Trump Threatens New Japan Tariffs as Trade Tensions Resurface
13:46 Share

This episode is brought to you by Charles Schwab. Decisions made in Washington can affect your portfolio every day. Washington Wise from Charles Schwab is an original podcast that unpacks the stories making news there. Listen at schwab.com slash Washington Wise.

Senators debate through the night in a marathon effort to pass their mega bill. Plus, President Trump threatens higher tariffs on Japan as trade negotiations stall. And California dismantles a landmark environmental law to tackle its housing crisis.

This single law has really been the biggest impediment to really building enough housing to match what California needs. And now it's basically been gutted and it's going to be a holy ballgame. It's Tuesday, July 1st. 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.

The sun has risen in Washington, D.C., with members of the Senate continuing to debate amendments to President Trump's tax and spending package. Republicans like South Carolina's Lindsey Graham see the bill as necessary to prevent a damaging tax increase, while Democrats like Arizona's Mark Kelly have sought to highlight the law's tax cuts for top earners and reductions to social safety net programs. Y'all will never do anything to make sure taxes go down.

So we're going to make sure they go down forever. Current policy is good tax policy. Stick with the bill we wrote. Giving a tax break to the richest people and most profitable corporations is a choice. And paying for it

by kicking 17 million Americans off their health insurance is a choice. Though voting began mid-morning yesterday, the bill is still said to be in flux as GOP leaders try to win the backing of Alaska Senator Lisa Murkowski, who is seeking to shield her state from Medicaid and nutrition assistance cuts and to slow the phase-out of clean energy tax credits.

If she can't be moved and is joined by two other GOP opponents of the legislation, Republicans may be forced to shrink or eliminate the bill's debt limit increase. While the White House has said it's confident the bill is on track, it is facing increasingly vocal opposition from the president's one-time ally, Elon Musk, who posted on X that he would fight to unseat lawmakers who campaigned on reducing spending only to vote for a debt increase.

Even if the Senate passes the bill in the coming hours, the Journal's Jasmine Lee says its fate in the House is uncertain, with Speaker Mike Johnson warning that any Senate changes to the law could upset his chamber's more rowdy and populist conference of members.

The House also has its moderate Republicans who are concerned about things like Medicaid, clean energy. And then there's the House Freedom Caucus. That's a group of fiscal hawks. They're very vocally opposed to spending more. So we could see a similar dynamic play out in the next few days. And if the House makes changes, they would have to send the bill back to the Senate.

Trade tensions are back in the headlines this week, with President Trump threatening Japan with new tariffs just days ahead of his July 9th deadline to strike deals with a raft of countries. That's a deadline motivating trade diplomacy around the world, with the EU's chief trade negotiator heading to Washington today to try to stave off Trump's threatened 50 percent tariffs on the bloc. With more, I'm joined by Journal Asia business and economics editor Peter Landers.

Peter, Japan had originally been touted as one of the first trade deals that we'd see in this administration. And yet here we are with a deal seeming like it might be far away yet. Yes, they're in trouble, Japan and the U.S. President Trump has said he admires Japan, but he has repeatedly criticized their trade policies on social media, saying the Japanese market is not fully open to American rice. It's not open to American cars, while Japan exports hundreds of thousands of cars to the United States.

So he's suggesting maybe there won't be a deal and Japan would have to put up with 25% tariffs on its cars and other tariffs on a perhaps semi-permanent basis. And what are we hearing from Japan about what's to come? Japan has a national election coming up on July 20th. And so it's politically delicate for the prime minister, Shigeru Ishiba, not to

not to make too many concessions. He has to walk a line there. Obviously, the U.S. is Japan's most important ally and most important trading partner alongside China, so he can't just reject out of hand some of Trump's demands. On the other hand, if he accepts, for example, long-lasting tariffs on Japanese cars,

or a broad tariff on all Japanese goods, he might be perceived as having given in too much and not having defended Japan's interests sufficiently. So I would say more than expected, Japan is taking a hard line and demanding that the U.S.,

pull back on some of its tariffs, and Trump is holding firm. That's why we're in a stalemate. All right. So what is the likelihood of a deal here? Yesterday, Treasury Secretary Scott Besant said they're still working on some deals, but that other countries may end up needing to face higher tariffs if they can't get agreements in place in time.

