Trade war
A new round of tariffs on aluminum and steel went into effect overnight. This time, no U.S. trading partner was spared.
The new tariffs amped up the risk of a global trade war. The European Union on Wednesday vowed to roll out $28 billion in retaliatory levies next month on American products, including bourbon, jeans and agricultural products.
“Jobs are at stake, prices up, nobody needs that,” said Ursula von der Leyen, president of the European Commission. Jonathan Reynolds, Britain’s trade secretary, said his country would “keep all options on the table.”
European officials hope they can still strike a deal. But President Trump seems determined to stick with his protectionist policies despite the stock market turmoil that he’s unleashed and regardless of the pushback from business leaders and global allies. “The tariffs are going to be throwing off a lot of money to this country,” Trump told corporate chiefs on Tuesday at a Business Roundtable event in Washington.
They “may go up higher,” Trump added, underscoring that he views tariffs as a way to revive America’s manufacturing sector.
The markets are quiet. Stocks in Europe and Asia are mostly up and U.S. futures are a tick higher. That’s after tariff jitters briefly pushed the S&P 500 into correction territory on Tuesday — the sell-off has wiped roughly $4 trillion off the benchmark index in less than a month — as concerns grow that the levies will push up prices and slow growth.
Investors are also bracing for new inflation data. The Consumer Price Index is due out at 8:30 a.m. Eastern. A hot reading, plus the uncertainty around the tariff’s inflationary effects, could prompt the Fed to keep interest rates higher for longer.
In 2018, Trump imposed metals tariffs that ultimately bolstered domestic steel and aluminum makers but raised costs and lowered production drastically for the automobile, tool and industrial machinery sectors. Analysts see a similar dynamic playing out with this round — Goldman Sachs economists this week lowered their full-year U.S. G.D.P. forecast and predicted even higher inflation.
Who will pay for the tariffs? Walmart has tried to get Chinese suppliers to bear some of the costs from Trump’s tariffs, according to Bloomberg — a negotiating tactic that’s drawn the attention of the authorities in Beijing.
Trump told C.E.O.s that he wasn’t backing down. More levies, including reciprocal tariffs, are expected to go into effect next month that could further jolt global trade. The potential upheaval has rattled corporate chiefs — and even some of Trump’s allies and aides — who’ve been thrown off guard by the president’s on-again-off-again approach, The Wall Street Journal reports.
That has prompted a flood of concerned calls to Trump officials and some critical comments from C.E.O.s. “Swinging from one extreme to another is not the right policy approach,” Mike Wirth, Chevron’s C.E.O., said this week.
HERE’S WHAT’S HAPPENING
President Trump may name Michelle Bowman as the Fed’s top bank cop. Bowman, a Fed governor, is seen as the front-runner for the vice chair of banking supervision, according to The Wall Street Journal, a position that carries significant oversight responsibilities. Separately, Fed staff cooperated with a Department of Government Efficiency request for access to federal payment systems, Bloomberg reported; the meetings came before Jay Powell told Congress that the central bank had had “no contact” with Elon Musk’s cost-cutting team.
Musk wants to support President Trump with another $100 million. The billionaire, who spent more than $250 million to help elect Trump, is considering donating the extra money to help further the president’s agenda, according to The Times. The move would likely bring Musk even closer to Trump and add to the president’s political coffers.
The House passes a key spending bill. The measure, passed largely along party lines, would fund the government through Sept. 30 and avert a shutdown at the end of the week. The bill, which raises military spending by $6 billion but slightly decreases overall spending, heads to the Senate, where Democrats face a dilemma over whether to support it.
Big Oil has a new catchphrase
At the CERAWeek gathering of oil executives in Houston this week, talk of climate change and clean energy has been replaced with the buzz words “energy realism.”
It’s another way of saying, “Drill, baby, drill,” President Trump’s rallying cry that doubles as an energy policy. While spending on clean energy reached $280 billion in 2023 under the Biden administration, Trump has gutted many of the programs that encouraged such investments — despite efforts by some oil executives to persuade Trump to preserve them.
“Beyond the obvious scale and cost problems, there is simply no physical way wind, solar and batteries could replace the myriad uses of natural gas,” Chris Wright, the energy secretary, said at the meeting.
The green retreat carries big questions, especially as low energy prices dent oil company profits and as the United States faces a power crunch to support its A.I. ambitions. In the next three years, data centers could triple their energy use, according to the Department of Energy.
Executives seem to be going with it, though. “Across the board, we have to think about power and energy in a pragmatic way,” Larry Fink, the BlackRock C.E.O. who has previously championed E.S.G. — environmental, social and governance — investing, said onstage.
