Judge Orders U.S. to Pay Back $130 Billion of Tariffs

0:00Austin Ramzy:Instagram teen accounts default teens into automatic protections for who can contact them and the content they can see. Explore teen accounts and all of our ongoing work to protect teens online at Instagram dot com slash teen accounts.

0:17Max Colchester:China cuts its economic growth forecast as it preps for an era of slower expansion. Plus, Europe ups its support for the U.S. war on Iran. and a trade court judge tells the Trump administration to pay back billions in tariffs.

0:32Luke Vargas:The Supreme Court ruling and then this refund ruling both creates a certain idea that there's a limit to how the administration can use these tariffs at will to penalize countries from one day to the next.

0:44Max Colchester:It's Thursday, March 5th. 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.

1:01Max Colchester:China has cut its annual economic growth target to a range of 4.5 % to 5%, its lowest expansion goal since 1991. The details were released during China's biggest political gathering, known as the Two Sessions, and kicks off the next five-year plan for the world's second-largest economy. Economics reporter Hannah Miao told us that Beijing is aiming to reshape its economy as it grapples with challenges both at home and abroad.

1:26Austin Ramzy:Households are fairly cautious to spend. Investment has slowed down and the real estate market is still very much struggling. And last year, China had set a growth target of around 5 percent. And it was really achieved in large part through exports. And that has become an area of increased tension with trading partners. The IMF has suggested that China should try to move away from relying on exports because it creates all these tensions around this global trade imbalance.

2:01Max Colchester:And while less reliance on exports might be welcome news for countries frustrated by the dominance of Chinese products, Hannah told us that the new growth targets include a growing focus on key technologies.

2:12Austin Ramzy:While the lower growth target does take some of that pressure off to really continue juicing GDP growth, policymakers are really doubling down on these goals of upgrading their industrial system and being technologically self-reliant. So in terms of this competition between the U.S. and China in key cutting edge technologies, China is really not letting up on that front.

2:39Max Colchester:The five-year plan also revealed a 4 % target for the fiscal deficit, suggesting China won't be stepping up its stimulus for the beleaguered property sector. The Trump administration is on the hook for more than$130 billion in tariff refunds. That was yesterday's ruling from a federal trade court judge who grew impatient when a Justice Department lawyer said that the government hadn't formalized its position on refunding tariffs and that issuing refunds would be time-consuming. The ruling comes as more than 2 ,000 companies have filed lawsuits seeking to recoup their money, including Costco and FedEx.

3:14Max Colchester:I asked journal global economics correspondent Tom Fairless how businesses are responding to the verdict.

3:19Luke Vargas:So firstly, it's a relief and there's enormous interest in claiming back these refunds. German manufacturers were immediately facing questions from customers about how to get these, how quickly they would get these refunds. But there's also continued uncertainty around how to claim it back, who gets the money, how much it will cost, how long it will take. There's lots of new layers of uncertainty.

3:45Max Colchester:While refunds could boost some companies' bottom lines and provide some much-needed certainty, Tom said that new tariffs put in place just last month are causing more damage.

3:54Luke Vargas:Businesses tell me they could live with a 10 % tariff, even a 20 % tariff, if they knew what it was. But it's the not knowing, the not being able to plan that is really poison for investment and for just making decisions on future markets and future investments.

4:10Max Colchester:The Trump administration is expected to appeal the order to prevent it from taking effect immediately. Morgan Stanley is laying off 2 ,500 employees or around 3 % of its global workforce. We report that many of the cuts took place yesterday and are affecting all of the bank's major divisions, investment banking and trading, wealth management and investment management. Morgan Stanley and its Wall Street peers are coming off one of their strongest years on record as trading desks navigated volatility, the wealthy continued to spend, and big companies struck more deals. Well, speaking of deals, we've got a special bonus episode coming later today.

4:47Max Colchester:It's the latest What's News in Earnings, where we'll be looking at the merger drama that dominated the media industry this earnings season. Look for that at midday in your What's News feed. Coming up, we've got the rest of the day's news, including a look at how the U.S. and Iran's allies are or aren't joining the war. That and more after the break.

