A clash over Musk’s latest missive
Monday could bring a standoff between Elon Musk and huge swaths of the federal government, including Trump-appointed agency leaders.
The fate of the latest example of Musk’s brutal management style — having government workers justify their employment by midnight or risk being fired — may reveal the limits of President Trump’s cost-cutter-in-chief’s efforts.
“For now, please pause any response,” a top Pentagon official told employees this weekend, adding that the Defense Department “will conduct any review in accordance with its own procedures.” Similar messages went out from Tulsi Gabbard, the director of national intelligence; Kash Patel, the director of the F.B.I.; the State Department; and more.
What’s notable is that Trump loyalists lead many of those organizations. But The Times reports that many agency leaders are “tired of having to justify specific intricacies of agency policy and having to scramble to address unforeseen controversies” raised by Musk, especially after the billionaire’s so-called Department of Government Efficiency gained unprecedented access to government systems.
It raises the prospect that the Musk approach has its limits. Yes, Musk made a similar move at the social network once known as Twitter. But the federal bureaucracy moves much more slowly than a private company — and has unions who can push back.
The president of the American Federation of Government Employees, the largest such union, declared Musk’s missive “plainly unlawful” and added that the Office of Personnel and Management was being directed by “the unelected and unhinged Elon Musk.”
The Department of Government Efficiency is falling in esteem among voters, at least according to recent polls and a growing number of town halls held by Republican politicians.
Some G.O.P. governors are still defending Musk’s work, even as their own states’ finances are being strained by halts in federal funding and layoffs of government employees.
What will Trump do? The president initially encouraged Musk to be more “aggressive” and bragged about the scale of the tech mogul’s job cuts. He has since stayed quiet about the matter.
Will he seek to rein in his most powerful ally, given growing concerns that the Musk-led cuts are costing the government technical expertise, potential research into artificial intelligence, possible job and economic growth, and potential loss of support for other initiatives, such as sweeping tax cuts?
Musk himself appears unfazed, at least publicly: Government workers “now need to do real work that is of real value to their fellow citizens,” he posted on X on Monday.
HERE’S WHAT’S HAPPENING
Apple pledges to spend $500 billion in the United States over the next four years. The tech giant said it will create 20,000 U.S. jobs and build more products, including A.I. servers, domestically, just days after Tim Cook, Apple’s chief executive, met with President Trump. The iPhone maker stands to lose out should the president hit China with more tariffs: In Trump’s first term, Cook persuaded him to forgo new levies that could have hurt iPhone sales.
European stocks and the euro rise after German voters choose a new chancellor. Friedrich Merz and his center-right Christian Democrats gained enough support to lead the country with just one other coalition partner, according to the latest poll results. But Merz may struggle to approve more military spending, potentially drawing the ire of President Trump. (The hard-right Alternative for Germany, which Elon Musk supported prominently, underperformed slightly but will be the biggest opposition party.)
Investors brace for Nvidia earnings and new inflation data this week. The chipmaker at the heart of the A.I. boom reports results on Wednesday, a big event for this quarter’s earnings season. On Friday, the Personal Consumption Expenditures report, the Fed’s preferred gauge on inflation, is set for release amid concerns that rising consumer prices could force the central bank into a lengthy pause on interest rates.
Minerals for aid?
As the Russia-Ukraine war enters its fourth year on Monday, the Trump administration and Kyiv are embroiled in tense negotiations that would essentially trade Ukraine’s mineral wealth for continued American support.
Such a deal would represent a major policy shift and give the United States prime access to Ukraine’s vast stores of titanium, lithium and rare earth materials. President Volodymyr Zelensky and his government have signaled some openness — though they are pushing back with limited leverage, given that Washington is preparing to start peace talks with Moscow, so far without their involvement.
Ukraine called Washington’s latest terms too onerous. Zelensky, who has been feuding with President Trump since his apparent pivot toward Russia, raised the stakes on Sunday when he said he would be willing to give up power in exchange for increased security commitments, including admission into NATO.
What’s at stake: Washington wants Ukraine to give the United States half of the revenues on its natural resource exports, plus a cut of earnings from ports and other infrastructure. The revenues would be paid into a fund that caps out at $500 billion. Ukraine believes it should have to pay in no more than $90 billion, Bloomberg reports.
Treasury Secretary Scott Bessent, who traveled to Ukraine earlier this month, has been selling the plan hard. “The terms of this partnership will mobilise American talent, capital, and high standards and governance to accelerate Ukraine’s recovery and sends a clear message to Russia that the U.S. is invested in a free and prosperous Ukraine over the long term,” he wrote in The Financial Times this weekend.
Trump’s hard-nosed approach signals a more mercantile approach to Ukraine, which could complicate efforts to rebuild the country.
