The Final U.S.-Russia Nuclear Weapons Pact Expires

0:00David Uberti:This is a new era of American innovation. Using Google AI, Etsy is making it easier for shoppers to discover unique creations and helping sellers connect with the people who love their work. Learn more at g.co slash American innovation.

0:17Luke Vargas:The end of an era as the U.S. and Russia's final nuclear weapons pact expires. Plus, a Democratic push to curb ISIS powers and fund DHS meets stiff Republican opposition in Congress. And why Washington's best efforts are failing to stop the decline of American manufacturing.

0:35David Uberti:Something like 200 ,000 manufacturing jobs have disappeared across the country since 2023. And since President Trump unveiled his so-called Liberation Day tariffs last April, there have been eight straight months of job declines in the manufacturing sector.

0:51Luke Vargas:It's Thursday, February 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. The last treaty controlling nuclear weapons between the U.S. and Russia has expired, raising fears of a new arms race.

1:11Michael Gordon:This is a very significant milestone. Since the early 1970s, there has been one sort of strategic arms treaty or another, which has constrained the Russian and American long-range nuclear arsenals.

1:26Luke Vargas:That's Journal National Security correspondent Michael Gordon. He says that the new Strategic Arms Reduction Treaty, or New Start, ended overnight because the Trump administration never responded to Russia's proposal to replace it.

1:38Michael Gordon:The agreement can't legally be extended again, but the issue on the table is a Russian proposal to informally observe the ceilings in the treaty on warheads and missiles and bombers as a kind of a holding action for a year, pending a decision on where to go next. But over the last few months, President Trump's been on both sides of the issue. He initially said that he was concerned about not having any limits on nuclear weapons, and he thought Putin's proposal was a good idea. More recently, the administration has signaled that they'll address this issue on their own timeline. So that's created a lot of uncertainty, at least among strategic weapons experts, not only about what the future would hold, but about what the Trump administration has in mind, because there hasn't been a vision laid out so far in his second term.

2:28Luke Vargas:The expiration of New START marks an end to the arms control that helped to bring an end to the Cold War. The treaty had capped the number of deployed strategic nuclear warheads for each party to 1 ,550 and established some transparency between Moscow and Washington, including data transfer, notifications, and on-site inspections. Yesterday, the Russian foreign ministry released a statement in anticipation of the treaty expiring, saying that Moscow intends to act responsibly and in a balanced manner.

3:00Luke Vargas:Senate negotiations to renew expired Affordable Care Act subsidies have collapsed, leaving approximately 20 million Americans facing higher insurance premiums. Both parties failed to bridge divides over abortion coverage and plan structures, despite bipartisan attempts to reach a middle ground ahead of the midterm elections. Meanwhile, a Senate standoff over funding for the Department of Homeland Security is intensifying, with lawmakers warning that it's unlikely they'll reach a deal in just over a week. Democrats like Illinois' Dick Durbin are demanding stricter oversight.

3:34Michael Gordon:Why shouldn't investigations be done by an independent source for their own credibility? Why shouldn't these people be taking the mask off and putting video cameras on? These are the fundamentals of constitutional conduct. I don't think we compromise on some of them.

3:49Luke Vargas:While Republicans have signaled openness to some ideas, they've rejected others and introduced their own demands, such as an end to so-called sanctuary cities. Here's Missouri's Josh Hawley. This has nothing to do with trying to get accountability for what's recently happened with discrete incidents in Minnesota. This is about trying to hamstring the entire agency, because that's what Democrats want. And listen, that's fine. I get it. That's their position. That's fine. I think it's a good faith position. I just totally disagree with it, and I'm not going to help them do it. Should talks fail, Senate Majority Leader John Thune has said he'd consider another stopgap funding bill for DHS, possibly for the rest of the fiscal year.

4:26Luke Vargas:But Democrats have said they're unlikely to provide the votes for any extension unless negotiations make real progress. And the Trump administration is moving to strip civil service protections from some 50 ,000 federal workers whose work focuses on executing the administration's policies. The reclassification would make it easier to fire career officials in senior positions, with the Office of Personnel Management saying it aims to prevent officials from, quote, sabotage or trying to find ways to thwart the objectives of the administration. Labor unions and advocacy groups warn that the new rules are a pretext to the government ousting workers whose political views aren't in line with the president.

5:09Luke Vargas:Can anyone stop the decline in American manufacturing? Successive U.S. presidents have tried to bring back a manufacturing golden age, but as the journal's David Uberti reports, employment indicators continue to point in the opposite direction. Dave, great to chat again. What are we seeing in the data?

5:27David Uberti:The data shows us that something like 200 ,000 manufacturing jobs have disappeared across the country since 2023. And since President Trump unveiled his so-called Liberation Day tariffs last April, there have been eight straight months of job declines in the manufacturing sector. Other indicators suggest factory activity has contracted for much of the last two years. And the actual investment that goes into manufacturing construction has actually fallen each of the first nine months that Trump has been in office. Now, all of this is notable because, as you said, we're approaching something like a decade of industrial policies across administrations.

6:04David Uberti:We actually had tariffs in Trump one. We had tariffs and massive spending on green energy and chips in Biden. And then in Trump two, while he has pulled back some of that spending on green energy, he has ramped up tariffs to levels we have not seen in decades, along with other pro-manufacturing policies as well. And where has left us is basically fewer people in America working in manufacturing than at any point since the end of the pandemic.

6:28Luke Vargas:You spoke to a number of manufacturers for this story. I'm curious where the disconnect here is between industrial policy and sort of outcomes. What are the roadblocks folks are contending with?

