Tariff turmoil
President Trump’s tariff week has arrived, and the world is none the wiser about what to expect. Among the unknowns: Who will get hit, and by how much?
Tariff tensions have fueled a $5 trillion stock market sell-off over the past six weeks, and Goldman Sachs economists have just raised their odds of a recession to 35 percent, warning that duties could sock global trade and raise inflation.
S&P 500 futures are in the red on Monday, with the benchmark index on pace for its worst quarter since 2022 as consumer sentiment plummets and investors nervously eye Friday’s jobs report.
Could the upheaval force Trump to change tack? The president and his team are giving mixed messages ahead of Wednesday’s expected announcement about reciprocal tariffs. On Air Force One on Sunday, Trump said he would be “much more generous” in meting out levies, but added that “all countries” are in the administration’s cross hairs, dashing hopes he’d draw up a short list.
(Trump prefers a “big and simple” tariff plan, The Wall Street Journal reports, suggesting exceptions could be hard to come by.)
Trump also warned of new targets this weekend, including “secondary tariffs” on Russia oil if Moscow muddled a cease-fire deal with Ukraine, and something similar for Iran.
Wall Street is calculating the potential fallout. Goldman economists now see Trump rolling out reciprocal tariffs with an average rate of 15 percent rate “across all trading partners,” according to a research note on Sunday.
That would lift “core” inflation, which strips out volatile food and fuel prices, to around 3.5 percent by year end, well above the Fed’s 2 percent target. It could also raise the unemployment rate and weaken GDP growth.
The effect of Trump’s pending tariffs could be felt this weekend. Car buyers in some regions turned out to dealerships in droves, as consumers fear higher prices. Trump’s 25 percent levies on imports of cars and auto parts are expected to go into effect on Thursday.
That hasn’t fazed Trump. “I couldn’t care less” if automakers raise prices, he said on NBC’s “Meet the Press” over the weekend. Speaking of foreign carmakers, Trump added, “I hope they raise their prices, because if they do, people are going to buy American-made cars. We have plenty.”
But the White House is weighing emergency aid for farmers left vulnerable from a trade war, The Times’s Tony Romm reports.
Adding to all this uncertainty: Trump is weighing whether and how to run for a third term, potentially setting off a constitutional crisis. “I’m not joking,” he said on “Meet the Press.”
HERE’S WHAT’S HAPPENING
BlackRock’s C.E.O. emphasizes the importance of private markets. In his annual letter to the money management giant’s investors, Larry Fink stressed the importance of nonpublicly traded opportunities as a way for average Americans to increase their wealth; BlackRock has acquired several companies to increase its offerings there. Fink now recommends that the average investor’s portfolio be 50 percent stocks, 30 percent bonds and 20 percent private assets, from 60 percent stocks and 40 percent bonds. Left unmentioned were divisive news topics including President Trump and the investing approach known as E.S.G.
The legal industry remains divided over Trump’s assault on top firms. None of the nation’s 20 biggest firms has offered “unconditional support” to Perkins Coie’s lawsuit seeking to overturn an executive order imposing steep punishments on the practice, according to The Financial Times. Relatedly, John Morley, a Yale Law School professor, wrote in a Wall Street Journal opinion essay that the firm Paul Weiss, which struck a deal with Trump after also being targeted, was especially at risk of a disastrous exodus of partners.
Elon Musk continues to spend big to win a Wisconsin Supreme Court election. The billionaire handed out $1 million checks to two voters in the state, repeating a tactic he used in Pennsylvania to support Trump, as he champions a Republican candidate for the Wisconsin high court ahead of a vote on Tuesday. It’s the latest effort by Musk to deploy his huge fortune to expand his political influence and aid Republicans. The party faces tight votes in Florida special elections on Tuesday.
Why Google’s A.I. drug spinoff raised outside money
Isomorphic Labs, the Google-owned company that uses artificial intelligence to accelerate drug development, plans to announce on Monday that it has raised $600 million — led by its first outside investor, Thrive Capital — Michael de la Merced is first to report.
The business, which was born from Google’s DeepMind research lab, has a deep-pocketed parent. But the round underscores the tech giant’s ambitions for the company, and suggests where it’s headed.
The back story: Isomorphic was spun out of DeepMind in 2021 with a plan to use the A.I. lab’s advanced software, including the AlphaFold model that predicts the shape of human protein and DNA, to design new drugs. Its C.E.O. is Demis Hassabis, a co-founder of DeepMind, who shared in the 2024 Nobel Prize for Chemistry.
Isomorphic’s goal is ambitious: “Our mission, one day, is to solve all disease” with A.I., Hassabis told DealBook, replacing a lot of the physical work of developing drugs with faster and more efficient computer modeling.
It’s currently working on oncology and immunology treatments, and has signed research partnerships with Novartis and Eli Lilly.
But that work requires more resources. While Isomorphic didn’t need to resort to outside capital — Google reported more than $100 billion in profit last year — developing new computational models and expanding its team of researchers is still costly.
“Isomorphic is pushing the boundaries of what is possible in small-molecule drug discovery,” Josh Kushner, Thrive’s founder and managing partner, told DealBook.
How the round came about: Hassabis and Thrive, which has made big bets on A.I. companies including OpenAI, Databricks and Anysphere, had known each other for years. But about 15 months ago, Thrive spent a lot of time with Isomorphic to better understand the A.I. drug discovery business. Soon after, Thrive saw in Isomorphic a potential investment.
Hassabis wanted a backer fixed on the long term who was also deeply focused on life sciences. Thrive, he said, had both expertise and a track record of sticking with start-ups for a long time.
