WSJ : Trump Says 200% Pharma Tariffs Are Coming. Wall Street Shrugs.

Trump Says 200% Pharma Tariffs Are Coming. Wall Street Shrugs.
A generous grace period would give drugmakers time to sidestep most of the pain

Photo: Kevin Lamarque/REUTERS
When a U.S. president threatens your industry with a 200% tariff, that’s not typically good news.

But since Tuesday, when Donald Trump said in a cabinet meeting that imported pharmaceuticals would face a massive levy, investors have been cautiously celebrating. Despite a broad stock selloff on Friday, the NYSE Arca Pharmaceutical Index is up around 1% over the past week, compared with a basically flat performance for the S&P 500.

That outperformance may seem puzzling, but for Wall Street, the size of the tariff matters less than the timing. The 200% figure lit up cable news chyrons, but investors focused instead on the grace period Trump floated. “We’re going to give people about a year, year and a half to come in, and after that, they’re going to be tariffed,” he said.

A year and a half is a long runway—and it could turn out to be even longer in practice. In a note titled “Tariffs Schmariffs,” Jefferies analyst Akash Tewari argues that if the grace period begins some time this year and lasts for a year and a half, companies could continue importing drugs tariff-free until 2027. They could buy even more time if they stockpile during that period to cover demand at least until some time in 2028. That might give them time to build entirely new U.S. manufacturing facilities, which typically takes around four years.

This doesn’t mean Trump isn’t getting what he wants. After all, the tariffs are meant as a threat to push companies to make more of their products in the U.S. And in this case, the threat seems to be working.

Since Trump began threatening pharma with tariffs, the industry has moved on two fronts. First, companies have been stockpiling drugs at a furious pace to build a cushion. For instance, the Wall Street Journal reported last month that $36 billion worth of hormone treatments—used in popular obesity and diabetes drugs—have been shipped from Ireland this year, more than double last year’s total.

Second, the industry has announced major investments in U.S. manufacturing. Some of that may be political posturing, but much of it reflects a real shift. Companies increasingly see no choice but to bring production back, at least for drugs sold to American patients. Eli Lilly LLY 0.30%increase; green up pointing triangle, for example, has announced a $27 billion plan to expand manufacturing in the U.S.

Making drugs in the U.S.—and registering the intellectual property here—comes with a tax hit. That is a big reason the industry offshored production to low-tax countries like Ireland in the first place. But Trump’s “Big Beautiful Bill” offers some relief to offset the pain. The bill lets companies immediately deduct R&D expenses and equipment purchases and raises the cap on how much interest they can write off—making it a lot cheaper to build new plants at home.

The upshot: with more time to prepare and a friendlier tax environment, pharma companies may barely feel the sting of tariffs. Take Merck. The company plans to produce a new version of its blockbuster drug Keytruda in the U.S. Jefferies estimates that with steps like stockpiling, gradually shifting production and trimming some costs, the hit to Merck’s earnings from tariffs in 2027 and 2028 could be just 1% to 2%. That is actually better than Jefferies’s earlier model for a smaller 25% tariff, which assumed fewer workarounds.

The sense of a new normal settling in around Trump’s second presidency might help explain why dealmaking has returned to the sector. Merck this past week announced a roughly $10 billion deal to buy Verona Pharma VRNA -0.02%decrease; red down pointing triangle. That followed a series of other deal announcements, including Eli Lilly’s $1.3 billion pact to acquire Verve Therapeutics VERV -0.27%decrease; red down pointing triangle.

By the end of Trump’s term, the U.S. pharmaceutical supply chain could look very different, with a greater share of innovative drug production happening on American soil.

That would be a rare win-win—for the White House and for the industry.

WWD : U.S. Apparel Imports From China Fell to a 22-year Low in May Amid Trade Wa

U.S. Apparel Imports From China Fell to a 22-year Low in May Amid Trade War Escalation
China's share of the U.S. apparel sourcing market fell below 10 percent for the first time in more than two decades.

