A.M. Edition for April 16. The Trump administration intends to use tariff negotiations with more than 70 countries to push them to limit China’s involvement in their economies. WSJ Southeast Asia bureau chief Gabriele Steinhauser discusses how that is likely to go over in countries used to balancing relations with Washington and Beijing. Plus, reporter Benoît Morenne explains how tariffs are rippling through energy markets. And a federal judge demands answers from the government about a wrongfully deported Maryland man, setting up the biggest test yet of judges’ authority to rein in the administration’s actions. Luke Vargas hosts. Check out our special series on how China’s trillion-dollar infrastructure plan is challenging the West. Learn more about your ad choices. Visit megaphone.fm/adchoices
Chapter 1: What is the focus of the tariff talks?
Everybody around the world has been trying to figure out what is the administration trying to do? What's the ultimate goal here? And increasingly, it is becoming clear that the real target is China.
And with global oil markets roiled by trade tension, we'll look at what it means for producers and consumers. It's Wednesday, April 16th. 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.
A federal judge in Maryland is demanding more answers from the Trump administration about its efforts to return a migrant wrongfully deported to El Salvador, setting up the biggest test yet of judges' authority to rein in the government's actions. U.S.
District Judge Paula Zinnis had previously ordered the government to facilitate the return of Kilmar Abrego-Garcia, with the Supreme Court upholding her authority to issue the order.
But at a hearing yesterday, the judge said that nothing has been done to get Abrego Garcia back, leading her to trigger an expedited discovery process requiring the administration to produce documents and have officials sit for questioning.
While lawyers for Abrego Garcia have asked Zinnis to consider holding federal agencies and officials in contempt, legal experts say the judge is already risking a constitutional showdown without clear ability to compel the administration's compliance. The Justice Department has said the courts lack the authority to interfere in U.S.
foreign affairs, and leaders of neither country have signaled interest in cooperating. Switching gears to trade, the journals Gavin Bade and Brian Schwartz exclusively report that the U.S. plans to use reciprocal tariff negotiations with more than 70 countries to ask them to help isolate China in exchange for concessions on tariff rates.
We report the strategy is being driven by Treasury Secretary Scott Besant and the U.S. officials' plan to ask foreign capitals to disallow China to ship goods through their countries, stop Chinese firms from setting up in their territories, and not absorb cheap Chinese industrial goods. I asked the Journal's Southeast Asia Bureau Chief Gabrielle Steinhauser how that approach is likely to go over.
For a country like Vietnam, this is an almost impossible ask, right? A lot of countries have staked out this sort of in-between position and picking one side over the other puts them in a very precarious spot. Vietnam has fought a border war with China, has disputes with China around the South China Sea.
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Chapter 2: How is the U.S. trying to isolate China through tariffs?
seemed to acknowledge that because of the inroads China had made around the world, it was going to be difficult to force a choice of it's either us or them. And yet Trump himself yesterday said he's considering pushing countries to make that very choice.
For a lot of countries, that is a choice that they will be incredibly reluctant to make because they need China for one thing and they need the US for another thing. It doesn't seem like the administration has entirely decided how they will use the talks with individual countries to somehow isolate China.
One option would be to demand that these countries sort of mirror the sky-high tariffs that the US has slapped on China for themselves. But that's a politically risky move for a lot of these countries that are not in a position like the US where they can afford to make China their enemy.
But it's also an economically very risky choice because they are dependent on Chinese inputs to make whatever they're exporting to the US. And to unwind that somehow is going to be incredibly difficult. And it's not entirely clear that these alternatives really exist for these countries.
Chapter 3: What are the implications for countries like Vietnam?
That was the journal's Gabrielle Steinhauser. The White House and Treasury Department didn't respond to requests for comment. And speaking of China, official data shows its economy got a first-quarter boost thanks to a rush of exports ahead of U.S. tariffs, expanding 5.4 percent compared to the same period a year earlier.
Though that could be the best news for a while, as economists expect Chinese growth to fall to 4 percent or less this year, its slowest expansion in decades outside of the pandemic years. There are already signs tariffs are beginning to drag China's economy. Chinese wholesalers say U.S. orders have dried up.
The country's Ministry of Transport reports container traffic at Chinese ports fell 6 percent last week from the previous seven days. And an index of freight rates for shipping goods to the U.S. West Coast has dropped by some 18 percent. Coming up, Nvidia sales take a hit on new AI chip restrictions on China and will unpack the impact of tariffs on the U.S. energy sector.
Those stories and more after the break.
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Chapter 4: What challenges do countries face in choosing between the U.S. and China?
