Uncertainty returns
The global trade war is rumbling on with higher tariffs, and a social media post from President Trump that suggests that negotiations with Beijing are in trouble.
“I like President XI of China, always have, and always will,” Trump wrote on Truth Social early on Wednesday. “But he is VERY TOUGH, AND EXTREMELY HARD TO MAKE A DEAL WITH!!!” (Trump has grown “obsessed” with holding a call with Xi, an unnamed official told Politico.) All of this comes as Treasury Secretary Scott Bessent acknowledged that negotiations had become “a bit stalled.”
The latest: Global markets are edging higher, despite a doubling of U.S. levies on steel and aluminum imports, to 50 percent, that went into effect on Wednesday. Separately, China, which has a lock on rare earth metals, has stepped up export controls of the crucial resources.
Such limits are a huge deal for industrial companies, and could clobber advanced manufacturing in the U.S. American carmakers are desperately seeking workarounds to the export controls — including potentially moving some production to China.
U.S.-China talks appear troubled, even as a senior Trump official suggested that Trump and Xi would speak as soon as this week, according to CNBC. Administration officials have accused Beijing of violating terms of an agreement reached last month in Geneva.
Just today, Beijing rebuked Secretary of State Marco Rubio over his commemoration of the deaths of pro-democracy demonstrators involved in the Tiananmen Square protests in 1989.
Is China backing away from the U.S.? Beijing is weighing an order for hundreds of new Airbus aircraft, Bloomberg reports, a potential sign that it wants to strengthen business ties with Europe. Shares in the plane maker jumped more than 3 percent on Wednesday.
Trump is still under pressure to cut deals. Markets and business leaders are anxious for some kind of resolution to his trade battle. “They’re not scared,” Jamie Dimon of JPMorgan Chase said of Chinese leaders late last week. “This notion that they’re going to come bow to America, I wouldn’t count on that.”
The administration says it won’t be deterred from tariffs, despite legal challenges. Indeed, the newly increased metals duties show that the White House still has plenty of freedom to put in place and even raise tariffs.
Expect more instability. The Organization for Economic Cooperation and Development warned on Tuesday that the “global economic environment has become significantly more challenging” in just the past few months, sapping growth worldwide, said Mathias Cormann, the organization’s secretary general.
HERE’S WHAT’S HAPPENING
The Fed finally lifts growth restrictions on Wells Fargo. The cap on assets had been in force since 2018, after bank employees were caught creating fake customer accounts to meet their sales goals. That led to huge fines, a management shake-up and a stock price that underperformed peers. Shares in Wells Fargo were up sharply in premarket trading on Wednesday.
Texas and BlackRock appear to have resolved their E.S.G. battle. The giant fund manager was removed from a state blacklist of companies deemed to be boycotting fossil fuels through their policies on social and environmental investment principals. The breakthrough, after three years of fighting, is a win for Larry Fink, BlackRock’s C.E.O., who has been working with red states to repair relations.
Citigroup drops a tough firearms policy under political pressure. The lender said on Tuesday that it would rescind its policy of refusing to bank businesses that sold guns to those under 21, which it adopted shortly after the 2018 Parkland, Fla., mass school shooting. It comes as President Trump and Republican leaders accuse lenders of discriminating against many of their supporters on political grounds.
Warner Bros. Discovery shareholders rebuke David Zaslav over pay. A vast majority rejected the entertainment boss’s $51.9 million pay deal, along with compensation deals for his leadership team. But the vote is nonbinding, which comes as cold comfort to investors who have seen the company’s market capitalization plummet over the past three years.
The costs of a broken bromance
Elon Musk’s latest broadside against Republicans’ domestic policy bill — a “disgusting abomination,” he declared on his X social network — has Washington speculating about whether his relationship with President Trump is on the rocks
Beyond the gossip about friction between the president and his biggest backer in 2024, there’s more at stake, for Musk’s businesses and for lawmakers seeking re-election.
Musk had plenty to say on Tuesday about the bill:
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“Mammoth spending bills are bankrupting America! ENOUGH”
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“If the massive deficit spending continues, there will only be money for interest payments and nothing else! No social security, no medical, no defense … nothing.”
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“This immense level of overspending will drive America into debt slavery!”
Musk also reiterated concerns that the higher government spending would overwhelm the (inflated) savings his cost-cutting initiative had made.
Whether the Musk-Trump bond is completely broken is unclear. Since Musk officially ended his government work last week, the two men have been cordial about each other in public. But his comments come at a delicate time for deliberations over the bill: Musk has emboldened fiscal hawks in the Senate, even as Trump is turning the screws on holdouts.
How much influence does Musk still have over the president? It may be waning: “The president already knows where Elon Musk stood on this bill,” Karoline Leavitt, the White House press secretary, said on Tuesday. “It doesn’t change the president’s opinion.”
That could affect Musk’s business. The Times reports that the Tesla chief was disappointed that Republicans appear set to remove subsidies for electric vehicles, which would hurt the carmaker. Musk’s SpaceX is also heavily dependent on government contracts, and both it and other companies like xAI are benefiting from Trump-era deregulation.
Could Musk retaliate against Republicans? He was among the most prolific Republican donors in 2024, and Trump officials are still awaiting $100 million in pledges that Musk made this year.