Clothing imports from China fell to a 22-year low in May and were down by more than half (52 percent) from the same period in 2024 amid escalating tariff tensions between Washington and Beijing that have since resulted in a patched-up trade truce.

For the first time in decades, China’s share of apparel imports into the U.S. market dropped below 10 percent. May saw the sourcing superpower account for just 9.9 percent of clothing imports — a plummet from the year-ago period, when China represented 19.9 percent of all apparel brought into the American market.

The May trade insights, compiled by University of Delaware professor of fashion and apparel studies Dr. Sheng Lu using U.S. International Trade Commission (USITC) data, revealed that tariff rates on fashion products (especially steep duties on China-originating goods) ballooned beyond levels seen in the modern era.

As a result of the Trump administration’s reciprocal tariff regime, the average tariff rate for U.S. apparel imports grew to 23.8 percent in May, up several points from the already record-setting 20.8 percent seen in April (and substantially higher than the 13.9 percent average rate in May 2024, and even the 14.7 percent rate of January 2025, before the president’s second term began).

China predictably faced the brunt of that burden for several weeks after a tit-for-tat spate of escalating tariff threats between President Donald Trump and Chinese trade officials. On April 9, the president set a 145 percent duty rate on China-originating products — an unprecedented measure that was reversed on May 12 when U.S. cabinet officials traveled to Geneva to meet with their Chinese counterparts and brokered a truce that reduced the duty rate on both sides significantly.

The duty hike had the effect of reducing apparel imports from China sharply, but those that did enter the U.S. market during May faced tariff rates averaging an unprecedented 69.1 percent, up from 55 percent the month prior, 37 percent in March and 22.1 percent in January. Lu calculated the applied tariff rate on apparel by dividing the duty rate by the value of imports. All told, while the overall value of apparel imports decreased 7 percent year-over-year, import duties grew by almost 60 percent during the same time frame.

“In May, I think most of the [average apparel tariff] increase was because of China. And for the rest of the world, they were charged a 10 percent universal tariff rate. Some products, especially those from Asia, were able to enter [the country] in May before the new tariff rate hit,” Lu said.

Across the board, all countries paid more duties on apparel in May than they did in previous months due to the universal baseline tariff. Vietnam’s average apparel import duty rate reached 25.9 percent, up from 20.5 percent in April, while Bangladesh saw a similar percentage jump from 17.8 percent to 21.1 percent month-over-month. India’s average clothing tariff rate climbed from 15.8 percent to 20.1 percent, while Cambodia’s increased from 19.7 percent to 24.6 percent.

There were winners to be found in May, however, and their growing import values correlated with manageable tariff rates. Mexico, for example, saw its average import duties paid on apparel products decrease from 2.2 percent in April to 1.4 percent in May — nearly the same rate it paid one year ago.

But Mexico’s apparel import values jumped considerably year-over-year, by 12.2 percent. The country’s apparel imports are covered by the U.S.-Mexico-Canada Agreement (USMCA), giving them duty-free access. However, the country still only accounted for 4.6 percent of U.S. apparel sourcing in May.

The biggest players are still the Asian nations, many of which have received letters from the Trump administration regarding their new, double-digit tariff rates. They also faced threats against transshipment, or rerouting products from other countries with the goal of evading tariffs.

Lu, like other experts, believes the reference may allude to the administration’s intent to revisit content requirements and Rules of Origin, as true transshipment of finished goods is already illegal. In his view, “The signal is very clear — the Trump administration not only wants to decouple from China, but it wants Asian countries to decouple their supply chains from China.”

But the Trump administration’s long-held goal of encouraging Asian nations to abandon China as a partner “does not appear to be realistic, at least in the near to medium term,” with so much dependence on the country for inputs, he said.

For example, Organization for Economic Co-operation and Development (OECD) data from 2020 (the latest year for which insights are available) showed that about 55.4 percent of the value of Vietnam’s textile and apparel gross exports contained content added from other countries —including 26.6 percent contributed by China. UNComtrade data was even more stark, showing that China accounted for 63.8 percent of the $16.6 billion in textile imports to Vietnam in 2023, a “notable increase” from 37.4 percent in 2010.