5:09Austin Ramzy:Hi, I'm Christopher Mims. And I'm Tim Higgins. We're the hosts of the Wall Street Journal's Bold Names podcast. On our show, we bring the bold name companies featured in the pages of the Wall Street Journal to life through real conversations with the people that lead them. If you're looking for more news and insights that bring you inside the C-suite, consider becoming a subscriber to The Wall Street Journal. Visit subscribe.wsj.com slash bold names to subscribe now.

5:53Max Colchester:The conflict in the Middle East is expanding yet again this morning after Iranian drones landed in Azerbaijan, the latest evidence of Tehran's regional escalation strategy designed to maximize economic disruption. Israel imports a significant amount of crude oil from Azerbaijan. Well, Iran's target list may be lengthening, but the U.S. military claims that its adversary's military response may be faltering. U.S. Central Command says that Iran's missile launches have dropped by 86 percent in four days, while drone launches decreased by 73 percent, a possible result of U.S. and Israeli strikes on launch sites and manufacturing facilities.

6:32Max Colchester:Still, a Western official cautioned that Iran could still attack with cheaper systems such as drones. The House is set to vote today on a War Powers resolution seeking to limit President Trump's ability to attack Iran without congressional approval. The Senate blocked a similar effort yesterday. And while the votes are largely symbolic, given that they would require supermajorities in both chambers to override a likely Trump veto, reporter Anvi Bhutani said there are some simmering debates playing out on Capitol Hill.

7:01Austin Ramzy:While President Trump has said that America is at war, many Republican lawmakers have strayed away from the term war or have had contention around the use of the term war. Lawmakers have also made comparisons to the U.S.'s poorly run ground wars in the Middle East. After some intelligence briefings earlier this week, most lawmakers still had further questions around the scale and scope of the operation, as well as the timeline as to how long the U.S. would stay committed in operations involving Iran.

7:34Max Colchester:Well, despite a lack of congressional backing for the war, a seeming coalition of America's European allies is taking shape, contributing planes, ships, and air defenses, or opening up their bases to be used by the U.S. Meanwhile, the major player in Iran's corner, China, is offering little more than rhetorical support to Tehran. To discuss these dynamics, I'm joined now by journal correspondent Max Colchester in London and reporter Austin Ramsey in Hong Kong. Max, let me start with you. And to To get a sense of where America's allies are standing in this conflict, I actually want to play a clip.

8:08Max Colchester:This is of the NATO Secretary General Mark Rutte yesterday appearing on Newsmax's The Record with Greta van Sustern, where he said the following.

8:17Luke Vargas:NATO is not involved, but obviously allies are basically in a massive scale are supportive of what the president is doing and are also enabling what the U.S. is doing now in the region.

8:31Max Colchester:Max, is that representative of where most European countries in particular stand on this conflict?

8:37Luke Vargas:Well, we've seen an evolution really in the last week in their stance. No European country was involved in the initial strikes on Iran. However, as Iran hit back, launching drones and missiles seemingly indiscriminately across the Gulf, European allies have been forced to respond. and what we're seeing now is they are providing air defenses to Gulf partners and they are trying to intercept and stop the drones and missiles headed towards allies or in some cases their own bases. The Brits are sending a destroyer to Cyprus to try and protect their base there which has come under attack from Iranian drones.

9:17Luke Vargas:The French are also deploying an aircraft carrier to the Mediterranean to try and defend Cyprus and regional allies. The Italians are sending air defence to the Gulf. And there's even talk of Ukrainians going into the Gulf to try and help train people there to better take down drones. So there's an effort going on to try and bolster defences in the region. And they're also allowing the US in some cases to use their airfields to launch strikes on Iran to try and take out the missile launchers that are firing these projectiles at them.

9:50Max Colchester:And yet, Max, there have been a number of countries in Europe that are opposed to what the U.S. is doing, though many of them, with at least one notable exception, are staying relatively quiet about it.

