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
Chapter 1: What are the new U.S. tariffs on steel and aluminum?
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. Fifty percent 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 McRaehl is in Paris, where EU trade negotiator Maros Shevchevich is set to meet with U.S. Trade Representative Jameson Greer today at meetings convened by the OECD.
Chapter 2: How will the tariffs affect industry and prices?
For the EU, this is an inconvenient change in U.S. policy, to say the least. It comes, as I'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 U.S. 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 News 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, Lee Jae-myung, has been sworn in as president following snap elections that punished former conservative leader Yoon Suk-yool 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.
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Chapter 3: What is the impact of lifting the cap on Wells Fargo?
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. 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. These projects can be up and running in 12 months.
There's going to be more natural gas added to the system, but it's going to 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 U.S. Congress doesn't intentionally harm U.S. 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
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Chapter 4: How are clean energy tax credits dividing Senate Republicans?
Chapter 5: What are the consequences of U.S. trade policies on global markets?
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. So 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.
Hey Spotify, it's Damson Idris here to celebrate Tommy Hilfiger's Apex GP Collection.
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Chapter 6: How does Wells Fargo's situation reflect on U.S. banking regulations?
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. 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. These projects can be up and running in 12 months.
There's going to be more natural gas added to the system, but it's going to 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 U.S. Congress doesn't intentionally harm U.S. 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.
Are you optimistic that is an argument that will be received well in the Senate?
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