Meanwhile, Vietnam represented the biggest apparel supplier to the U.S. in May, accounting for 21.7 percent of clothing imports. Limiting or discouraging access to the imported raw materials needed to produce apparel products could easily threaten Vietnam’s stability as a sourcing base, Lu believes.

The same is true for many of America’s current top suppliers, which in May included Bangladesh (which accounted for 9.7 percent of U.S. apparel import market share), Dominican Republic-Central America Free Trade Agreement (CAFTA-DR) countries (10.4 percent), India (8.2 percent), Indonesia (5.1 percent), Cambodia (5.2 percent) and U.S.-Mexico-Canada Agreement (USMCA) members (5.5 percent).

TechCrunch : Firefly Aerospace files for an IPO

Firefly Aerospace files for an IPO

Firefly Aerospace is taking its orbital ambitions to the public markets. The company, which notched a string of successes this year, including a historic commercial moon landing, submitted its formal declaration to regulators Friday detailing its plans to IPO sometime this year.

The S-1 document submitted to the U.S. Securities and Exchange Commission provides a wide-ranging look into the company’s finances and governance plans, though the number of shares to be offered and their price range has not been disclosed. This means the final valuation is still to be determined.


Firefly is heading into the initial public offering with $176.9 million in cash and cash equivalents. And while it has incurred negative cash flows and losses from operations, Firefly projected that its cash is adequate to meet its liquidity needs for at least 12 months.

The company does have a lot of debt: about $173.6 million, including a $136.1 million term loan with a 13.87% interest rate. The net proceeds from the IPO will be used in part to repay that outstanding loan, according to the S-1.

Firefly reportedly scored $55.8 million in revenue as of March 31, up from just $8.3 million for the same period in 2024. The majority of that — around $50 million — is from “spacecraft solutions,” or its Blue Ghost lander missions, and just $5 million from launch. But hardware is an expensive endeavor, and Firefly is still burning a lot of money: The cost of sales, or incurred expenses, was nearly as much as revenue — about $53 million as of March 31, leaving just $2.2 million in gross profit.

The company operated at a net loss of $231.1 million for the 2024 fiscal year, up from $135.5 million in 2023. Its net losses at the end of the first quarter were $60.1 million.

Yet the company tells prospective investors that it sees nothing but growth ahead, and there’s a handful of huge developments in the pipeline that could prove that to be true. That includes a major partnership with defense giant Northrop Grumman for a new, reusable launch vehicle called Eclipse, a launch agreement for up to 25 launches with Lockheed Martin, and the impending commercial debut of Elytra, a spacecraft line designed for in-space transportation services.

The company also cited strong customer demand, noting that as of March 31 it had about $1.1 billion worth of backlogged launch orders and spacecraft contracts. That’s about double from the $560 million in backlogged orders it had from a year prior. That big boost came from three multi-launch agreements for Firefly’s small Alpha rocket and an additional lunar delivery contract for its Blue Ghost lander.

The regulatory document also states Firefly intends to be a “controlled company” — essentially, that it will leverage Nasdaq rules to ensure that AE Industrial Partners, the private equity firm that bought a majority stake in Firefly in 2022, will retain significant governance control over the company even after it is listed on the public markets.

The company intends to list on the Nasdaq Global Markets under the ticker symbol $FLY. The news comes after a relative quiet period of space company exits. There was a slew of space companies that went public via mergers with special purpose acquisition companies in 2021 and 2022, many of which have failed to perform.

Firefly’s IPO will likely provide some much-needed liquidity to the market. Its IPO comes just one month after Voyager Space, a space company building the private space station Starlab, filed its IPO paperwork last month.

FT : Vietnam got an early trade deal with Donald Trump. Was it worth it?

Vietnam got an early trade deal with Donald Trump. Was it worth it?
Businesses wonder if Hanoi locked in better terms on tariffs by moving quickly — or gave up too much

For Thanh Cong Garment, a Vietnamese supplier to apparel companies including Adidas, Calvin Klein and Columbia, a trade deal to avoid the worst of US President Donald Trump’s tariffs should have been a huge relief.