Can the shift stop the clean energy transition? Not entirely, though the Trump policy changes are already dragging it down, analysts note.
One big reason: Market forces have pushed down costs. Biden era policies may be in jeopardy, but “the economics have never been better,” Jon Creyts, chief executive of RMI, a nonprofit that promotes sustainability, told The Times this month.
How Anthropic is keeping the wheel
Of Google’s many investments in artificial intelligence, one of the most closely watched is in Anthropic, the company founded by defectors from OpenAI.
The Times’s Cade Metz, Nico Grant and David McCabe revealed on Tuesday the details of that investment, which allows Anthropic to chart its own course despite having received billions of dollars from Google.
The terms: Google has invested $3 billion in Anthropic for a 14 percent stake. That’s close to the limit of Google’s potential ownership in the start-up, filings show — even as it is set to invest an additional $750 million through a convertible debt offering in September. Google also holds no voting rights and no board seats, or even observer rights.
The details emerged from Google’s antitrust fight with the Justice Department, after The Times obtained documents filed by Anthropic that detailed the tech giant’s investment. Under President Trump, the department is no longer seeking to force Google to sell its stakes in A.I. companies; it has only asked to be notified before Google makes new investments.
Anthropic is very different from OpenAI, and may present a model for other A.I. start-ups. OpenAI was founded as a nonprofit, then created a for-profit arm to raise money from outsiders. Until recently, it relied almost entirely on one investor, Microsoft, for funding. That arrangement is beginning to lead to problems. (OpenAI is now trying to convert itself into a public benefit corporation, a type of for-profit entity that aims to create products for the public good.)
Anthropic, on the other hand, was set up from the beginning as a public benefit corporation and has raised money from different investors.
But it’s a reminder that even buzzy A.I. start-ups need Big Tech. Anthropic has raised billions in funding. Much of that comes from Google and from Amazon, which has kicked in $8 billion.
The astounding sums are required because of a longstanding tenet of Silicon Valley (at least until the emergence of the low-cost Chinese start-up DeepSeek): Developing and powering A.I. products requires a lot of computational power, something tech giants have. Google and Amazon provide Anthropic with much of that computing power, while OpenAI gets a lot of its requirements from Microsoft.
So, as much as Anthropic and OpenAI may want to limit the power that tech giants have on them, they will also depend on Big Tech for a while.
Picture of the day
— President Trump held a sheet featuring Tesla prices and other sales points at a White House event on Tuesday during which he said that he was buying two of the company’s cars and that he would designate violence against Tesla dealerships as domestic terrorism. It was another reminder of the extraordinarily close links between Trump and Elon Musk; shares in Tesla rose 3.8 percent after the appearance.
The case against Delaware’s big overhaul
Delaware lawmakers are set to hold hearings on Wednesday to discuss Senate Bill 21, an amendment to the state’s Constitution that would significantly curtail the rights of shareholders in controlled companies.
If it passes, it could limit shareholder lawsuits — but also, critics say, eliminate important checks and balances. On Tuesday, DealBook reported on the big corporate law firms defending the bill. On Wednesday, we hear from some of the shareholder groups opposing it.
Thomas DiNapoli, New York State’s comptroller: “Lowering standards for corporate behavior at the expense of shareholders undermines the executives duty toward the corporation and its shareholders and is simply the wrong move,” he wrote to Delaware lawmakers. He is trustee of the New York State pension fund, which is valued at over $270 billion; more than 40 percent of that fund is invested in publicly traded companies.
Among DiNapoli’s concerns is how the bill defines a controlling shareholder and who counts as an independent director, which he says could limit the court’s ability to accurately assess the true independence of executives making key decisions.
He also expressed concern about the bill’s proposal to significantly reduce the kinds of private records that plaintiffs can request.
The International Corporate Governance Network: “We are concerned that some of the proposals in Senate Bill 21 will be detrimental to shareholder rights,” the group, which says it leads investors with more than $90 trillion under management, wrote to lawmakers.
The group said that the bill could hurt long-term returns for investors, including retirees, and could make it harder to hold management accountable through litigation.
THE SPEED READ
Deals
Politics, policy and regulation
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The U.S.-brokered agreement for a 30-day cease-fire in the Russia-Ukraine war has helped lift European stocks and oil prices, though Moscow hasn’t yet responded. (NYT)
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Perkins Coie, the law firm with Democratic ties that President Trump stripped of security clearances and access to federal buildings, has sued the administration. (WSJ)
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