What Trump’s Tariff Plans Mean for World Trade
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Republicans chip away at Democrats' early voting advantage, plus how Donald Trump could rewire global trade relations. We're looking at a world where U.S. tariffs are possibly the highest since World War II. And if other countries retaliate, as many likely will, you could see a move away from open trade unlike anything we've seen in the modern era. And Cuba's president warns against protests and looting as massive blackouts drag on. It

It's Tuesday, October 22nd. 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. More than 15 million Americans have now voted early in person or by mail, according to the University of Florida's Election Lab.

While key states like Michigan and Georgia don't include party registration in their data, figures from states that do show that Democrats account for 49 percent of returned mail-in ballots compared with 31 percent for GOP voters. That is a narrower margin between the two parties than four years ago, suggesting that Republicans have begun to eat into Democrats' early voting advantage.

While Donald Trump had taken blame within the GOP for hurting early voting efforts with claims of fraud, he's more recently begun urging supporters to cast ballots before Election Day, saying it would free up resources to target others. Kamala Harris, meanwhile, has publicly touted big overall early voting numbers in states like Georgia and North Carolina and urged more people to join in.

Millions of Cubans remain without power as the government struggles to restore nationwide electricity service after a massive blackout plunged the island nation into darkness on Friday. With food spoiling and cooking gas scarce, some people in the capital Havana have resorted to cooking with coal and firewood on streets and sidewalks, while fuel shortages have severely affected public transit.

Restaurant worker Yeniset Del Valle said that businesses are just trying to hang on. We need power to come back because we are at a point of desperation. As a tourism worker, I am having a hard time. Food is rotting, drinks are hot and we cannot provide a service because it is almost impossible.

The Cuban government has blamed U.S. sanctions for its inability to secure fuel and spare parts for its grid, with the country's energy minister saying that its newest power generation units are at least 35 years old. Officials have responded to the blackout by declaring a state of emergency, and President Miguel Diaz-Canal has warned that looting and protests won't be tolerated.

HSBC, Europe's largest bank by market value, has announced plans to overhaul its structure as its new CEO looks for ways to cut costs. In an exchange filing today, HSBC said it would split off its Hong Kong and UK businesses into individual units while merging its commercial and institutional business outside of those regions. The changes are meant to simplify the bank's operations and reduce duplications.

Even after years of shedding businesses around the world, including its U.S. retail network, HSBC remains one of the world's largest and most complex lenders.

San Francisco Fed President Mary Daly has told the Journal that she sees no reason to pause interest rate cuts despite a recent run of strong economic data. Is policy still tight? And in my judgment, it absolutely is. If you looked at the real rate of interest against historical heights, this is a very tight interest rate for an economy that already is on the path to 2% inflation. And I don't want to see the labor market slow further. Journal.

Journal subscribers can watch more interviews with leaders and newsmakers at the WSJ's TechLive conference by visiting WSJ.com. And in other things we're watching in markets today, shares in Cheesecake Factory are up in off-hours trading following exclusive journal reporting that activist investor JCP Investment Management is pushing the restaurant operator to spin off three of its smaller brands into a separate public company.

A spokesperson said the company is aware of JCP's investment, a roughly 2% stake, and regularly engages with shareholders. Also rising today, shares of Swedish defense company Saab. That's after the company predicted full-year sales at the upper end of its guidance range on strong global defense spending, especially for its ground combat weapons and missile systems.

And it's shaping up to be a busy earnings day, with results due from defense companies RTX and Lockheed Martin, as well as Verizon and major U.S. manufacturers, including GE Aerospace, 3M, and General Motors. Coming up, how a second Trump presidency could remake global trade, and how chaos packaging is taking the world of consumer products by storm. Those stories after the break.

People are the lifeblood of every organization, but they're also the greatest source of risk. That's why Mimecast has pioneered the connected human risk management platform to help your business protect collaboration, educate employees, and detect insider risk. Learn more at mimecast.com.

We've spoken here before about Donald Trump's proposals to enact across-the-board tariffs on goods imported to the U.S., on Chinese goods in particular, as well as certain products from countries like Mexico. We've also reported on economists' forecasts about the effect of those policies on things like inflation. But bigger picture, if elected, how could Trump's proposals rewire global trade relations? ♪

It's a question the journal's chief economics commentator, Greg Ip, has been ruminating on. And he joins me now from Washington, D.C. Greg, let me lead things off with a caveat, one practically in bold font in your recent column. Quote, in short, no one knows what Trump has in mind. End quote. Can we agree that with that out of the way, we can engage in some considerate speculation then about the effect his policies could have? What stands out to you the most?