What’s next? Isomorphic plans to develop more models and continue work on drug candidates, some of which are on the path for potential preclinical trial work, according to Hassabis. Longer term, the company may raise more money — and eventually aim to be independent.
Sparring over Panama’s ports
President Trump’s Panama Canal ambitions have hit a roadblock.
A big deadline looms this week in BlackRock’s $19 billion bid for the global port operations of Hong Kong-based CK Hutchison, with high stakes for the Wall Street giant and the White House. BlackRock has until Wednesday to finalize a big piece of the deal: for CK Hutchison’s prized Panama assets. China has now put that part in limbo.
The impasse comes as Beijing and Washington square off for control over global trade routes amid an escalating trade war, Grady McGregor reports for DealBook.
The deal is “just dominating the anger you feel from Chinese officials,” Josh Lipsky, senior director of the Atlantic Council’s GeoEconomics Center, told DealBook fresh off a flight from Hong Kong. “I was hearing about it in the morning, the afternoon, the evening.”
A recap: The deal would give BlackRock control of 43 ports across 23 countries, including key operations in Panama. That would not equate to American sovereign control over the Panama Canal, but Trump nonetheless has hailed the deal as such.
China’s top leader, Xi Jinping, sees it in similarly strategic terms, and he is reported to be personally angry with CK Hutchison and its mercurial 96-year-old owner, Li Ka Shing.
A spokesman for BlackRock declined to comment, and CK Hutchison could not immediately be reached.
Beijing’s fury had simmered in commentaries published in state-run media for weeks. Last week, it turned up the heat: Beijing announced an antitrust investigation into the deal, and ordered Chinese state-owned companies to temporarily sever ties with CK Hutchison, according to Bloomberg.
But Beijing has limited options to intervene. Here’s why:
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Li Ka Shing has been selling off mainland assets for over a decade to reduce CK Hutchison’s exposure to the Chinese market. “He may be untouchable at this point,” said Ryan Berg, director of the Americas Program at the Center for Strategic and International Studies.
Beijing has cards to play. The antitrust matter will be handled by the State Administration for Market Regulation, a powerful regulator created by Xi that was central in his crackdown on tech giants such as Alibaba and Tencent.
But killing the deal, through whatever means, would hobble Hong Kong’s standing in global finance, and could undermine Beijing’s latest charm offensive with Western business. It’s the “commercial nuclear option,” said Isaac Kardon, a senior fellow for China studies at the Carnegie Endowment for International Peace.
Still, CK Hutchison’s future in Panama has long been uncertain. The Panamanian authorities had been auditing its port operations. And there is also no telling how a Panama Canal-obsessed Trump might respond to Xi’s intervention.
“If China is really willing to pull out all the stops to kill this deal, that is teeing them up for a showdown in Panama,” Kardon said.
Vistria goes all in on housing
The Vistria Group has raised more than $2.5 billion in assets under management for its real estate fund focused on affordable housing, Lauren Hirsch is first to report.
The capital increase comes as the so-called private real estate industry emerges from its toughest fund-raising year in over a decade. But it also highlights how some investors see an opportunity in addressing the nation’s affordability crisis, which continues to simmer as a major political issue.
Vistria’s fund is led by Margaret Anadu, who made waves when she joined the Chicago-based firm from Goldman in 2022. Vistria has acquired more than 7,000 (mostly affordable housing) units since the real estate fund’s 2023 launch. Among its most recent deals was a project to convert nearly 700 units in California.
Vistria views such housing as a promising asset class. Rising interest rates and dwindling supply have driven up housing prices to historic highs, according to Brookings. That’s driving politicians on both sides of the aisle to try to bolster investment by modifying zoning, cutting red tape, or embracing private and public partnerships to increase the supply of housing for those in lower income brackets.
“The capital need is in the trillions, not billions,” Anadu said.
“It’s no secret that there’s a big market opportunity,” Bennett Goodman, whose firm, Hunter Point, invested in Vistria in 2022, told DealBook. “What’s hard is being able to put together a scalable platform where you have sufficient capital to be relevant.”
Vistria’s fund-raising comes as some investing focused on social issues has fallen out of favor. But the size of the fund — and the broad buy-in from investors at so-called family offices, investment banks and insurance companies — indicate that investors don’t just see this as merely a “change they can make in society,” Anadu said. “We much more significantly have investors who are really focused on the commercial opportunity.”
THE SPEED READ
Deals
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The embattled British carmaker Aston Martin reached an agreement to sell more shares and a stake in its Formula One team — valued at a combined $162 million — to the Canadian billionaire Lawrence Stoll as it faces potential tariffs from the U.S. (Bloomberg)
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A federal judge ruled that Elon Musk must face trial for allegations of breaching securities disclosure rules when he built an ownership stake in Twitter ahead of buying the social network in 2022; he faces a similar lawsuit from the S.E.C. (Reuters)
Politics, policy and regulation
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Breaking: Marine Le Pen, a leader of France’s far right, and others in her political party were found guilty of embezzling European Parliament funds; she was sentenced to prison and barred from running in the country’s 2027 presidential election. (NYT)
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“DOGE wants businesses to run government services ‘as much as possible’” (WaPo)
Best of the rest
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Ted Sarandos, Netflix’s co-C.E.O., said that President Trump didn’t pitch him on doing a documentary on the first lady, Melania Trump, when the two had dinner last year. Amazon picked up the project; Sarandos said, “For $40 million, I hope it’s great.” (Deadline)
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The New York Yankees hit a lot of home runs this weekend, drawing added scrutiny to the team’s “torpedo” bats. (The Athletic)
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