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

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China cuts its economic growth forecast

as it preps for an era of slower expansion, plus Europe.

Upset support for the U.S. war on Iran,

and a trade court judge tells the Trump administration

to pay back billions in tariffs.

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.

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.

China has cut its annual economic growth target

to a range of four and a half to 5%.

It's 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 Hennemyow told us

that Beijing is aiming to reshape its economy

as it grapples with challenges both at home and abroad.

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%,

and it was really achieved in large parts 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 and balance.

And well, less reliance on exports

might be welcome news for countries

frustrated by the dominance of Chinese products.

Hennet told us that the new growth targets

included growing focus on key technologies.

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 US and China

and key cutting edge technologies,

China is really not letting up on that front.

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.

I asked Journal Global Economics correspondent Tom Feralis

how businesses are responding to the verdict.

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.

Well, 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.

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,

they're not being able to plan that is really poison

for investment and for just making decisions

on future markets and future investment.

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,

men 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.

While speaking of deals,

we've got a special bonus episode coming later today.

It's the latest What's News and 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 have for the break.

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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, that's not the case.

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

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.

Still, a Western official caution 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.

While President Trump has said that America is at war,

many Republican lawmakers have straight 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.

is 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.

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 Culchester in London

and reporter Austin Ramsey in Hong Kong.

Max, let me start with you.

And to get a sense of where America's allies are standing

in this conflict, actually want to play a clip.

This is of the NATO Secretary General Mark Ruta

yesterday appearing on Newsmax's The Record

with Greta Van Suster, where he said the following.

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.

Max, is that representative of where most European countries

in particular stand on this conflict?

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.

The French are also deploying an aircraft carrier

to the Mediterranean to try and defend Cyprus

and regional allies.

The Italians are sending air defense 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 defenses

in the region.

And they're also allowing the U.S.

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.

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, at least one notable exception

are staying relatively quiet about it.

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 out.

They say that they still don't want the U.S.

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 U.S.

for its own defense.

Also, I think that's a good point to bring China

into the discussion now.

It's diplomats have also been denouncing U.S. 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 up.

That's right.

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 Iran.

There is a somewhat difficult position.

China is 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.

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.

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 US 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.

That's right. There are benefits to China in this war.

They get to see how the US presses this campaign,

what the US is bringing to the fight against Iran,

and they will take note of that.

The US is also, as we reported,

using an incredible amount of munitions,

the sort of munitions that would be important for a fight

with China and the Pacific over, say, Taiwan.

And so it puts the US on the backflip 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.

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. Thank you, Lee.

And while Europe and the US 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.

Reporters Sam Shekner in Paris says that the government account

is called French response and aims to combat online trolls

and misinformation, one meme at a time.

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-Douard Beaux,

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 US 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 Hadi Moyer and Daniel Bach,

our supervising producer, his 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.

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