I think it's a close call. And there's obviously a lot of gamesmanship in these types of negotiations when a deadline is approaching. That's true in any type of negotiation. In that sense, nothing unusual. And it's to be expected that President Trump and Treasury Secretary Besant would warn countries of what they might face if they don't make concessions that the U.S. is seeking. But I think there is an additional uncertainty is whether Trump really wants to lift the

the 25% tariffs in particular on cars that affect Japan, South Korea, and the European Union. Sometimes the president suggests it's just a negotiating tool to get concessions. Other times he feels it seems that these tariffs are a good thing that he wants to maintain if possible and encourage those car makers from places like Japan and Europe to expand their production in the U.S.

Peter, 25% tariffs on autos, a significant concern, I would imagine, for major exporting countries like Japan and South Korea. And yet we've seen some new data lately suggesting maybe things aren't quite as bad as we originally thought. That's right. South Korean exports were actually up a little bit in the most recent month. And if there is to be a trade war, I think the worst of it would come after July 9th if President Trump reintroduces some of the tariffs that he suspended back in April.

I would say the impact on the global economy has been less than feared, and there are some positive signs in China, South Korea, Japan, and many other countries. However, if the tariffs are reinstituted on July 9th, then, for example, a country like Japan would be paying around 25% tariffs on all of its exports, and in particular cars, which are already paying 25%, if that became more permanent,

then I think you could see a more significant impact on global economies. Peter Landers is the journal's Asia business finance and economics editor. Peter, thank you so much, as always. Sure thing. Coming up, California dismantles an environmental protection law in a bid to tackle the country's worst housing shortage. And we'll find out if a chatbot can offer better career advice than a human. Those stories and more after the break.

Lawmakers in California have voted to roll back one of the country's strongest environmental laws in a bid to kickstart new housing projects.

Journal West Coast correspondent Jim Carlton says Governor Gavin Newsom blamed the previous law for blocking development and reducing affordability. There's been the California Environmental Quality Act in effect here since 1970, and it's really been the bane of development. Activists have used it really to block development for decades, and it's really created a housing crisis the likes of which we haven't really seen in the United States before.

California is the least affordable state in the United States. Nine of the 10 most unaffordable cities in the country are in California. And so as a result, a lot of people are leaving California. It's hurt the state's economy. And now it's going to be interesting to see. They're talking about like an unprecedented wave of housing development can be coming now. According to Newsom, abuses of the law had spread so widely that opponents had used it to block some bicycle lane expansions in San Francisco.

Environmentalists have warned that developers will now go unchecked.

Back in Washington, President Trump has signed a presidential memorandum restoring hardline U.S. policy toward Cuba, reversing efforts by President Biden to relax some restrictions on the communist-run island. The move reinforces the Trump administration's stance that Cuba is a U.S. national security concern, bringing back a statutory ban on tourism and doubling down on a decades-old economic embargo.

It comes as Cuba is mired in its deepest economic crisis since the 1990s, plagued by 18-hour blackouts and acute food and fuel shortages. Meanwhile, Canada has shipped its inaugural cargo of liquefied natural gas to Asia from the country's large-scale LNG export facility in British Columbia.

LNG Canada is a joint venture led by Shell's Canada affiliate and includes Malaysia's Petronas, Chinese oil major PetroChina, Japan's Mitsubishi, and South Korean utility Korea Gas. According to consultancy Wood Mackenzie, LNG is set to be the primary gas source in Southeast Asia by 2034 amid a regional shift toward greener energy sources.

And finally, could an AI chatbot provide better career advice than a human coach? That is what journal tech contributor Alexandra Samuel set out to discover by creating her own custom AI assistant called Viv. I started by spending quite

Spending quite a bit of time with AI, thinking about different kinds of coaching processes that I've participated in in the past, when I shared all of that with an AI, I was able to kind of come up with a set of principles for how I like to work with a

coach. And I was able to create essentially an instruction for the AI. And I was able to use that as the basis for a description of, hey, coach, here's who you are. Here are the methodologies you draw on. Here are the strategists who you're inspired by. And here's how you're going to work with Alex. Based on her many hours interacting with Viv, Alex says that the best part of using an AI coach is that it holds her accountable without the judgment you might expect from a coach in real life.

I spent a few sessions with the AI coming up with a list of 17 questions. We would role play in a different tone every week. The AI assumed the persona of a venture capitalist that was considering whether to invest in me. And in another, it was like a time traveler from 25 years in the future asking me to explain the business environment of the current moment.

And what I found when I took on those questions in a particular imaginary context and just had to answer them, and there was nothing at stake because nobody's listening, I actually had a lot more answers than I realized. And my answers were in a lot of ways more ambitious than anything I had ever admitted to another person and maybe even in some cases to myself. And you can read much more about Alex's experience via the link in our show notes.

And that's it for What's News for this Tuesday morning. Today's show was produced by Daniel Bach. Our supervising producer was 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.