Vietnam was one of only two countries that Trump said has clinched a deal with the US by a July 9 deadline to avoid his so-called reciprocal tariffs. This week, many of its neighbours received letters from the White House threatening, in some cases, higher levies.

But the company was left puzzling over the lack of detail in the agreement. Trump announced a blanket 20 per cent tariff rate, down from an initial threat of 46 per cent, but neither Vietnam nor the US has provided further details or released a final version of a trade agreement.

Hanoi has also not confirmed the new tariff rate, saying only that the two sides had reached a “fair and balanced reciprocal trade agreement framework”, raising further uncertainty for companies.

The US side also included a clause threatening a 40 per cent rate on goods “transshipped” — or rerouted — through Vietnam, though it did not define transshipment. But the clause has stoked concerns among businesses that they will be penalised for using Chinese inputs, which are critical to supply chains in Vietnam.

Tran Nhu Tung, the company’s chair, noted that the 20 per cent base rate was not much higher than the 15-17 per cent import tax currently paid by Vietnamese garment makers. But the transshipment clause could prove to be a huge challenge.

“For the products that [have] materials from China but manufactured in Vietnam, what is the tariff to export to the US? 20 per cent or 30 per cent or 35 per cent?” said Tung. “We need to wait.”


Vietnam, one of the biggest suppliers of apparel, shoes, electronics and other products to the US, became a manufacturing powerhouse in recent years, attracting the likes of Apple, Nike and Samsung as companies rushed to relocate production out of China to avoid blowback from geopolitical tensions.

Many of those companies are clambering to figure out the new trade deal will work — and whether by moving quickly, Vietnam has scored favourable terms or hemmed itself in.

“There is a sigh of relief that at least we know what the answer is for Vietnam . . . but there is still quite a lot of uncertainty in the agreement that exists right now,” said Rich McClellan, founder of the RMAC Advisory, whose clients include companies and the Vietnamese government.

The transshipment clause is “the most ambiguous and most potentially risky portion of this agreement”, he added. 

Vietnam has a lot at stake. One of the world’s most trade dependent countries, with an exports-to-GDP ratio of nearly 90 per cent, a third of its exports go to the US alone, making a higher tariff rate a significant risk for economic growth.

Its trade surplus with the US has surged in recent years to $123bn in 2024, the third-largest behind China and Mexico.

The country also drawn accusations of serving as a conduit for Chinese companies seeking to avoid Washington’s tariffs. A large amount of manufacturing investment in Vietnam has come from China, which accounted for almost one in three new projects last year.


Experts say the Trump administration’s definition of transshipment could refer to a range of practices from simply repackaging Chinese goods with a counterfeit “made in Vietnam” label or to using Chinese raw materials in goods manufactured in Vietnam.

“The impact may be more limited if these 40 per cent tariffs are enforced solely for the most egregious practices of plain diversion of trade to avoid US tariffs,” said MUFG analyst Michael Wan.

“In contrast, if there is a stricter determination of transshipment defined as a certain threshold of foreign value added, the impact . . . may be pronounced.” 

Given the Trump administration’s interest in isolating China, businesses fear a wider definition. This would be extremely damaging for Vietnam, where many businesses rely on Chinese raw materials and components, and warned that removing them would be impossible.

“That is not realistic, that does not take into account how global supply chains work,” said one American businessman in Hanoi. “It’s not just impossible for Vietnam. It’s impossible for everybody.”


Another big unknown is how Vietnam’s tariff rate will compare with those of its neighbours — a difference that will be critical to Vietnam retaining its competitive advantage as a manufacturing hub. Trump has set a new deadline of August 1 for countries to come to an agreement with the US.

“Whether the negotiated tariff is ultimately a win or loss for Vietnam will largely depend on whether other ‘China plus one’ markets secure similar deals,” said Marco Förster, Asean director at Dezan Shira & Associates.

