Washington, DC

1. Trump abandons 20% toll
2. Collins calls Mullin
3. SCOTUS justices testify
4. Warsh quizzed on hikes
5. Cyclospora data debate
6. Left’s new bogeyman

IBM ▼ 25% after the company warned of weak Q2 financial results as customers shift spending to servers and memory chips.

Trump walks back 20% toll plan

President Donald Trump today backed off the plan he announced just yesterday to charge a 20% fee on cargo shipped through the Strait of Hormuz, proposing instead that the US would strike massive “trade and investment deals” with Middle Eastern countries. A White House official called Trump “very serious” about the toll, but analysts were dubious, as it would double the cost of moving oil through the strait. Commercial shippers are worried about the waterway, nonetheless, as the conflict continues to re-escalate. Trump wanted a swift, decisive victory when the war began, but Iran’s exploitation of the strait has forced his hand. The president’s latest plan to wrest control of Hormuz — by renewing strikes on Iran and reimposing a naval blockade — is his third major shift in military strategy in the five-month-old war. Depending on how Iran responds, his options will likely narrow further.

Collins pushed for ICE vehicle stop suspension

Sen. Susan Collins said she made the call to Homeland Security Secretary Markwayne Mullin that convinced him to suspend vehicle stops by immigration agents until they receive new training — a show of clout for the Maine Republican, albeit one with its own risks. Immigration and Customs Enforcement officers have shot and killed two drivers in the last six days, including a Mexican immigrant in Texas and a Colombian immigrant in Maine. Witnesses and officials have given conflicting accounts of the events. Protesters in Maine gathered outside Collins’ district office yesterday, invoking her recent vote for $70 billion in new immigration and border enforcement funding. How Collins handles this case could test her appeal as an independent, moderate voice in the Senate — the image that has carried her to victory even as Maine has trended bluer.

Supreme Court justices testify on security

Supreme Court Justices Amy Coney Barrett and Elena Kagan urged Congress today to increase the funding to protect them and their court colleagues during a rare appearance before House and Senate committees. “I didn’t expect that performing this service would put me in the position of explaining to my children what a bulletproof vest was, why I had to wear one,” Barrett, a conservative, said. Kagan, a liberal, urged lawmakers to turn down the temperature on heated comments. “They’re dangerous in terms of individual justices’ security,” Kagan said. The Supreme Court’s security force has hovered around 200 officers for years, but officials are aiming to double that number, according to Politico. Threats against federal judges of all levels have been on the rise, according to the US Marshals Service, which protects them.

Warsh condemns inflation while dodging on hikes

US Federal Reserve Chair Kevin Warsh today committed to tackling stubborn inflation in hawkish comments that investors took as a signal that borrowing costs are likely to stay higher for longer, reports Semafor’s Eleanor Mueller. Warsh sidestepped questions about whether the Fed would raise rates, even though lawmakers pressed him. But he again emphasized the Fed’s goal of price stability and dismissed a cooler-than-expected inflation report as “just one data point,” adding that he doesn’t want to “cherry-pick data.” “There might be some that look at this morning’s data and say, ‘Oh, mission accomplished, everything is swell,’” Warsh said at a House Financial Services Committee hearing. “That is not my view.”

Cyclospora outbreak exposes public health cracks

As cases of a parasitic infection spread across the US, critics of the Trump administration’s response have blamed cuts to a single program. But public health experts say that misses the deeper problems the outbreak has exposed, reports Semafor’s Lauren Morganbesser. The foodborne illness tracking program, called FoodNet, followed cyclospora cases through a 10-state network until last year, when the Centers for Disease Control and Prevention reduced the number of pathogens that FoodNet required states to report from eight to two. Experts say tracking cyclospora through FoodNet is valuable and should be resumed, but caution that the outbreak would likely have been difficult to solve even if FoodNet hadn’t been cut. Instead, the outbreak has revealed a public health system strained by years of underinvestment, leaving investigators to chase one of the largest outbreaks in recent memory with outdated technology, limited staffing, and stretched resources.

AI is the left’s new AIPAC

New York Gov. Kathy Hochul’s Tuesday announcement of a data center moratorium signals that backlash against unchecked AI growth is moving closer to the Democratic mainstream, Semafor’s David Weigel reports. In races across the country where left-leaning challengers are threatening Democratic establishment picks, they’re doing so by making the AI industry into a new bogeyman. As the implosion of Graham Platner in Maine stokes an intraparty debate over progressives’ campaign acumen, the left has sought to change the subject by digging in against data centers as energy-hungry behemoths that hurt communities. “Progressives have made the influence of big money a major divide in our politics this cycle,” said Faiz Shakir, an adviser to Sen. Bernie Sanders, I-Vt., who in March proposed a nationwide data center moratorium alongside New York Rep. Alexandria Ocasio-Cortez.

Big law firms have run the same playbook for 50 years: hire armies of young lawyers, bill their hours at steep rates, and funnel the money up to the partners. AI is about to upend that model. On this week’s Compound Interest, presented by Amazon Business, Cooley partner and CEO Rachel Proffitt joins Liz and Rohan to discuss how AI could disrupt Big Law’s sacred cow — the billable hour — by taking over the grunt work that most associates cut their teeth on. Plus, what the rainmakers of the future look like, the rise of AI-native law firms, and the paranoia sweeping the industry.

White House

• President Trump’s holding company received a $2 million payment from a South Korean firm involved in a US trade dispute. — NYT
• Trump told reporters today that his prime-time address Thursday evening will include the subject of “voting machines.” — WaPo
• Vice President JD Vance taped an episode of Joe Rogan’s podcast today in Austin, Texas — he had been scheduled to meet with House Republicans, but canceled last night.

Congress

• Darline Graham Nordone was sworn in as the interim senator from South Carolina after the death of her brother, Sen. Lindsey Graham.

Business

• Big banks smashed earnings records in the second quarter.
• Michelle Bowman, the Federal Reserve’s top bank regulator, said banks should not “micromanage” how lenders use AI. — Bloomberg

Courts

• E. Jean Carroll received a payment of $5 million plus interest today from President Trump, her award for a 2023 civil sexual abuse and defamation judgment against him.
• Mahmoud Khalil, a Columbia University protester whom the Trump administration has sought to deport, filed a lawsuit against the government and pro-Israel groups.

Foreign Policy

• The US is in advanced talks with Syria and Iraq on the construction of an oil pipeline that would bypass the Strait of Hormuz. — Bloomberg
• Newly released emails reveal confusion at the State Department as the agency attempted to destroy contraceptives housed in Belgian warehouses. — WaPo
• The office of former Iranian President Mahmoud Ahmadinejad denied a New York Times report that he’d become an Israeli asset.
• Iran-backed Houthi forces and Saudi Arabia traded airstrikes as war threatens in Yemen.

— Sen. Tommy Tuberville to Semafor on what Secretary of State Marco Rubio told the Senate GOP during an impromptu visit.

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,