Budget jitters
House Republicans hope to push through President Trump’s “big, beautiful” spending bill as soon as next week. But investors are getting antsy.
Government bonds sold off again amid worries about the deficit-expanding effects of Trump’s tax cuts, the cornerstone of a major budget package being debated in the lower chamber. The budget bill faces stiff resistance — including from some Senate Republicans — and it’s putting America’s strained finances in focus.
The latest: Yields on the 30-year Treasury bond are steady on Thursday. But they climbed to nearly 5 percent on Wednesday, a level last reached in early April when “yippy” investors revolted against Trump’s reciprocal tariffs. A reminder: That helped force the White House to reverse course on those levies.
Stocks have rebounded since. But long-dated bonds have not, even as Trump continues to tour the Middle East, hailing a windfall of deals that he says will bolster American businesses and the economy. (More on that below.)
Could bond vigilantes again check the Trump agenda? They have flexed their power before, and may do so again if the proposed budget vastly adds to America’s $36 trillion national debt.
There’s reason for them to worry: The Republican bill, which would extend Trump’s 2017 tax cuts and introduce new ones for tips and overtime pay, could add $3.8 trillion to deficits over the next decade, according to the Joint Committee on Taxation — and potentially much more.
Fiscal hawks are alarmed. Stephen Jen, a major bond investor who heads Eurizon SLJ Capital, told Bloomberg that he saw the growing U.S. debt as “a disaster” in the making.
He evoked a recent episode in global politics that still resonates with investors: the ouster of Liz Truss as Britain’s prime minister in 2022 after her government tried to push through unfunded tax cuts that roiled the bond markets. “It may be necessary to have a repeat of what happened to Liz Truss,” he said, “to force everyone to do the right thing.”
Is Trump feeling any pressure? On Thursday, he told reporters that he would rather “make a lot of money, pay off debt” before pursuing wish-list ideas like creating a sovereign wealth fund, the kind of investment vehicles found in countries running big budget surpluses.
The budget bill is far from a shoo-in. Republicans, who hold a slim majority in Congress, are haggling with one another over cuts to popular provisions, including Medicaid and food stamps. One sticking point includes caps on state and local tax deductions, known as SALT: Two New York Republicans have argued it should be set as high as $80,000 per couple, from $10,000 today.
Republicans would need to find significant savings to fund these tax cuts without blowing up the deficit. Bond holders are betting they’ll come up short.
HERE’S WHAT’S HAPPENING
Shares in UnitedHealth Group tumble on a report of a federal investigation. The Justice Department is examining the health insurance giant’s Medicare billing practices, according to The Wall Street Journal. It’s the latest bad news for UnitedHealth; its shares took a hit after the company unexpectedly replaced its C.E.O. and suspended its 2025 financial guidance.
Microsoft reportedly nears a deal with the E.U. to avoid a big antitrust fine. European Union regulators are likely to accept the tech giant’s proposal to settle a competition case involving its Office and Teams products, according to Reuters. If a deal is reached, it would spare Microsoft potentially billions of euros’ worth of penalties, after having already accumulated €2.2 billion in fines in recent years.
Harvard arranges $250 million for research after a federal funding freeze. The university said it had freed up the money to help cope with the Trump administration withholding more than $2.6 billion in funds — though it warned that school officials and researchers would have to make “prudent decisions” about program adjustments. Harvard’s president, Alan Garber, will take a 25 percent pay cut.
Trump’s latest deals in the Middle East
President Trump is in the midst of his Middle East trip, one meant to drum up investment from allies in the region. The visit has continued to deliver, especially for U.S. businesses like Boeing.
But it’s a potential deal of a different sort that is moving markets on Thursday.
The latest: Boeing struck an agreement to sell up to 210 to Qatar Airways, in what the manufacturer called its largest wide-body jets order. Complementing that is a deal between GE Aerospace and Qatar Airways for more than 400 jet engines. (GE Aerospace’s chief, Larry Culp, specifically praised “President Trump’s support for this historic agreement.”)
Separately, Saudi Aramco, the Saudi state-controlled oil giant, said that it had signed agreements potentially worth up to $90 billion with U.S. companies. That said, it didn’t provide many details, and several of the accords were merely memos of understanding.
Markets also moved on potential progress for a different sort of deal. The price of Brent crude, the international oil benchmark, was down nearly 4 percent on Thursday after Trump suggested that there was movement in talks with Iran over its nuclear weapons.
“We’re in very serious negotiations with Iran for long-term peace,” Trump said on Thursday, adding that he wanted Iran to be a great nation but not to have nuclear weapons. The expectation is that a deal would lead to a lifting of sanctions on Tehran and potentially bring more oil into the international market.
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In related news: Trump said that India offered to essentially lift all tariffs on American goods — but added that he disapproved of Apple’s plan to make U.S.-bound iPhones there.
dealbook series: how tariffs are affecting U.S. business
‘It’s a nightmare for a small brand like ours’
We’ve been asking DealBook readers how tariffs have affected their companies. Today, we’re featuring Laurie Sebestyen, who, along with her husband, Mike Buechi, owns Mike’s Organic Curry Love.
The company, based in Boise, Idaho, started in 2008 and sells Thai-inspired meal kits, sourcing all its ingredients from Thailand. It generates just under $2 million in annual sales. The two are the only employees.
The responses have been lightly edited and condensed.
