Good morning. Investors and business leaders have been anxiously awaiting some kind of letup in President Trump’s trade war with Beijing. There’s none in sight, but at least the two sides have set a date for talks. We break down the latest below. (Was this newsletter forwarded to you? Sign up here.)
IcebreakerThe S&P 500 looks set to break a two-day losing streak as Washington and Beijing say that trade talks between the two are finally on, scheduled for this weekend in Switzerland. The news comes as investors await today’s Fed decision on interest rates. But there continue to be signs that markets shouldn’t expect a quick break from President Trump’s trade war. Treasury Secretary Scott Bessent said that the focus of the talks, which will involve Jamieson Greer, the United States trade representative, and He Lifeng, China’s vice premier for economic policy, would be more about de-escalation than achieving immediate tariff relief. A reminder: Bessent, who has become the point person in negotiations, has said that it could take up to three years to achieve a full deal. But pressure is mounting as the escalating tariff fight has created, in Bessent’s words, “the equivalent of an embargo” between the two countries. “We don’t want to decouple” with China, Bessent told Fox News. “What we want is fair trade.” (China, meanwhile, has to contend with a slowing economy: The People’s Bank of China cut short-term interest rates today as part of a raft of stimulus measures.) Trump is also playing down hopes for a quick resolution. “Stop asking, ‘how many deals have you signed this week?’,” he told reporters in the Oval Office yesterday, with Prime Minister Mark Carney of Canada, another trade partner in limbo, sitting next to him. With little progress on trade agreements imminent, Trump also brushed off previous comments about how quickly he could sreach them: “We don’t have to sign deals,” he said, insisting that the pressure is on other countries to strike a bargain with the United States. (He also at times appeared to redefine “deals” as simply his administration’s unilateral demands.) Business leaders would disagree. A parade of companies, including the toymaker Mattel and the consumer products giant Procter & Gamble, have warned that they are at least weighing price increases if the levies stick. That’s putting the Fed in a tight spot. The central bank today is widely expected to leave interest rates unchanged as inflation remains well above its 2 percent target and economists warn that trade-war fallout could push it higher. Standing pat could draw the ire of Trump, who has repeatedly criticized the Fed for holding steady while other central banks cut borrowing costs. The president recently called Jay Powell, the Fed chair, “a major loser,” and said it would be his fault if the economy were to slow. Powell will likely face questions about tariffs and Trump at today’s news conference. In March, the central bank’s chair struck a dovish tone, saying that tariffs would likely amount to just a “transitory” shock. But with so many businesses warning about tariffs volatility — especially on their spending and hiring plans — will he and other Fed policymakers change their assessment?
The Justice Department calls for a Google ad business breakup. Prosecutors urged the federal judge overseeing an antitrust case against the tech giant to order the sale of the ad marketplace AdX and the ad platform DFP to reduce the company’s control of the market. It’s the latest effort by federal regulators to break up Google, with the Justice Department asking a judge in a separate case to force the sale of the Chrome web browser. SpaceX wins permission to launch more rockets in Texas. The F.A.A. said that Elon Musk’s company can launch its huge Starship from its Starbase complex in Texas up to 25 times a year, five times more than the previous limit. It’s a victory for SpaceX, which has sought to send more rockets into space. The company also stands to benefit if Congress approves President Trump’s budget outline. OpenAI reportedly plans to cut revenue sharing with Microsoft. The ChatGPT creator told investors that it aims to halve the percentage of sales that it pays to Microsoft to 10 percent from 20 percent by 2030, according to The Information. OpenAI’s new target comes as it pursues a corporate reorganization — one that Microsoft must sign off on. An Israeli spyware company is ordered to pay Meta $167 million. A federal jury in California awarded Meta damages from the NSO Group, whose Pegasus software was used to hack 1,400 WhatsApp accounts belonging to journalists, human-rights activists and government officials. NSO plans to appeal, but the company has already been blacklisted by the U.S. Commerce Department. Republicans plan to expand a college pressure campaign beyond the Ivy League. Presidents of schools including Haverford College and DePaul University are set to testify today before the House Education Committee about their efforts to combat antisemitism, suggesting that Republicans aren’t stopping at elite schools. Separately, universities including Harvard and Princeton are seeking to sell stakes in private equity funds on the secondary market as they face funding pressures, including from President Trump. DEALBOOK SERIES: HOW TARIFFS ARE AFFECTING U.S. BUSINESSES ‘Tariffs have never worked unless you want to punish your own population’We asked DealBook readers how tariffs have affected their companies. Today, we’re featuring a response from Thomas Johns, an owner of National Roofing, a private business based in Albuquerque that installs and repairs roofing for commercial clients, such as government and military buildings, hospitals, airports, manufacturing centers, data communications buildings and other facilities. The business generates as much as $20 million a year and employs between 100 and 150 people. He writes: I started this company 50 years ago. I left the day-to-day running of the business, but I’m still an owner. Tariffs directly affect only 1 percent to 2 percent of products we provide in our roofing business. But the uncertain economic conditions have forced our clients to change their posture from growth and renovation programs to a no-spending mode. That means our costs are ultimately two to five times higher because we’ve had to absorb more risk. We’ve stockpiled material that we may not be able to sell since it appears our clients will pull back on their spending. That’s what we saw during the pandemic and we’re seeing it again. Back then, we kept our people on the payroll even with the pullback in jobs. We lost $2 million in two years to keep everyone employed. That was to keep families fed and able to get vaccinations. We were buying lunches. While most of the products we use are made in this country, most of our tools are manufactured overseas. For example, a critical robotic welder we use will go from $10,000 to $30,000 — who can afford that? There’s also been an issue with manufacturers withholding supplies to drive up prices, something we saw during Covid. We ended up taking a hit of $5 million to $12 million because of that. We expect more of that again. Right now, I’d say the situation has added an additional 10 to 20 percent to our costs. That of course could get much worse. We do everything we can to not pass on price increases. But that is cutting into our margins. The other difficulty is in our federal contracts. Most of our economy in this part of New Mexico is driven by government dollars with all the air force bases around here and national laboratories such as the Los Alamos National Laboratory. But the Federal government can be deceptive in its contracts with vendors like us. You sign an agreement to do the project for X dollars, and it’s etched in stone. That’s all you’re getting. If our costs go up, there’s no recourse. Tariffs have never worked unless you want to punish your own population — which is what this is doing. DEALBOOK WANTS TO HEAR FROM YOU We’d like to know how the tariffs are affecting your business. Have you changed suppliers? Negotiated lower prices? Paused investments or hiring? Made plans to move manufacturing to the U.S.? Or have the tariffs helped your business? Please let us know what you’re doing.
“I hated having to live a pretend life, one that was totally silent on all the topics normal people talked about with each other. Of course I could have declared my sexuality, come out as some others were doing, but I was among the many at that time who were too scared to do so.”— Barry Diller, the media titan who once ran Paramount and Fox and is now at IAC, addressing his sexuality in his memoir, “Who Knew,” in which the 83-year-old discusses his “fear of exposure” about being gay, and describes his lifelong partnership with Diane von Furstenberg as “the miracle of my life.” Blackstone’s president donates $125 million to Tel Aviv medical schoolAs Israel faces a doctor shortage, Jonathan Gray, the president of the investment giant Blackstone, and his wife, Mindy, are donating $125 million to Tel Aviv University’s health science and medical school. The donation, made through the Grays’ foundation, is the largest the university has ever received, Lauren Hirsch reports. Israel desperately needs more doctors. As of 2020, the number of physicians per capita in the country was about 10 percent below the average of countries in the Organization for Economic Corporation and Development. A limited medical training capacity, along with an aging population, have contributed to the shortage. The school will be renamed the Gray Faculty of Medical and Health Sciences. The Grays’ donation is expected to increase enrollment, in part by allowing the medical school to add more students each quarter. It will also support, among other things, a new 600-bed dormitory, scholarships and new teaching facilities. The donation is expected to help the university double the number of Arab Israeli students in medical school specifically, by offering scholarships and discounted housing in the school’s new dormitories. The Grays’ gift is a response to the Oct. 7 attack on Israel. Both American Jews, the Grays say they feel a connection to Israel. The attack “awakened a need to express that connection in a far more concrete way,” Jon Gray said in a statement. “We can think of no better way to accelerate healing,” the Grays said, “than by supporting an institution that touches the lives of so many.” We hope you’ve enjoyed this newsletter, which is made possible through subscriber support. Subscribe to The New York Times.
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