Elon Musk’s growing power in government appears to be making some of his businesses more of a magnet for investors. Case in point: Banks have managed to sell off most of the $12.5 billion worth of debt owed by X, his social network, to eager buyers. Investors are essentially betting that the company’s future is brighter because of his role at the heart of government.
It’s a different situation from what worries many Musk skeptics — that he will use his vast influence to directly benefit companies like SpaceX. It’s also worth flagging that the scrutiny on Musk may have ended up costing Tesla that potential State Department contract we wrote about on Thursday. More on all that below.
Markets shrug off tariffs threat
Tariffs, schmariffs: Investors on Friday are largely brushing off President Trump’s latest trade-war barrage. Stocks have rallied in China, a major target on his tariffs hit list, while the dollar has fallen.
This is all playing out just hours after Trump unveiled his long-awaited plan for reciprocal tariffs against all trading partners, which, along with his levies on steel and aluminum imports and still-unresolved threats against Canada and Mexico, could still upend global trade.
What gives? To the seeming relief of investors, there was little detail in Trump’s latest executive order. And the measures won’t be enacted until early April at the earliest, giving federal agencies time to study how to calibrate country-specific levies.
“Markets had to decide whether the president was being a protectionist or a pushover, and for now are erring toward pushover,” Paul Donovan, the chief economist at UBS Global Wealth Management, wrote in an investor note on Friday. “The delay is seen as an opportunity to do ‘deals’.”
Companies and countries are doing exactly that. French winemakers have been ramping up shipments to the United States ahead of any levies. And to get in Trump’s good graces, Vietnam says it will import more U.S. farm products, and Taiwan and India say they are willing to buy more American oil and liquid natural gas.
At a news conference with Prime Minister Narendra Modi, Trump said that he was unable to get India to lower its high levies on U.S. imports. But now, Trump added, “We’re just going to say ‘Whatever you charge, we charge.’”
Maros Sefcovic, the E.U. trade commissioner, plans to fly to Washington to speak with Howard Lutnick, Trump’s pick for commerce secretary, to potentially cut a deal, The Financial Times reports. In the meantime, the trading bloc is readying countermeasures: “We have to respond — it’s better to negotiate from a position of strength,” Sefcovic said.
Trump wants to fundamentally rewrite the rules of global trade. The U.S. typically sets trade terms and tariff levels through international bodies like the World Trade Organization. Instead the president has blown up those norms by pronouncing fresh demands or deadlines on his terms, forcing countries to scramble with a response.
His administration has taken a broad view of what constitutes a trade barrier. Peter Navarro, the president’s senior counselor for trade, called out value added taxes that are widely used in Europe as an “unfair” burden on American companies.
He has also criticized other governments’ subsidies to homegrown industries, as well as foreign exchange rates that punish the dollar — despite that largely being out of a country’s control.
Trump may have more in store. He’s considering additional levies on automobile imports. And White House officials hinted that Japan, India and the E.U. could be targeted with a future round of tariffs.
But tariffs could be inflationary and that may spook investors. Some economists predict that the measures could add roughly 2 percent to consumer prices. Trump himself conceded that tariffs could force prices to “go up somewhat short term.”
HERE’S WHAT’S HAPPENING
The acting U.S. attorney in Manhattan resigns over the Eric Adams case. The move by Danielle Sassoon ended days of uncertainty about whether she would follow orders from the Justice Department to drop corruption charges against New York City’s mayor. (Five officials in the department’s public integrity section in Washington later resigned.) Sassoon’s opposition to the orders from Washington raise questions about how independent Jay Clayton, President Trump’s pick to lead the Manhattan U.S. attorney’s office, would be.
TikTok returns to the Apple and Google app stores. The reappearance of the video app came after the Justice Department assured the tech giants that they would not face fines for doing so, despite a law banning the Chinese-owned platform in the United States, The Times reports. It’s still unclear whether TikTok will be sold to a U.S. entity, as Trump wants; many legal experts also say the administration’s refusal to uphold the law is unconstitutional.
Beijing reportedly invites DeepSeek’s chief to a high-level meeting of tech leaders. Liang Wenfeng is set to join President Xi Jinping, the Alibaba co-founder Jack Ma and others for a symposium as soon as next week, according to Bloomberg. The move underscores the rising importance of DeepSeek for China’s ambitions in artificial intelligence, as well as a thawing of relations between Beijing and Ma, who had been on the outs.
Elon Musk’s creditors offload most of their X debt
If you thought Elon Musk’s creditors would never get a return on the $12.5 billion in financing they provided for his Twitter deal — now called X — think again.
Banks yon Thursday sold $4.7 billion of X’s debt, more than the $3 billion initially proposed, after receiving heightened interest, DealBook’s Lauren Hirsch and The Times’s Joe Rennison and Kate Conger report.