6:37David Uberti:The impacts of tariffs are very disparate across the manufacturing sector. If you own an aluminum or steel plant, you love tariffs on aluminum or steel because it boosts prices for aluminum and steel. But if you're the various types of suppliers for automakers or infrastructure firms or whatnot that use those types of materials in the various types of widgets or equipment that you actually produce and you need to import some of those materials, then your costs are going up and that's actually compressing your margins. in many cases and making you scramble for supplies. I spoke with a number of businesses who are grappling with some of these impacts, two of which are based in North Carolina, one of which was called InSteel.

7:18David Uberti:They have been forced to import more steel because of tariffs. There's actually a dearth of US-made steel that they need to produce the wire that's used to reinforce concrete in highways and bridges. That's holding back some of their ability to grow. At the same time, another auto parts manufacturer I spoke with called NN, And they have said that the increased costs that have stemmed in part because of tariffs in steel and aluminum have compressed their margins and left them with less money to actually invest in new manufacturing in the U.S. and elsewhere. So if you sort of add that up and multiply that across the hundreds, if not thousands, of different manufacturers in the sector, you see some pressure, at least in the short term, from these import taxes.

7:59Luke Vargas:All right. So those are some of the challenges, Dave, on the ground. And yet, I suspect if we look big picture, we might get some clearer answers about why it's proving so difficult to bring back a golden age of American manufacturing.

8:11David Uberti:Well, I'd say there's two macro factors at play. First and foremost is China and the growth of China into a manufacturing powerhouse. The series of trade wars the Trump administration has launched either on China or related to various trade imbalances around the world. They have not stemmed the tide of exports from countries such as China or other countries in South and Southeast Asia. They are still pumping out record numbers of exports despite some of these trade barriers. And that's putting downward pressure on prices for some of the products that U.S. manufacturers are trying to sell abroad.

8:44David Uberti:That's number one. Number two is there is sort of a difference between manufacturing output and manufacturing employment. Those things are overlapped, but the Venn diagram is not a circle. And while President Trump has staked a lot of his economic agenda on bringing manufacturing jobs back, hopefully revitalizing some of the industrial heartland of the country, it's probable that a lot of the companies that are making investments in manufacturing right now will do so in ways that just use fewer workers. The advancements made in software, AI, and robotics over the last couple of years have been immense.

9:21David Uberti:And a lot of the companies that we are speaking to and say that they are actually taking advantage of some of the recent tax breaks for new investment in businesses to become more efficient, basically to be able to pump out more stuff with fewer people. And over the course of time, that will have a downward impact on manufacturing employment, even as output might stay stagnant, if not go up. That was the Journal's David Huberti.

9:43Luke Vargas:Dave? Appreciate you stopping by. Thank you so much for the update. Thanks for having me. Coming up, the day's top business stories as SpaceX angles to get an early invite to Wall Street's most exclusive indexes. That and more after the break.

10:01David Uberti:This is a new era of American innovation. Using Google AI, Etsy is making it easier for shoppers to discover unique creations and helping sellers connect with the people who love their work. Learn more at g.co slash American Innovation.

10:19Luke Vargas:Not content to simply IPO this year, we're exclusively reporting that SpaceX is pushing for an early inclusion in indexes like the S &P 500 or NASDAQ 100 after its listing. Typically, companies have to wait several months to a year to prove their post-IPO stability and liquidity in order to enter those indexes. This week, the NASDAQ shared proposals to update how it lets companies into the NASDAQ 100, including one that would allow especially large companies to join within 15 trading days. At their current valuations, SpaceX, OpenAI, and Anthropic would all qualify. So why the rush? I asked Journal Finance Editor Alex Frankos.

11:00Michael Gordon:The sooner you can get into these indexes, the sooner you have this wall of money coming at your stock. Basically, these index funds, which a lot of our listeners are probably invested in, automatically buy whatever is in the index. And an IPO is always an uncertain process. You're putting a new company on the stock market. You don't know how people are going to react. There's also the issue that a lot of insiders in the company, people who already own shares, are going to sell their shares after the lockup period expires. So if you have the index funds already buying your shares, that's probably going to create some demand, push up the stock price, keep things stable.

11:36Michael Gordon:So it's a way to make the IPO a success. Right.

11:40Luke Vargas:That argument makes sense, Alex, but I imagine there's probably reasons why the indexes might not want to go along with this.

11:45Michael Gordon:Indexes have these rules for a reason, because it takes a while for investors to settle on what the price should be and what direction it's going. And it's an untested company. There are rules about profitability and size and all sorts of things, because they're concerned that they don't want something to come in and then tank. And then people will be like, why did you put that in the index? You know, if it turns out that there was something wrong. So time often helps prove out that a company is what it says it is.

12:13Luke Vargas:And let's spin through some headlines coming across markets this morning, starting with the Danish shipping giant Maersk, which is cutting a thousand jobs to slash costs as it forecasts a sharp drop in earnings. Oil major Shell is keeping the buyback train rolling, returning$3.5 billion to shareholders in spite of weaker prices. Chinese search engine Baidu, meanwhile, is getting into the buyback game for the first time, to the tune of$5 billion. And Europe's largest steelmaker, ArcelorMittal, said that EU efforts to protect the industry from Chinese competition should help it to capture market share in the coming years.

12:50Luke Vargas:Its stock is up today more than 3%. 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.

13:25David Uberti:in ways both big and small. Using Google AI, Etsy is making it easier for shoppers to discover unique creations and helping sellers connect with the people who love them most. This is a new era of American innovation. Learn more at g.co slash American Innovation.