President Trump’s proposal that the United States should take control of Gaza and turn it into the “Riviera of the Middle East” drew widespread criticism, including from allies. But it also underscored the expanse of his geopolitical and economic aims, especially after his comments about Greenland and Canada. What will serve as checks on his ambitions?
We also point out how China’s reported deliberations about investigating Apple show the potential costs of Trump’s tariff fight. And we dive into more efforts by the Trump administration to say there are limits on Elon Musk’s government work.
The Apple factor in the trade fight
The trade battle between Washington and Beijing is taking a bite out of one of President Trump’s favorite American tech giants.
Shares in Apple are down more than 2 percent in premarket trading on Wednesday, erasing $90 billion in market value, after Bloomberg reported that Chinese regulators may begin an investigation into the iPhone maker.
The latest saber-rattling by China underscores that the president’s tariff threats could hurt American interests. That said, Washington isn’t standing still, either.
What’s happening: China’s State Administration for Market Regulation is taking a close look at Apple’s App Store policies, including the cut that the U.S. tech company takes from sales there and its restrictions on the use of external payment services and stores, Bloomberg reports. The publication added that the possible inquiry might be forestalled if talks with Apple over these concerns make progress.
Any inquiry into the matter would come after global pushback on the App Store, with the European Union having already forced Apple to open up iPhones to alternative app stores on competition grounds. In the United States, Epic Games sued Apple over its restrictive policies. Apple scored a big victory, but the legal fight still isn’t fully resolved.
China remains a key but increasingly difficult market for Apple. The country is the iPhone maker’s third-biggest source of revenue, accounting for $18.5 billion in sales in its most recent quarter. But the company has seen its sales there fall in recent quarters, as it faces growing competition from homegrown rivals selling cheaper handsets.
Beijing is showing that it has cards to play the trade fight. It has already announced tariffs on some American exports, including liquefied natural gas. It has also opened an antimonopoly investigation into Alphabet, announced right as Trump said a new 10 percent levy on Chinese imports would go into effect. Regulators there are also looking into Nvidia, the big A.I. chipmaker, and reportedly weighing an inquiry into Intel.
A big unknown is whether Beijing would actually impose tariffs on iPhones, which might provoke a heated response from Trump (who has spoken favorably of Apple and its C.E.O., Tim Cook). Asked last week about the possibility of being dragged into the trade fight via tariffs, Cook said only, “We are monitoring the situation.”
The United States ramped up pressure on China, too. The U.S. Postal Service said on Tuesday that it had temporarily stopped accepting parcels from China and Hong Kong, after an executive order was issued that ended duty-free handling of many smaller shipments. (It reversed course on Wednesday.)
That move threatened to hit Chinese e-commerce giants including Shein and Temu, which have taken advantage of the decades-old tariff exception to ship low-cost goods to American customers.
HERE’S WHAT’S HAPPENING
President Trump draws criticism for his comments on Gaza. His proposal that the United States should seize the territory, displace the two million Palestinians who live there and turn it into a “Riviera of the Middle East” prompted rebukes across the Middle East, including from Saudi Arabia, a key U.S. ally. The idea — which lacked specifics or even an explanation of its legal basis — further underscored Trump’s fixation with expanding America’s geographic footprint, by force if necessary, and introduced another element of geopolitical uncertainty to his second term.
Key Trump picks advance in the Senate. The Senate confirmed Pam Bondi as attorney general Tuesday night, while Robert F. Kennedy Jr. President Trump’s choice for health secretary, and Tulsi Gabbard, his choice for director of national intelligence, survived committee votes. On Wednesday, the Senate Commerce, Science and Transportation Committee is expected to vote on whether to advance Howard Lutnick, President Trump’s choice for commerce secretary.
Efforts to combine Honda and Nissan are in peril. Executives of Nissan rejected a revised merger proposal by Honda that would make their company a subsidiary of its rival, instead of the two being equal parts of a holding company, The Times reports. A suspension of deal talks would leave unclear the fate of the two auto makers, which have struggled with the transition to electric vehicles.
More than 20,000 federal workers have agreed to quit. About 1 percent of the federal government’s roughly two million workers accepted an offer to resign and receive eight months of pay. That’s well short of the White House’s target, and far fewer than the 62,000 federal workers that on average have retired each year over the past decade. Thursday is the deadline to respond to the deal.
How Elon Musk is hacking the government
Of all of the moves Elon Musk has made to dismantle key agencies and upend government infrastructure, none has rattled career officials more than taking control over the Treasury payments system that disburses money on behalf of the entire federal government.
But President Trump and others are now saying that there are plenty of checks on the entrepreneur’s power.
A recap: Musk was supposed to advise Trump on where to cut the fat and improve efficiency. But the tech mogul and his associates — known to some government employees as “the Bobs” (as in the cost cutters from the film “Office Space”), according to The Times — have set up offices near the White House and have been waging a cost-cutting war across nearly every agency, all seemingly without congressional oversight.
The Treasury payments issue has touched a nerve, however. Demonstrators gathered outside the Treasury Department on Tuesday to protest Musk’s gaining access to the system, which handles nearly 90 percent of payments for the government.
Earlier this week, Trump — despite promising Musk wide latitude for his work — said that “Elon can’t do and won’t do anything without our approval.” Then Treasury Secretary Scott Bessent privately told Republican lawmakers that Musk didn’t have control of the system, according to Politico.
On Tuesday, the Treasury Department sought to provide more reassurances about limits on Musk’s work: It said that his cost-cutting review would have “read-only” access to data — though it didn’t specify whether the team can gain access to or edit the underlying software.
What’s not in dispute is how much power Musk has amassed to disrupt Washington. Here are just some examples of his blitz:
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Pushed Trump to pick as Air Force secretary Troy Meink, who used to run a Pentagon office that helped Musk win a multibillion-dollar contract for SpaceX.
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Taken over the Office of Personnel Management — the federal government’s H.R. department — which last week offered roughly two million federal workers a deferred resignation deal.
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Examined the General Services Administration’s real estate holdings in an effort to terminate leases. (Separately, the Trump administration on Tuesday warned of coming staff cuts.)
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Announced plans to download federal contracts into a system to be analyzed by A.I. to look for waste.
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Asked for a West Wing office but once Musk decided it was too small he moved to a suite in the Eisenhower Executive Office Building.
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Filled his staff with many people who are engineers — one as young as 19.
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Was granted access to financial and personnel systems of the U.S.A.I.D., where hundreds of workers will be put on administrative leave.
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Aides have requested access to Centers for Medicare and Medicaid Services systems that control more than $1 trillion in payments.
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Musk has also deployed his huge social media platform, X, using it as a tool to pressure senators to confirm Trump nominees, promote his agenda and attack his detractors.
Some have made moves to limit Musk. There are at least four lawsuits filed in federal court to challenge Musk’s authority.
Alphabet sticks to Silicon Valley’s A.I. playbook
Analysts and investors have asked in recent weeks what lessons Silicon Valley would take from the sudden rise of DeepSeek. Would the Chinese start-up’s apparent ability to produce artificial intelligence software on par with American rivals with far fewer resources lead to a rethinking of how A.I. is developed?
Google’s parent company, Alphabet, on Tuesday joined Meta, Microsoft and OpenAI in answering “no” to that question.
Alphabet said it planned to spend about $75 billion on capital expenditures this year, much of which would be earmarked for A.I. infrastructure like data centers. That’s up sharply from the $52.5 billion that the tech giant spent last year.
Compare Alphabet’s spending with Meta, which pledged to spend up to $65 billion this year; Microsoft, which has committed to $80 billion in the fiscal year ending in June; and OpenAI, which is planning to raise at least $100 billion for its Stargate initiative with partners including SoftBank, MGX and Oracle.
It’s a ratification of the idea that A.I. development will continue to require huge amounts of resources, even as DeepSeek claims to have achieved high performance with less access to the costly Nvidia processors that Alphabet and others have been paying up for.
Alphabet also said its A.I. models were more efficient than DeepSeek’s. On an analyst call on Tuesday, Sundar Pichai, the tech giant’s C.E.O., praised his Chinese rival for having done “very, very good work.”
But he added that new Google A.I. models were “some of the most efficient” out there, explicitly comparing them favorably to DeepSeek’s V3 and R1 software. Those comments appear to be meant to show that his company’s work was at the vanguard of A.I. development, with a path to developing models that won’t be so cost-heavy down the road.
Investors appear to have other concerns about Alphabet, though. Chief among them is slowing growth in cloud computing sales, which include selling A.I. tools to customers. The prospect of spending more on A.I. development when the company’s cloud offerings remain well behind Amazon’s and Microsoft’s hasn’t sat well with shareholders: Alphabet’s stock is down more than 6 percent in premarket trading on Wednesday.
THE SPEED READ
Deals
Politics and policy
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The F.C.C. is investigating a radio station owned by Audacy, whose backers include Soros Fund Management, for reportedly disclosing the location of undercover Immigration and Customs Enforcement agents. (Fox News)
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The S.E.C. is moving to scale back a unit dedicated to bringing crypto enforcement actions. (NYT)
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