because their customers are uncertain and they're not investing as much.
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Chapter 3: What strategies are small businesses using to cope with tariffs?
Okay, that seems like kind of a tough situation for some of these small businesses.
What can they actually do about any of this?
So some of the small businesses that I talked to tried to move product to the U.S. ahead of the tariffs to at least give them a little bit of a cushion. They also have to figure out what to do. How much do you pass on tariffs to your customers? Do you put fewer items in a package? Do you make things a little differently? And finally, they're just taking a very close look at their costs.
If small businesses are suffering, that can lead to economic weakness, particularly if small businesses slow their hiring or have to lay off employees or they scale back their investments.
That was WSJ Senior Special Writer Ruth Simon. Thank you, Ruth.
It was a pleasure to join you.
Coming up, President Trump is taking on the legal industry. And big law is split on what to do about it. That's after the break. In legal news, the Justice Department is asking the Supreme Court to block a judge's order that required it to reinstate more than 16,000 fired federal employees.
Administration officials are seeking the justices' intervention to clear away lower court rulings that have slowed President Trump's policies. Meanwhile, Trump has set his sights on law firms, and he's escalating his attacks on the industry.
On Friday, he sent out a presidential memorandum broadly accusing law firms of abusing the legal system to challenge his policies, stymie immigration enforcement, and pursue partisan causes. Now, firms are scrambling to stay out of the crosshairs. WSJ National Legal Affairs reporter Erin Mulvaney joins me now with more. Erin, I want to talk about what happened before Friday's memo.
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Chapter 4: How is President Trump affecting the legal industry?
So the president has targeted so far three firms in executive orders. And in each one, he has attached the firm to a lawyer that has worked there or represented clients that were considered his political or legal enemies in various ways. And then the result is that the firm has security clearances removed. The lawyers at the firm cannot access federal buildings.
And the agencies are directed to remove federal contracts from any firms or their clients. So it's pretty sweeping. That's at least for two of the executive orders. One of them was a little more narrow, but that's why law firms are scrambling. It's pretty sweeping consequences of those orders.
So Paul Weiss was sort of confronted with this situation from the president. What did the firm do about it?
At first, they were preparing to fight. They were hiring some really important litigation firms to back them and discussing how to put a lawsuit together. But instead, the chair also took this other path where he made his way to the White House and went to the Oval Office, met with Trump.
And they hashed out an agreement that would allow Trump to rescind the executive order in exchange for a few things like $40 million to certain pro bono services that the administration cares about, veterans and fights against anti-Semitism, and generally just a support for not taking on clients that are partisan. That's basically how we got out of it.
All right. So firms are confronted with a situation that could turn into something similar to Paul Weiss. What are they doing about it?
They're really trying to decide how to respond because there is a divide among firms' clients, which is usually the most important thing to them. as it's their business. Clients or some of them are asking them to support efforts to fight back against these orders. Others say, please stay out of this. We don't want the president to come after us.
And then they have the internal forces of the lawyers within the firm having different views on what the best course of action is as well. And in the meantime, they definitely just want to keep their heads down, not make big public statements or swings against the president and and his actions against the legal industry out of fear that they'd be the next target.
But not everyone is adopting that approach, right? What is Perkins Coie doing?
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