It's definitely the case that Trump basically is never quite precise or consistent exactly what he plans, except for the following. He will impose higher tariffs, whether those tariffs will be 10 percent, 20 percent, 100 percent, whether they'll be on everybody, China, Mexico, whether there will be reciprocity for trade allies that don't impose tariffs or not. All of that's up for discussion. But I think at the end of this process, we're looking at

a world where U.S. tariffs are much higher than they have historically been, possibly the highest since World War II. And if other countries retaliate, as many likely will, you could see a move away from open trade unlike anything we've seen in the modern era. Greg, there's another big question you pose in your column, which is how much, if at all, might Trump be willing to dial down tariffs in return for concessions?

Do we have a better sense years after he first started talking about some of these things, whether he ultimately sees tariffs as an end in and of themselves or just a means to something else? Well, in his first term, he talked a lot about tariffs, but ultimately the primary use of tariffs was to get trading partners to renegotiate their terms of commerce with the United States. So, for example, he imposed tariffs on steel and aluminum from a lot of our allies, which

And one of the consequences was the North American Free Trade Agreement with Canada and Mexico was renegotiated. That became the U.S.-Mexico-Canada agreement. In the case of China, for example, tariffs were used to negotiate a so-called Phase I trade deal under which China would purchase various products from the United States.

But when you hear Trump say that tariffs are wonderful and they're going to raise all this revenue to help cut other taxes, it leaves a strong impression that he expects higher tariffs to be a permanent state of affairs issue.

and that we should therefore get used to the idea that they will not simply be a negotiating strategy. As you noted a moment ago, how Trump and the Trump camp view protectionism is only one factor because the rest of the world can retaliate. What is the landscape there, especially given that to many leaders, Trump is kind of a known entity and even someone that for some of them they've dealt with before? One of the big question marks is exactly that. Will other countries retaliate?

The European Union, for example, doesn't want to let the United States think that it's costless for them to hit Europe with tariffs.

On the other hand, there are other considerations at work as well, one of which is that the world is a more dangerous place than it was eight years ago. Russia has invaded Ukraine. China is becoming more belligerent towards its neighbors. And no U.S. ally wants to fully alienate the United States. There's already concern that Trump would be less committed to its military alliances than previous presidents. And that's another factor here as well. A lot of the frustration that the United States has with China in particular is

is shared by its allies. And it's possible that the system where the U.S. and its allies provide preferred trading terms with each other, but not against China, might be the logical outcome of this new round of trade tension.

Because after all, the United States is not alone in finding China a difficult player to deal with. And finally, Greg, we've dedicated much of our focus here to Donald Trump. But as we heard in his debate with Kamala Harris on trade matters, in particular, the daylight between these two isn't nearly as wide as it is on other issues. You note in your column that if elected, it's not as if she's going to send trade relations back to kind of where they were in the late 1990s.

That's right. Kamala Harris is not a big fan of free trade agreements. Neither was President Joe Biden. Odds are that the trade system we will get under President Harris will look much like what we have now, not much change. If a President Trump were to impose these high tariffs,

We could have them for a very long time, even if a future president thought they were a mistake. Look at the tariffs on China. Even though some people in the Biden administration wanted to roll a few back as a way of fighting inflation, that never happened. Greg Ip is The Wall Street Journal's chief economics commentator. Greg, always a pleasure. Thank you so much. Thanks for having me.

And finally, there's a name for ice cream tubs full of tampons, sunscreen that's sold in whipped cream cans, and gin that comes in motor oil containers. It's called chaos packaging and refers to basically any item that's packaged intentionally in the wrong container. Journal reporter Katie Dayton says that with advertising and marketing costs going up, many companies are flexing their creative muscles to catch consumers' attention.

So just by making your packaging kind of weird and eye-catching is something that these companies reckon will get them some sales on the shop floor as well as on places like Instagram and TikTok where consumers might post about them.

In a few instances, it really does look like it's working. Liquid Death, which is just water packaged in beer cans, it's done immensely well. It's had a huge amount of fundraising. The question is how much of this will consumers put up with? Because if you have to go to the shop and have to establish what the thing on the shelf is for every single item, I think people will not be too happy with that.

And that's it for What's News for Tuesday morning. Additional sound in this episode was from Reuters. Today's show was produced by Kate Bullivant and Daniel Bach with supervising producer Christina Rocca. And I'm Luke Vargas for The Wall Street Journal. We will be back tonight with a new show. Until then, thanks for listening and make sure to double check what exactly it is you're picking up at the grocery store.

People are the lifeblood of every organization, but they're also the greatest source of risk. That's why Mimecast has pioneered the connected human risk management platform to help your business protect collaboration, educate employees, and detect insider risk. Learn more at mimecast.com.