How much do you have to pay in tariffs now?
Right now, we’re at 17 percent — the new 10 percent base on top of an existing 7 percent that has been in place since the expiration of GSP, which kept tariffs low for exports from countries like Thailand. One container that came in this week was $12,000 in customs duties for about $70,000 worth of goods. Before the new tariffs, we were paying more like $5,000 for the same value of goods.
But that’s not the only cost. We pay roughly $7,000 just for transport. That’s before taxes and insurance.
How much has that added to your costs?
Our margins are slim to begin with. Our gross margins hover around 40 percent, but for net margin we’re barely breaking even. In addition to our cost of goods, we have to pay slotting fees, which is what a retailer charges for placing you on the shelf. And then promotions, like the first box is free.
Also storage, fulfillment, Amazon fees, advertising, coupons, shipping — everything has gone up in recent years.
After all the costs, we can barely afford to live on what we make.
How much of the added costs have you had to pass on to customers?
So far, none. When the new tariffs were announced, a couple of our retailers and distributors sent us letters telling us they won’t be accepting any price increases.
Maybe larger brands that have larger margins can negotiate. But for a small business, where you’re living day to day, it’s an impossible situation.
What do you think about Trump’s plan to use tariffs to bring manufacturing back to the U.S.?
I want to bring manufacturing back to the U.S. as much as possible. But things like coffee and chocolate and coconut don’t grow here. When we started out, we produced our curries in California, but we had issues with consistency. We realized Thai curries are best made in Thailand.
It doesn’t make sense to do trade this way. It’s a nightmare for a small brand like ours.
Previous reader responses: Deer Stags, Frameology, Seim & Partner, Aremco Products, National Roofing and Le Petit Triangle Cafe
“We knew how ruthlessly effective this campaign against journalists had been in other countries, and we knew those in President Trump’s orbit wanted to implement it here. Even so, it’s startling to see how quickly these warnings have come to pass.”
— A.G. Sulzberger, the publisher of The New York Times, in a speech on Tuesday at the University of Notre Dame, where he outlined the ways President Trump has sought to dismantle the press, from suggesting journalists should be jailed to opening multiple leak investigations into The Times’s own reporting.
Why Buffett chose now to plan his exit
Warren Buffett stunned investors this month when he announced, near the end of Berkshire Hathaway’s annual meeting, that he planned to step down as C.E.O. of the conglomerate.
In some ways, it was news that many had expected — at some point, anyway. But Buffett, 94, elaborated to The Wall Street Journal why now was the time to hand over the reins:
“I didn’t really start getting old, for some strange reason, until I was about 90,” he said by phone from his office in Omaha, Neb. “But when you start getting old, it does become — it’s irreversible.”
He began to lose his balance, occasionally, and sometimes had trouble recalling a person’s name. Suddenly, the newspapers he read looked like they were printed with too little ink.
Buffett’s physical slowdown, he said, stood in stark contrast to his 62-year-old handpicked successor, Gregory Abel:
“The difference in energy level and just how much he could accomplish in a 10-hour day compared to what I could accomplish in a 10-hour day — the difference became more and more dramatic,” Buffett said. “He just was so much more effective at getting things done, making changes in management where they were needed, helping people that needed help someplace, but just all kinds of ways.
“It was unfair, really, not to put Greg in the job,” he added. “The more years that Berkshire gets out of Greg, the better.”
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THE SPEED READ
Deals
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Starbucks is said to be sounding out private equity firms and other companies as it weighs options for its China operations, including a possible stake sale. (Bloomberg)
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Shares in Foot Locker soared in premarket trading after it confirmed a report that it would sell itself to Dick’s Sporting Goods for about $2.4 billion. (WSJ)
Politics, policy and regulation
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1789 Capital, the investment firm where Donald Trump Jr. is a partner, has backed businesses that were awarded government contracts, adding to concerns about the Trump family’s conflicts of interest. (Business Insider)
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Britain is said to be considering special visas for investors, including A.I.-focused ones, while the European Union is seeking to expedite its visa program to lure U.S. researchers under threat from President Trump’s funding cuts. (Bloomberg, Politico)
Best of the rest
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After a much-pilloried name change, the streaming service Max will again be known as HBO Max — but at least HBO’s social team appears to be in on the joke. (NYT, Business Insider)
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Bags of cash being hauled to bank-teller windows, stacks of bills being fed into A.T.M.s: Money-laundering has come to America’s bank branches. (WSJ)
We’d like your feedback! Please email thoughts and suggestions to [email protected].
Andrew Ross Sorkin is a columnist and the founder of DealBook, the flagship business and policy newsletter at The Times and an annual conference.
Bernhard Warner is a senior editor for DealBook, a newsletter from The Times, covering business trends, the economy and the markets.
Sarah Kessler is an editor for the DealBook newsletter and writes features on business and how workplaces are changing.
Michael J. de la Merced has covered global business and finance news for The Times since 2006.
Lauren Hirsch covers Wall Street for The Times, including M&A, executive changes, board strife and policy moves affecting business.
Edmund Lee covers the media industry as it grapples with changes from Silicon Valley. Before joining The Times he was the managing editor at Vox Media’s Recode.
Ravi Mattu is the managing editor of DealBook, based in London. He joined The New York Times in 2022 from the Financial Times, where he held a number of senior roles in Hong Kong and London.
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