Washington, DC

1. Sweating Trump and Chinese autos
2. Superpower club
3. Inflation vs. wages
4. US-Iran stalemate
5. Dem wants ballroom shuffle

The semiconductor index ▼ 3% on worries that inflation will increase chip prices.

Lawmakers push to ban Chinese-made autos from US

Two Michigan lawmakers made a push today for legislation to ban Chinese-made cars ahead of President Donald Trump’s visit to China. GOP Rep. John Moolenaar, chair of the House select committee on China, and Democratic Rep. Debbie Dingell warned about the national security and economic consequences of Chinese autos, with Moolenaar saying it would be “lights out for the American auto industry.” Steep tariffs on Chinese cars make it all but impossible to currently import them into the US, but Dingell said she still feared Trump could make concessions. “President Trump is President Trump and you never quite know what he’ll do until he does it,” she said, adding their legislation was “trying to send a message to him.” Trump alarmed some on the Hill when he signaled some openness earlier this year to allowing China to build car factories in the US.

— Nicholas Wu

View: What Asia fears more than a US-China showdown

If there’s one thing that Asia-Pacific economies fear more than a US-China showdown — forcing them to choose sides — it’s the opposite: a world in which the superpowers club together to cut bilateral deals, leaving everyone else out in the cold. Trump’s visit to Beijing this week has crystallized those anxieties. As he seeks agreements with Chinese leader Xi Jinping, American friends and allies are feeling abandoned. “All of a sudden it’s going to look like all the important decisions for the region are made in Beijing and Washington, rather than their own capitals,” Edgard Kagan, the US ambassador to Malaysia during the first Trump administration, told reporters. But that seems to be Trump’s plan. He’s revived language about a G2, the idea that a superpower condominium will run the affairs of the globe, with smaller countries falling in line.

Inflation surpasses wage gains

American consumers are being squeezed: Inflation has surpassed wage gains, according to new data from the Labor Department released today. The prices Americans are paying for goods rose at a rate of 3.8% in April, while wages have increased an average of 3.6% since this time last year. The cause is surging gas prices, which are pushing up not only the cost of filling the tank — Americans are paying an average of 50% more since the start of the war in Iran — but the cost of nearly all goods. Grocery costs jumped in April, too. Trump acknowledged the inflationary effects of the war today and dismissed whether that is pressuring him to make a deal: “The only thing that matters when I’m talking about Iran, they can’t have a nuclear weapon. I don’t think about America’s financial situation,” he said.

Trump heads to Beijing amid stalemate with Iran

Trump had hoped to leave for Beijing with a deal to end the war in Iran in the works, but he’s en route this afternoon amid a stalemate. The uncertainty was palpable on Capitol Hill, where lawmakers from both parties quizzed Defense Secretary Pete Hegseth and Joint Chiefs of Staff Chairman Gen. Dan Caine earlier today. “Did you anticipate the closure of the Strait of Hormuz?” Sen. Susan Collins, R-Maine, asked of Caine, who said the administration considered a “range” of outcomes. Hegseth ducked questions about the war’s cost, though a top Pentagon official put the price tag at around $29 billion — $4 billion more than two weeks ago. Sen. Lisa Murkowski, R-Alaska, rejected the White House claim that the operation had technically ended: “We still have 15,000 troops that are forward deployed, more than 20 warships and an active naval blockade.”

Democrat seeks to redirect ballroom funds to police

Sen. Jacky Rosen, D-Nev., will propose stripping $1 billion in White House security funding for Trump’s ballroom and East Wing renovation from Republicans’ immigration enforcement funding package and redirecting the money to law enforcement programs, Semafor’s Burgess Everett scoops. Rosen has two amendments to the bill, which is subject to unlimited amendments on the Senate floor. One would use the $1 billion to fund two years of the COPS hiring program, which awards grants for hiring local law enforcement, and two years of funding for the Public Safety Officers’ Death Benefits program, which pays death benefits for fallen officers. The other would fund a year of a criminal justice grant program. “They’re either going to have to be with him on this ridiculous policy, or they’re going to have to finally stand up against a ballroom, find a spine, and say no,” Rosen said.

For decades, litigation was a cost of doing business. Now, it’s becoming Wall Street’s newest asset class. Chris Bogart spent years at Cravath before founding Burford Capital, now the world’s largest litigation finance firm, turning corporate legal disputes into investable opportunities with billions at stake. In this episode of Compound Interest, presented by Amazon Business, Liz and Rohan explore the financialization of corporate fights, Burford’s $16 billion dispute with Argentina, and what it would take to finally let private equity buy a piece of Big Law.

White House

• Defense Secretary Pete Hegseth said he will join President Trump on his trip to China.
• Ukraine and the US are moving toward a drone deal. — CBS
• Staff at the Interior Department say bubbles and small holes have appeared in one of the layers meant to waterproof the Lincoln Memorial Reflecting Pool, raising concerns about the quality and speed of the work. — NYT

Congress

• The Congressional Budget Office estimates a national missile defense system, “The Golden Dome for America” akin to Israel’s Iron Dome, would cost $1.2 trillion over 20 years.
• FBI Director Kash Patel sparred with senators over reports of his drinking and denied the agency is targeting journalists.

Courts

• The FBI is questioning current and former CIA staff as part of the Justice Department’s investigation into ex-CIA director John Brennan’s involvement in the 2016 Russian election interference probe. — Reuters
• The DOJ filed criminal charges against a Singapore-based company for alleged safety violations that led to a massive container ship crash and the collapse of Baltimore’s Francis Scott Key Bridge in 2024.

Pentagon

• A company linked to President Trump’s sons has asked the Department of Defense for an extra $400 million to develop a mine in Kazakhstan, on top of the $1.6 billion in government support. — FT
• The Pentagon might rebrand “Operation Epic Fury” to “Operation Sledgehammer.” — NBC

Health

• After subsidies ended, more than one in five enrollees in Healthcare.gov were dropped from insurance roles for failing to pay their first premium. — NOTUS

Business

• eBay said its board rejected GameStop’s unsolicited $56 billion takeover proposal.

World

• Japan’s biggest snack maker switched to black and white packaging because of the “supply instability” of raw materials linked to the Iran war.
• At a meeting in Singapore last month, a representative from a Chinese think tank urged officials from Anthropic to allow Beijing access to the company’s new advanced AI model, a request Anthropic denied. — NYT

— Former Food and Drug Administration Commissioner Marty Makary resigning via text to President Donald Trump, who posted it on Truth Social.

Laura McGann, editor

With help from Elana Schor, senior Washington editor, and Morgan Chalfant, Washington briefing editor

Graph Massara and Lauren Morganbesser, copy editors

Contact our reporters:

Burgess Everett, Eleanor Mueller, Shelby Talcott, Nicholas Wu, David Weigel