Tuesday’s social media blast also resurrects the possibility that Musk could seek to unseat Republican lawmakers who back the budget bill. “Shame on those who voted for it: you know you did wrong,” he wrote. “You know it.”
Shoppers’ pain, a discounter’s gain
Dollar General’s stock has soared after the discount retailer reported strong quarterly earnings and raised its full-year financial outlook, bucking gloomy industry forecasts.
But good news for the dollar store’s investors signals financial strain for American households, Danielle Kaye reports.
It’s the latest sign of consumer unease. Even wealthier shoppers are trading down to lower-cost options, the company said. “While our core customer remains financially constrained,” said Todd Vasos, Dollar General’s C.E.O., “we have seen increased trade-in activity from both middle- and higher-income customers.”
The company beat revenue expectations for its most recent quarter and lifted its outlook for net sales growth this year. The results sent its shares up more than 15 percent.
There are other signs of strain on consumers. Recent data shows a rising number of defaults for “buy now, pay later” loans; ballooning household debt; and slowing retail sales. Consumer sentiment has fallen in recent months, with tariff-fueled price increases and questions about the future of the labor market looming large.
Still, consumers “overall remain relatively strong,” David Silverman, a retail analyst at Fitch Ratings, told DealBook.
All that is bolstering discounters. Walmart, known for its low prices, reported another solid quarter and kept its full-year forecast unchanged. Costco and BJ’s Wholesale Club also reported better-than-expected results. “Discounters will benefit from a more value-oriented pricing position” throughout the year, Silverman said.
That’s in stark contrast to retailers that cater to more affluent shoppers or those that rely more heavily on discretionary categories like home and apparel. Target’s sales fell short of expectations; Macy’s lowered its forecast.
Still, even Dollar General isn’t insulated from tariffs. It could see both higher costs (the chain relies on direct and indirect imports) and a broader pullback in spending among its customers.
Vasos, the chain’s C.E.O., cautioned that price increases were on the horizon — but “as a last resort.”
“I would take more pride if his clients were different people.”
— Rabbi Sheldon Engelmayer, on Juda Engelmayer, his son, who has become the crisis P.R. expert for clients many won’t touch — including Harvey Weinstein, the fake heiress fraudster Anna Sorokin and the meditation guru Nicole Daedone. (“I’m very, very cynical about the world,” the younger Engelmayer told The Times of his father’s remarks.)
Reflections of a lending rainmaker
Over four decades, Andy O’Brien became one of the top money men at JPMorgan Chase, responsible for some of the biggest corporate loans on record.
On Tuesday, he announced his retirement at the end of the year, in part to focus on his role as chair of the Michael J. Fox Foundation. He spoke with Michael de la Merced about how the multitrillion-dollar corporate loan market has changed — including the rise of nonbank rivals.
Corporate lending has come a long way. When O’Brien started, loan syndication — Wall Street-ese for selling off pieces of loans to reduce a lender’s default risk — was mainly done with other banks. Then mutual funds began buying pieces of loans to get higher interest rates than they could from bonds. Other investors, like collateralized loan obligations, followed.
That helped make ever-bigger loans possible. O’Brien remembered when private equity firms looking to buy SunGard Data Systems in 2005 sought a $4 billion loan. “A lot of investors at the time said it was too big and couldn’t be raised,” O’Brien recalled — adding that many of them also said, “‘I want a piece of it.’”
By 2013, his team at JPMorgan and other banks were confident in offering Verizon a $61 billion bridge loan, still the biggest such loan ever, to buy out Vodafone’s stake in Verizon Wireless. Verizon’s lenders were later able to sell off that debt.
Lending is “a very competitive market now,” O’Brien said, as the so-called private credit industry has grown to an estimated $2 trillion in size, according to a new study by Moody’s Analytics.
O’Brien is more sanguine about his bank’s growing army of rivals. “Having more options is better” for clients, he said; JPMorgan itself offers private credit-like products such as direct lending. (JPMorgan’s lending business is holding up: Corporate lending revenue in the first quarter hit $1.9 billion, up 11 percent year on year.)
“Banks are ready to lend,” he said. “I still see a very healthy market.”
THE SPEED READ
Deals
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Cohere, a prominent A.I. start-up, is said to be seeking $500 million in new funding to keep up with bigger rivals like OpenAI and Anthropic. (FT)
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“Is Trump Unveiling a Crypto Wallet? His Associates Say Yes. His Sons Say No.” (NYT)
Politics, policy and regulation
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President Trump is reportedly poised to again delay a U.S. ban on TikTok as negotiations continue over an overhaul of the Chinese-owned app’s ownership structure. (N.Y. Post)
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“Some of Trump’s Biggest Inaugural Donors Benefit From Early Government Actions” (WSJ)
Best of the rest
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“Trump Wants America to Make Things Again. Does It Have What It Takes?” (NYT)
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Is the endgame of the artificial intelligence boom a string of “everything apps”? (The Atlantic)
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 the weekend edition editor of the DealBook newsletter and writes features on business.
Michael J. de la Merced has covered global business and finance news for The Times since 2006.
Danielle Kaye is a Times business reporter and a 2024 David Carr Fellow, a program for journalists early in their careers.
The post Trump Bemoans How ‘HARD’ It Is to Strike a China Deal appeared first on New York Times.