Official data for the first half of the year shows FDI increased nearly a third to $21.5bn, suggesting that investment had not been scared off by the tariff uncertainty. Vietnam also has an edge in certain incentives and cheaper costs for producers.

But Steve Greenspon, founder of US home goods retailer Honey-Can-Do, warned that even “a 20 per cent tariff will result in higher prices and inflation on goods”.

“This will certainly lead to reduced demand for goods, hurting American businesses and jobs,” he said. “Companies will continue to produce their products in Vietnam, though at a lower pace than prior to the tariffs.”

For Tung, orders from US customers for the third quarter had already dropped between 15 and 20 per cent, after a rush to ship orders before the July 9 deadline. Up to 70 per cent of raw materials for garment manufacturing, from cotton yarn to zippers and elastic, are sourced from China, making it difficult for the industry to avoid being caught up in transshipment.

“Most of the garment materials of Vietnamese garment firms are imported from China,” said Tung. “So it’s difficult to find another materials supplier apart from China.”

FT : How Renault is speeding up car development to match Chinese rivals

How Renault is speeding up car development to match Chinese rivals
French carmaker is ahead of groups such as Volkswagen and Stellantis in time it takes to bring a vehicle to market


Renault is preparing more than 20 new models that will each be developed in less than two years in one of the most ambitious projects as western carmakers turn to fewer components and artificial intelligence to match the engineering speed of Chinese rivals.

The French group and other legacy carmakers from Volkswagen, Nissan to Stellantis are tearing down vehicles made by BYD and other Chinese carmakers, hiring Chinese engineers and learning from their joint venture partners in China to compete against an influx of new products that are cheaper and yet equipped with more advanced software.

What sets it apart is its ability to leverage its smaller scale to be nimbler to adapt to market changes, building a continuous flow of new electric vehicles in half the time it historically took to build a car. While other non-Chinese carmakers have announced similar ambitions, they have yet to implement the speed promised by Renault.

“We have a chance in Renault to be small in volume, very focused on our markets . . . and be faster than the big Volkswagen or Stellantis,” said Cédric Combemorel, its deputy chief technology officer.

Renault will release an all-electric new Twingo next year, after two years of development compared to the four it previously took. After Twingo, it has more than 20 projects, including its new Dacia minicar, which it aims to launch in 2027.

The Dacia minicar was developed in just 16 months — a record for western brands and even faster than the Chinese average development time of 18 to 20 months. Both vehicles will be produced at its plant in Slovenia.

The strategy was developed by Luca de Meo, who is to take over luxury group Kering, but executives say Renault will continue to find ways to execute his plans even after his departure.


Despite Renault’s optimism over executing its strategy, rival executives question whether the French group, and other legacy carmakers who follow, can produce a continuous flow of new vehicles that match the Chinese at speed and cost.

According to Alexandre Marian, partner at AlixPartners, not only can Chinese carmakers bring new cars to market at twice the speed, they can do so with up to 50 per cent less investment while using parts that are 30 per cent per cent cheaper than their western rivals.

Tighter deadlines, faster decision-making, software development, and in-house development of components are among the factors that make this possible. “On all levels it helps them win,” Marian added. 

Combemorel said the faster development cycle also required fewer and simpler parts. For example, including the number of vehicle colours, Renault also used to offer up to 220 options to consumers — compared with just 15 for some Chinese brands. 

“Frankly, the Chinese have learned for a long time from the Europeans, and now we’re turning this around so we learn something from them,” said Guido Haak, Renault’s chief programme officer.

A bigger challenge for Renault is “culture change” internally and among its suppliers, who will need to demonstrate that their components are not only essential but can also be developed faster.

To accelerate the shift, Renault has invested €26mn to build a simulation centre just outside Paris that houses an 8-tonne carbon-fibre pod to test prototypes of future vehicles on virtual roads to save both time and cost. 

For each new model, a so-called “digital twin” is created so that designers and engineers anywhere in the world can work on vehicle development together virtually, and problems can be fixed before a physical prototype is created. 