The high demand was a marked change from two years ago, when investors wouldn’t touch X’s debt. Just two months ago, investors were negotiating to buy the debt at a loss of 10 to 20 percent for the banks, one person involved in the discussions said.
The latest sale represents the third round of X debt that banks have offloaded in the past few weeks after selling around $6.5 billion in the first two rounds. Creditors still hold about $1.3 billion, which could eventually be sold.
Why are investors buying now? They’re betting on X’s improved business — but also on Musk himself. The billionaire has become one of the most powerful people in Washington with direct access to President Trump and billion-dollar government contracts for his SpaceX rocket company.
Questions still swirl around whether his companies could benefit from his newfound power.
X’s revenue increased by 40 percent last year after a dismal 2023, according to the person familiar with the company’s finances. More subscribers are now paying for X’s premium service, and the platform gets additional revenue from xAI, Mr. Musk’s artificial intelligence venture, which pays X to license its data, according to the people familiar with X’s business. That increase in revenue comes on the back of extensive cost-cutting by Musk, including an 80 percent reduction in staff.
Last month, Musk told employees in an email that user growth had stagnated and “we’re barely breaking even.” He added: “We need to be faster, more innovative and relentlessly focused.”
It may have worked. “More business seems to be coming in than it has in the last 2 years,” Brett Weitz, X’s head of content, wrote in an internal email in late January, which was seen by The Times.
“You think there’s going to be consensus with a gun to our head? If you think that’s harmony, we must be in North Korea.”
— Elisabeth Murdoch to her father, Rupert Murdoch, after being told about his plans (called “Project Family Harmony”) to cripple her voting power — and that of her siblings James and Prudence — in the family trust that controls Murdoch’s media empire, a conservative behemoth that includes Fox News and The Wall Street Journal. The Times’s Jonathan Mahler and Jim Rutenberg sourced their article from more than 3,000 pages of court material. It’s worth your time.
“Debanking” takes the stage on Capitol Hill
Lenders shutting down customer accounts, purportedly over conservative beliefs, has become a hot topic, especially after President Trump accused the C.E.O.s of Bank of America and JPMorgan Chase of so-called “debanking” last month.
It’s a subject that has followed bank chiefs to Capitol Hill.
“We don’t debank people for their religious or political affiliations,” Jamie Dimon of JPMorgan told reporters as he headed into a roundtable discussion with Senator Tim Scott, the South Carolina Republican who chairs the Senate Banking Committee, and fellow bank leaders.
Brian Moynihan of Bank of America — who was on the receiving end of Trump’s unexpected diatribe at the World Economic Forum — said after the meeting, “We have 70 million customers, and we’re happy to serve anyone.”
It isn’t just bank C.E.O.s being asked about it. In Senate testimony on Tuesday, Jay Powell, the Fed chair, said that he was “struck” by the number of cases of people saying they had been denied access to banking services.
He added that the central bank was “determined to take a fresh look” at the issue, raising the prospect for rule changes.
Lack of access to bank services isn’t just a conservative issue. Senator Elizabeth Warren of Massachusetts, the top Democrat on the Senate Banking Committee, called it out as an issue that affects people of all political stripes. She added, “Donald Trump was onto a real problem when he criticized Bank of America for its debanking practices.”
But there’s a split in diagnoses of the problem. Bank C.E.O.s are blaming what they say is a thicket of regulations. Asked if banking rules were to blame, Dimon said on Thursday, “Pretty much, yeah,” pointing specifically to anti-money-laundering and financial crime reporting requirements:
The AML/Fincen rules are extraordinary, and it does cause a lot of people to be pushed out of the system because banks were afraid of being sued, fined, because if after the fact something goes wrong — coulda, woulda, shoulda — you could pay a billion dollars.
Senator Warren argued last week, however, that banks were taking shortcuts to comply with regulations, and that agencies like the Consumer Financial Protection Bureau had a role to play. (That said, the Trump administration and Elon Musk’s cost-cutting initiative have effectively frozen the C.F.P.B.)
THE SPEED READ
Deals
Politics, policy and regulation
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The State Department says it has halted a plan to buy $400 million worth of armored vehicles from Tesla. (AP)
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Joe Gebbia — a co-founder of Airbnb, a close friend of Elon Musk and a Tesla board member — plans to join the tech mogul’s government cost-cutting task force. (NYT)
Best of the rest
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New details have emerged on Melania Trump’s documentary film deal with Amazon: The first lady’s cut is reportedly expected to exceed $28 million and her agent is trying to get more money from C.E.O.s close to the president. (WSJ)
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“Where China’s Exports Begin: Inside the Vast Markets of Guangzhou” (NYT)
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