Last year, the World Bank pegged the reconstruction and recovery cost at $486 billion, and Kyiv owes foreign countries and the I.M.F. billions of dollars more. By far the biggest creditor is the European Union. Brussels has furnished billions of euros worth of grants and loans, including a €50 billion rebuilding fund.
De minimis tax break, major headache
Lobbyists are in an 11th-hour push to preserve a small but significant trade rule that the Trump administration tried to scrap earlier this month with disastrous results.
As part of a wider tariff policy, President Trump wants to kill the de minimis exception, which allows merchandise worth less than $800 to enter the country untaxed.
It’s seen as a key to stopping fentanyl from entering the United States, and has bipartisan support — but ending it is expected to bring pushback from corporate America, Grady McGregor reports for DealBook.
Why business is worried: Pulling the exception, which China has become especially adept at exploiting, could be costly for companies like Amazon and FedEx. Economists also worry it would reignite inflation, and hit poorer households hard.
Corporations and their representatives plan to argue that thousands of additional Customs and Border Protection officers and huge investments would be needed to police de minimis shipments — and there are cheaper high-tech ways to stop fentanyl shipments.
Trump created turmoil in his approach: The president abolished the de minimis allowance for goods coming from China earlier this month only to backtrack days later.
Representative Rosa DeLauro, a Connecticut Democrat who is a staunch critic of the de minimis provision, said the U-turn has “given us all severe whiplash.” Trump amended the order after meeting with Fred Smith, the chairman of FedEx, prompting DeLauro to question whether the logistics giant had pressured the president to suspend the matter.
Asked by DealBook about its efforts to lobby the White House on de minimis, FedEx said in a statement that it was “an advocate for pro-trade policies that make it easier for global trade and commerce.”
The de minimis opposition remains fierce. Trade hawks, like Peter Navarro, a key Trump adviser, have long criticized the provision as a loophole that allows drugs to freely enter the U.S.
“It’s toast,” William Reinsch, a former United States trade official and a senior adviser at the Center for Strategic and International Studies, told DealBook.
The U.S. is currently in a de minimis boom. In 2024, 1.36 billion de minimis packages arrived in the U.S., roughly half of which came from China, nearly a 10-fold increase from a decade ago.
Investors and companies are bracing for its demise. It would be a blow to the Chinese e-commerce giant Shein, which is eyeing a London I.P.O. and is already reportedly facing pressure to reduce its valuation significantly or delay the listing. Other companies are looking to move production away from China. Amazon’s Shein look-alike venture, Amazon Haul, also stands to lose out.
What is Buffett waiting for?
Yes, Berkshire Hathaway reported a big jump in operating earnings for 2024. But for investors, the big question was: What is Warren Buffett’s plan for his increasingly dusty “elephant gun” cash pile?
His conglomerate has amassed $334 billion in cash and Treasury bills, bigger than the market value of Coca-Cola. And while Buffett continued to praise stocks, he’s no closer to striking another major deal.
“Berkshire will never prefer ownership of cash-equivalent assets over the ownership of good businesses,” Buffett wrote in his annual letter to investors on Saturday. He added that the value of his conglomerate’s holdings of companies far outweighed that of his equity portfolio.
But that doesn’t change the fact that the Oracle of Omaha sold down lots of stock in 2024, including holdings in Apple and Bank of America, in what was a blockbuster year for the markets.
What would get Buffett off the sidelines for a big deal? This year, he didn’t mention “elephant gun” in his letter at all. He conceded last year that there were only a few companies that could meaningfully move the needle for Berkshire, strongly suggesting that the era of transformative takeovers for the company was over.
The growing cash pile may not mean that Buffett is preparing for economic calamity, with some Berkshire watchers positing that the billionaire is smoothing out a path for his eventual successor as C.E.O., Greg Abel.
And Buffett noted that Berkshire’s hoard of short-term Treasuries — $286 billion as of Dec. 31 — had provided a “predictable large gain in investment income.”
But Buffett is bracing for potential disasters. The billionaire warned that wildfires and other weather events could hurt Berkshire’s vast insurance operations.
More ominously, he alluded to the possibility of decisions from Washington hurting investors, at a time when inflation and debt hawks are closely watching President Trump’s planned policies.
“Paper money can see its value evaporate if fiscal folly prevails,” he wrote to investors. “Fixed-coupon bonds provide no protection against runaway currency.”
THE SPEED READ
Deals
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Shares in Just Eat Takeaway.com soared on Monday after Prosus, a big tech investor, agreed to buy the food delivery service for $4.3 billion in cash. (CNBC)
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FTI Consulting is said to be bracing for a staff exodus as the firm contends with the fallout from a major star’s exit. (FT)
Artificial intelligence
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