Renault also uses artificial intelligence to monitor any risks that could cause disruptions to its supply chains — which it claims has also helped to reduce vehicle delivery times by 60 per cent.

As western carmakers use the same methods to make vehicles like the Chinese, some analysts warn of the risk that the end products would start to look similar. 

Haak stressed that Renault could still differentiate its cars with exterior design as well as experience inside the car. 

“With the Chinese, you have a lot of very similar cars,” he said. “The most important thing is to understand your customer needs and that is what should differentiate us. If we’re not doing that, we have lost it.”

FT : Netherlands rations electricity to ease power grid stresses

Netherlands rations electricity to ease power grid stresses
Country provides early warning for rest of EU if investments in new cables do not keep pace with shift to greener economy

Thousands of businesses and households are waiting to connect to the Dutch grid, forcing network operators to ration power in an early indicator of what other European countries are likely to suffer as the speed of electrification increases.

More than 11,900 businesses are waiting for electricity network connections, according to Netbeheer Nederland, the association of Dutch grid operators. On top of that are public buildings such as hospitals and fire stations as well as thousands of new houses.

Dutch officials and companies said lengthy waits for connections were holding up economic growth and could force businesses to rethink their investment plans. Despite efforts to invest in new cables and substations, new connections in some areas of the country will only become available in the mid-2030s, according to network operators.

Although the bottlenecks in the Netherlands are particularly acute, analysts say it is a harbinger of what is likely to occur in other EU countries, as the speed of electrification increases to meet the bloc’s ambitious decarbonisation targets.

“There is congestion in other countries”, but other countries should “definitely” see the Dutch example as a warning, said Zsuzsanna Pató, power team lead at the Brussels-based energy NGO RAP.

A Dutch official acknowledged: “It’s nowhere near as bad anywhere else.”

The Netherlands is among the countries in Europe to have moved fastest to electrify critical parts of the economy after it in 2023 ended production at its giant onshore gasfield, Groningen. More than 2.6mn Dutch homes now have solar panels on their roofs, Netbeheer Nederland figures show. Companies also accelerated their move away from gas after the EU’s energy price crisis in 2022.

The country had been so used to relying on its gas resources that power grid upgrades had not kept pace, its national power grid operator, Tennet, said.

To provide the grid capacity required, the Dutch government estimates the level of investment needed in cables and new substations to be in the region of €200bn to 2040.

Some of that can be funded through the sale of Tennet’s section of the German power grid to private investors, which is valued at about €20bn, according to officials involved in the talks. But much of the rest will have to be covered by the amortisation of assets, with consumers fronting the cost.

The Netherlands already has some of the highest electricity costs in western Europe because of the grid bottlenecks. Monthly prices are, for example, roughly €30 per megawatt hour higher than they are in France this year, according to data from the think-tank Ember.


To cover the necessary investment, tariffs are expected to increase each year until 2034 by an average of between 4.3 and 4.7 per cent in real terms, a presentation from Tennet said.

To free up capacity, Tennet and regional grid operators have started to offer contracts to households that discount electricity used at non-peak times, such as between 11am and 3pm, and other flexible contracts that allow users to pay for electricity in time blocks.

From April 1, operators could offer contracts where large industrial users are barred from using their connections at all during certain busy hours in exchange for lower tariffs.

The Hague has also put out a “more conscious use of energy” advertising campaign across TV and social media that asks consumers to charge bikes and cars outside of the 4pm-to-9pm peak, when the grid comes under greatest strain.

But local leaders are still worried that their regions will lose investment if the queues for connections endure.

“Everything is going electric and electricity infrastructure needs to grow massively everywhere,” said Jeroen Dijsselbloem, mayor of Eindhoven.

The Brainport region around Eindhoven, covering 750,000 people in several municipalities in the southern Netherlands, had lost investment because it had to ration power supply, he said.

Brainport is also home to a cluster of advanced technology companies led by ASML, the maker of the world’s most sophisticated chipmaking machines. No significant new grid capacity would be installed in the region until 2027, Tennet figures show.

