Washington, DC

1. Türkiye’s F-35 bid stalls
2. Tariff arbitrage crackdown
3. Iran war toll rises
4. Markets see good news
5. Kennedy Center fight reignites

Democrats gathered in Austin are expected to approve a new primary calendar for 2028 that leads with South Carolina on Jan. 22, followed by Nevada on Feb. 1.

Türkiye’s F-35 buy faces growing headwinds

President Donald Trump’s plans to sell F-35 fighter jets to Türkiye remain stalled more than a month after he announced them, leaving Congress to navigate the resulting tension, report Semafor’s Eleanor Mueller, Lauren Morganbesser, and Shelby Talcott. US sanctions require that Türkiye must offload its S-400 Russian air defense system for the sale: Türkiye took a first step when it reportedly entered into talks to sell the system to the UAE, but people familiar with the talks say those conversations don’t appear to have advanced. The F-35 sale could have a hard time surviving a congressional disapproval vote — in part because many Trump allies insist on Türkiye’s divestment from the Russian system. “I don’t think they should have F-35s unless they’re going to be a true partner … so if they have the S-400, they cannot have the F-35,” Sen. Rick Scott, R-Fla., told Semafor.

Trump accuses China of dodging tariffs

The Trump administration is pointing the finger at more than 40 countries it says have helped China dodge tens of billions of dollars in tariffs. “It’s big money, but there’s also a very human cost here,” Peter Navarro, senior counsel for trade and manufacturing, told reporters this morning. “A Chinese motor that clears customs as Mexican is a motor not built in Detroit, Grand Rapids, or Indianapolis.” He added that Customs and Border Protection has launched an AI “detective border” to crack down on rerouted exports, which would work in tandem with a recent executive order and ongoing trade negotiations. Navarro declined to answer a question on whether Trump would raise the issue with Chinese leader Xi Jinping when the latter heads to Washington in six weeks. Talks over the countries’ proposed board of investment have appeared to stall ahead of the visit.

— Eleanor Mueller

A quarter of US Reaper drones lost in Iran

The Iran war is taking a toll on the US military. A quarter of the Pentagon’s Reaper drone fleet has been lost during the conflict, at a cost of about $1.3 billion, according to a report in The Washington Post today. Reapers conduct surveillance and targeted strikes, and they have been used heavily in missions around the Strait of Hormuz. Meanwhile, the Pentagon is planning to send the USS George Washington aircraft carrier to the Middle East to relieve the USS Abraham Lincoln, in what was described to The Wall Street Journal as a pre-planned rotation. But the switch was announced soon after lawmakers began asking questions about reports of poor conditions onboard the Lincoln, which has been deployed for 250 days. The US and Tehran have made little outward progress toward a resolution in the last week, but mediators say talks continue.

Markets surge on wholesale prices beating expectations

Another marker of inflation came in below expectations today, sending the S&P 500 soaring to an intra-day high. The wholesale cost of goods was flat in July, according to new Bureau of Labor Statistics data. The finding tells a similar story as other recent data points: Rising inflation, driven by the energy shock from the Iran war, is cooling. This spring, investors started pricing in the Federal Reserve raising rates one or more times before the end of the year, but the new data could give the central bank room to continue its wait-and-see approach. Still, year-over-year inflation is 3.4%, well above the Fed’s target of 2%. Fed Chair Kevin Warsh has been coy about what move he might make in September when the board next meets.

Trump’s Kennedy Center fight reignites

The Trump-led Kennedy Center board is headed for another showdown with a federal judge. Today the board voted to re-inscribe the president’s name on the performing arts center, testing a federal judge’s previous order to remove it. A plaintiff in the case swiftly threatened further legal action. The board approved inscribing “Restored and Renovated by President Donald J. Trump” below the institution’s name, and proposed naming the center’s grounds the “President Donald J. Trump Plaza.” Two months ago, a US district judge ordered Trump’s name removed, ruling that only Congress could change the institution’s name. Rep. Joyce Beatty, D-Ohio, who sued over the original renaming, called the moves “a transparent effort to circumvent the court’s ruling” in a statement. Her attorneys added: “Now, the defendants must answer for their actions — again — in court.”

— Lauren Morganbesser

Reed Hastings, who shook business models from Blockbuster Video to Hollywood studios in his 29 years at Netflix, says we’re underestimating the wave of “creative destruction” that’s coming as AI’s capacity grows, allowing companies to attack slower-moving rivals.

Two months after leaving Netflix to run Powder, a Utah ski resort, Hastings advises CEOs to “keep an open lens” on the AI scenarios that are most likely to play out. It’s not the paranoid who survive, he says; it’s “the people who have judgment.”

In the latest episode of The CEO Signal, presented by PwC, Hastings tells Penny Pritzker and Andrew Edgecliffe-Johnson how he approached succession at Netflix and why he chose a “totally different” challenge for his second act.

White House

• Vice President JD Vance asked Attorney General Todd Blanche to review whether allegations of medical misconduct and billing fraud by providers of pediatric gender medicine lodged in a Health and Human Services report violate federal law.
• A federal judge in Boston dismissed the Trump administration’s antisemitism lawsuit against Harvard University.

Congress

• Sen. Susan Collins, R-Maine, told Semafor all ICE enforcement officers in Maine are now “equipped with body-worn cameras and trained in their use.”
• A House ethics investigation found that Rep. Chuck Edwards, R-N.C., used campaign funds to take a young aide to Las Vegas. — Raleigh News & Observer
• House Minority Leader Hakeem Jeffries signaled he’s open to debating making changes to the Supreme Court if Democrats regain power. — WSJ

Courts

• ​​Luigi Mangione, facing charges for the assassination of a health insurance executive in 2024, is expected to plead guilty in a federal court. — NYT
• The Justice Department declined to appeal a court ruling that struck down federal permitting requirements for suppressors and short-barreled firearms, effectively weakening key provisions of the 1934 National Firearms Act.

Campaigns

• Independent candidate Aaron Day may be able to stay on the ballot in the Senate race in New Hampshire after a challenge to his eligibility. He’d likely be a spoiler candidate for former Republican Sen. John E. Sununu. — Burgess Everett
• Two women who accused Graham Platner of abuse called on a liberal group in Maine to rescind an invitation to the former Democratic Senate candidate to headline a local Labor Day event, which was first reported by the Bangor Daily News.

Foreign Policy

• Last year, 153 civilians were killed and 243 injured in US attacks on the Iran-backed Houthis in Yemen, according to a review by the Defense Department. — Bloomberg

World

• Strikes targeting multiple Ecuadorian fishing boats near the Galápagos Islands this year were carried out as part of a covert CIA program. — WaPo

Immigration

• The Department of Homeland Security spent $464 million on 10 planes for deportation flights last fall, but most have sat unused for months. — NYT

Correction

• An earlier edition of this newsletter misidentified Forbes’ chief content officer as the company’s CEO.

— Attorney General Todd Blanche, in an address to the Justice Department after being sworn in on Monday.

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: