webstorm ignoring 'excluded' directories in a .tsconfig.json file

Question

When trying to compile typescript files in webstorm, I am bombarded with compilation errors that originate from files in the node_modules folder.

My .tsconfig looks like

{
  "compilerOptions": {
    "target": "es5",
    "module": "commonjs",
    "experimentalDecorators": true,
    "emitDecoratorMetadata": true,
    "noImplicitAny": true,
    "sourceMap": true
  },
  "exclude": [
    "node_modules"
  ]
}

and I have 'use .tsconfig.json' checked in preferences > typescript.

The errors I'm getting are from the 'reflect-metadata/Reflect' package

TS2304: Cannot find name 'msCrypto'