9:59Luke Vargas:Yes, and that notable exception is Spain. We saw the Spanish Prime Minister Pedro Sanchez come out and heavily criticize the war. Trump has responded, threatening that the U.S. would cut all trade with Spain. And the Spanish government don't appear to have backed down. They say that they still don't want the US to use any of its bases to launch attacks on Iran. And to quote Pedro Sanchez directly, he's called the war a disaster. And I think this is quite a bold move. And it's seen as a bold move in Europe because Europe is very beholden to the US for its own defense.

10:33Max Colchester:Austin, I think that's a good point to bring China into the discussion now. Its diplomats have also been denouncing US actions. And we did hear this morning that China's foreign minister is sending a special envoy to the Middle East to try and mediate the conflict. And yet, in terms of offering any material support here to a Chinese ally, Iran, there's not much to speak of. That's right.

10:52Tom Fairless:The Chinese have criticized the war on several levels. They've criticized the fact that it was launched as negotiations were still taking place. They criticized the attacks that killed much of the Iranian leadership. But yes, at the same time, China has not done much more than provide rhetorical support for Tehran. They're in a somewhat difficult position. China's very reliant on oil imports, and it buys most of Iran's oil. At the same time, it also buys a lot of oil from other countries in the region. And so they can't be too forceful on Iran's side without alienating other countries in the region that have been attacked by Iran in recent days.

11:35Tom Fairless:So China, while overtly is very critical, privately, I think they're very flexible and they are waiting to see what happens, waiting to see who ends up running the country after the fighting stops.

11:48Max Colchester:So China sitting out this fight, at least, and yet you report they are benefiting in some ways from being able to sit back and observe how the U.S. presses a military campaign, a very modern one, right, with all of its highest end equipment being pulled out into the field. opposition research, so to speak, that could be useful for China in the future.

12:06Tom Fairless:That's right. There are benefits to China in this war. They get to see how the U.S. presses this campaign, what the U.S. is bringing to the fight against Iran, and they will take note of that. The U.S. is also, as we've reported, using an incredible amount of munitions, the sort of munitions that would be important for a fight with China in the Pacific over, say, Taiwan. And so it puts the U.S. on the back foot for a period, perhaps years, to rebuild that arsenal. So that's something that will go into any Chinese calculation over what they might do with regards to Taiwan in the future.

12:40Max Colchester:I've been speaking to Wall Street Journal reporter Austin Ramsey in Hong Kong and correspondent Max Colchester in London. Austin, Max, thank you both so much. Thank you, Luke. Thank you, Luke. And while Europe and the U.S. may be finding some alignment now over the war in Iran, France is adopting a more combative tone on other fronts. The country's bureaucrats are quite literally ditching the language of diplomacy and have set up an account on X that posts English-language takedowns. Reporter Sam Schechner in Paris says that the government account is called French Response and aims to combat online trolls and misinformation one meme at a time.

13:18Max Colchester:French response was targeting most of its trolling at Russia, which has long been an antagonist of France, especially in the Internet sphere. And traditionally, they would fight back with a communique or explain that this or that thing is wrong. And France's foreign minister, Jean-Noël Barreau, had the idea that really they should be fighting back, you know, fight fire with fire. Responding to a critical post on X with a press release is sort of like showing up to drinks with your friends in a tuxedo. And so they decided to match the tone. Some of the ones that made me chuckle were after Trump's declarations that he wanted the U.S.

13:56Max Colchester:to take possession of Greenland. There was a tweet that said, breaking Statue of Liberty reported spotting swimming back across the Atlantic, said she, quote, preferred the original terms and conditions. Well, here are what's news version of rapid response. Leave us a five star review on Apple podcasts. I'm kidding. Am I? And that's it for What's News for this Thursday morning. Today's show was produced by Hattie Moyer and Daniel Bach. Our supervising producer is Sandra Killhoff. And I'm Luke Vargas for The Wall Street Journal. We will be back tonight with a new show. Until then, thanks for listening.

14:57Austin Ramzy:We'll be right back. That you can use to help navigate the markets, consider becoming a subscriber to The Wall Street Journal. Visit subscribe.wsj.com slash take on the week to subscribe now.