“We need more than 100 medium-size substations and 4,000 small substations,” Dijsselbloem said. Grid operators are also short of 28,000 technicians to install the necessary infrastructure, according to Netbeheer Nederland.

Companies such as Thermo Fisher, a US medical business with a base in the Eindhoven area, have maintained their growth plans but invested in on-site battery storage and solar to counter the grid congestion issues.

“We continue to work with local officials and authorities to find a long-term solution on power grid capacity,” said Steve Reyntjens, leader of Thermo Fisher’s Eindhoven site.

In the meantime, the Dutch energy ministry and network operators are looking at ways to safely increase the load on the grid without causing blackouts like the one across the Iberian peninsula in April.

There are also initiatives to pool connections and create “energy hubs” that share grid access.

Eefje van Gorp, spokesperson for Tennet, said that other countries should beware. “Belgium is in trouble. The UK is in trouble. In Germany there’s lots of trouble because in Germany all the wind is in the north and the demand is in the south.”

The EU is consulting on legislation addressing the need for grid upgrades and to further accelerate permitting for grid infrastructure projects before the end of the year.

But analysts fear this will offer little immediate relief. “To build a grid takes five to six years. There’s no silver bullet,” Pató said.

WSJ : SpaceX to Invest $2 Billion Into Elon Musk’s xAI

SpaceX to Invest $2 Billion Into Elon Musk’s xAI
The startup is leaning on Musk’s business empire to play catch-up in the AI race

  • SpaceX has agreed to invest $2 billion in xAI, nearly half of the Grok chatbot maker’s recent equity raise.
  • The investment is one of SpaceX’s largest investments in another company.
  • Musk has used SpaceX to support his other businesses in the past.

Elon Musk’s SpaceX has agreed to invest $2 billion in his artificial-intelligence company xAI, investors close to the companies said, nearly half of the Grok chatbot maker’s recent equity raise.

Musk has repeatedly mobilized his business empire to boost the AI startup, which is racing to catch up with OpenAI. Earlier this year, he merged xAI with X, combining what was a small research lab with a social-media platform that helps amplify the reach of its Grok chatbot. The merger valued the new company at $113 billion.

The SpaceX investment is part of xAI’s $5 billion equity fundraise announced by Morgan Stanley last month. It is the rocketmaker’s first known investment into xAI and one of its largest in another company.

Since leaving his role in the Trump administration, Musk has turned his attention to training the latest version of Grok, which earned high marks from AI-benchmarking service Artificial Analysis for its performance following its release on Wednesday.

Musk called it “the smartest AI in the world,” though the chatbot it powers hasn’t gained nearly as much traction as OpenAI’s ChatGPT. It recently posted racist and controversial comments in response to users on X. “We deeply apologize for the horrific behavior that many experienced,” xAI said, adding that it investigated and took steps to resolve the issue.

Grok powers customer-support features for SpaceX’s satellite internet service, Starlink, The Wall Street Journal reported. Musk’s representatives have said more business partnerships between SpaceX and xAI are likely in the future, according to investors who spoke with them.

During Musk’s release of Grok 4 this week, he said he also aims to embed Grok into humanoid robots, like Tesla’s Optimus fleet.

Musk has long used SpaceX to support his other businesses. He personally borrowed $20 million from the company to help fund Tesla early in its history and also used SpaceX’s equipment to set up his tunneling venture, The Boring Company. More recently, he turned to SpaceX for a $1 billion loan around the time he was acquiring what was then-called Twitter, which he paid back shortly after taking it out.

SpaceX’s investment in xAI may pose risks for Musk’s space company. SpaceX’s revenue has jumped in recent years, but the company is investing billions to develop a new rocket called Starship. The experimental vehicle is behind schedule and has suffered multiple setbacks this year, including three consecutive failures in flight and a large explosion during an engine test last month.

SpaceX recently had more than $3 billion in cash on hand, the Journal has reported. The company has rarely made investments in outside ventures. A major one occurred in 2021, when it acquired a satellite-communications firm for $524 million.