Global oil markets are being roiled by tariffs, so declared the International Energy Agency in a report this week that shed light on how trade tensions and recession fears are rippling through energy markets. And here to plumb the depths of the IEA's findings, including what could be in store for American energy producers and consumers, is journal reporter Benoit Morin. Benoit,
What has been going on with energy markets in the last few weeks? I will admit here on the show, we've talked a lot about equities, how they've been affected, particularly the tech sector. We've talked about bond yields, about the dollar, but gas prices, global energy demand, not as much. What's been going on?
Yeah, well, crude prices have been in for a tough ride since Trump's Rose Garden announcement about two weeks ago, where he unveiled all those tariffs against a number of countries in the world. You've seen U.S. oil prices drop by about 10% since this announcement. This drop also applies to global crude prices. So everyone's very carefully looking at growth demand for oil this year.
got it and that lower demand for oil is very much a part of this most recent report from the iea that's right it's a pretty gnarly situation for a number of oil and gas producers especially here in the us because they're finding themselves squeezed between opec
which is this oil producing cartel that has decided to unwind production cuts starting next month, which has been surprising to a number of observers of the market because those increases are going to be much more substantial than people expected. And then at the same time, you're seeing the potential for some sort of global slowdown, which would impact oil.
demand for their product so you'd have weakening demand for oil at the same time that you're seeing an oversupply market which is sort of the worst case scenario for oil and gas producers it's pretty good for gasoline consumers however right because you're likely to see lower gasoline prices which of course was a core promise of president trump on the campaign trail
Going back to producers, especially those in the U.S., as I know you've written with our colleague Colin Eaton, they have got another challenge now in the form of tariffs.
Companies in the U.S. need a certain price at which they can do a number of things. They can return cash to shareholders. They can service debt. And then they can make a small profit, ideally. But even if they just want to break even, they would need U.S. oil prices at a level of above $62 a barrel. Right now we're about $61.
a tough position for those companies to be in if they want to keep adding oil and keep growing this year. U.S. shale had been slowing down already and producers were anticipating that this curve was going to come down maybe starting next year or the year after that. That's a function of aging oil fields.
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Chapter 5: How are tariffs affecting China's economy?
But now that oil prices are projected to be fairly lowish for the remainder of the year and potentially into next, this is not incentivizing companies to be adding production, especially when you look at the impact of steel tariffs, right? About 25%, that's an added cost on your bringing wells online because you're using a lot of steel, right?
And plus everything's more expensive, and that includes labor.
So low prices, a disincentive to drill more, higher production costs would have the same effect. Then there's the question of markets and market access, which is very much in flux as global trade is upended.
Absolutely. The U.S. is an energy superpower. It exports a lot of its products, whether it be natural gas, liquefied natural gas, or crude or petroleum products. That includes a number of products that are derived from oil and gas, a lot of those products go to China, for instance, which is a big employer of certain products like ethane that is used to make plastics, propane, butane.
Chapter 6: What is the impact of tariffs on the U.S. energy sector?
And it's a global market. And so it's likely that those barrels that would have gone to China will find other buyers. That being said, there are specificities to the Chinese market, which make it a very good one for certain US products. And then you have this fragmenting of the global trade, which is just going to make it a little trickier to find those alternative buyers overall, right?
In addition to inducing this potential slowdown globally as economies find themselves dealing with all this uncertainty.
I've been speaking to Wall Street Journal energy reporter Benoit Morin in Houston. Benoit, thank you so much for bringing us this update. Thank you for having me. In markets news today, shares of NVIDIA fell more than 6 percent in off-hours trading after the chipmaker said it would take a $5.5 billion hit on its quarterly earnings, as it disclosed that the U.S.
will now require a license for exporting the company's H2O processors to China and other countries. According to a company filing, the government informed NVIDIA on Monday that the new requirement would be in place indefinitely. The H20 chips have far less processing power than NVIDIA's top-of-the-line processors and were designed to enable sales of AI chips to China to comply with U.S.
export controls. Transportation bellwether J.B. Hunt, the first U.S. freight operator to report earnings this quarter, has logged lower first-quarter profit and revenue as the sector continues to struggle with weak demand and excess capacity.
The trucking company said import volumes picked up at the beginning of the year as firms rushed in inventory to get ahead of tariffs, but that activity has since slowed as retailers reduce new orders as they await clarity on duties. And on deck today, U.S. retail sales figures for March are due at 8.30 a.m. Eastern, with Fed Chair Jerome Powell set to discuss the economic outlook at 1.30 p.m.
And the Bank of Canada is set to make its latest interest rate decision after seven consecutive cuts since last June. Economists narrowly forecast that it will leave its benchmark rate unchanged after wrestling down inflation, though several said U.S. trade policy moves require another cut. And that's it for What's News for this Wednesday morning. Today's show was produced by Kate Bullivan.
Our supervising producer was Daniel Bach. And I'm Luke Vargas for The Wall Street Journal. We will be back tonight with a new show. Until then, thanks for listening.
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