At xAI, Musk is spending billions of dollars every year training AI models, an effort that mirrors the high spending levels at rival AI startups, which have similarly garnered high valuations but face almost constant pressures for cash.

The startup raised $5 billion in debt alongside its equity financing, and it is expected to raise even more money later this year, one of the investors said.

>>> Barron’s Weekend Summary

Cover:
-The Barron's Roundtable predicts a stall or sink in the stock market due to high prices, potential inflation from tariffs, and tepid economic growth. Despite these concerns, there are 55 promising stocks to buy, with many in neglected sectors or attached to companies with temporary challenges. The Roundtable's investment pros were initially skeptical about the market's prospects but are still searching for bargains. Rajiv Jain, an investment pro, expressed more anxiety due to complacency in the bond market and the fiscal setup. Jain highlighted the fiscal deficit running at 6.5% of U.S. GDP for five years, indicating the significant impact of Covid-related stimulus and deficits on corporate earnings.

Interview:
-No update

Tech Trader:
-Tech earnings later this month are expected to reveal more massive outlays for artificial intelligence, as Amazon, Google, Meta Platforms, and Microsoft remain in a costly race to build data centers and buy Nvidia chips to fill them. To slow the pace of spending, hyperscalers are sourcing chips not made by Nvidia, such as Broadcom and Marvell Technology. Both companies develop application-specific integrated circuits (ASICs), which can be designed for predictable, high-volume workloads and cost an average of several thousand dollars compared to more than $30,000 for Nvidia's latest GPUs. Morgan Stanley analysts estimate that the custom AI chip share of the market stood at 11% in 2024 and will rise to 15% in 2030. The AI accelerator market is set to grow to $390B by 2030, making Broadcom and Marvell valuable diversification in the AI trend.

The Trader:
-Oil prices have been volatile this year, with oil prices increasing by 0.5% this week. WTI Crude, the U.S. benchmark, is down 16% from its 2025 high of $80.04 in January but up 18% from its low of $57.13 in May. Despite this, oil prices have held up even after OPEC announced a larger-than-expected supply boost on July 5. This resilience suggests that concerns about oversupply are already reflected in the price, though a shift in the economic or political winds could always cause volatility to resume. In such an uncertain environment, investors should look for oil companies that are relying on more than higher prices to boost profits. Chord Energy, a $6.2 billion company, fits the bill by implementing efficiency measures that can boost its free-cash-flow margins. Resources, California Resources, and SM Energy, which currently have margins below 20%.
-President Donald Trump's tariffs are causing concern among investors, with the S&P 500 index dropping 0.9% in the first two days of the week. The iShares Expanded Tech-Software Sector exchange-traded fund has declined only 0.2%, suggesting it should be more volatile than the stock market. Software companies tend to buy fewer physical products, making them less vulnerable to rising prices. Demand isn't as economically sensitive as for other industries, so if the economy takes a light hit from increased levies, software isn't among the market's top concerns. If tariffs get slightly worse, software will trade well. The recently passed tax bill allows software companies to expense research and development spending immediately, resulting in higher near-term expenses and lower tax bills. According to Morgan Stanley analyst Keith Weiss, the three software stocks that benefit the most from the changes in the law are Okta, Autodesk, and CrowdStrike Holdings.

Features:
-Venture capital firms have been investing in gambling and gambling treatment since the opening of nationwide sports betting in 2018. New Hampshire-based alumni Ventures, part of an initial investment round for Sleeper, raised $2M in 2017, which was later valued at $400M. This past August, alumni Ventures invested $1.5M in Kindbridge Behavioral Health, a gambling addiction treatment firm. Bettor Capital, a devoted gambling VC firm, also invested in Kindbridge in March. In total, six VC firms have simultaneously invested in gambling and gambling treatment. The investment thesis is that as more people gamble, more will eventually develop a gambling problem and seek help. Venture-capital firms see the market for treatment growing in lockstep with the market for gambling. American VC firms have invested $2B in gambling businesses since a US Supreme Court ruling opened the door to nationwide sports betting in 2018.
-Luxury stocks have been a topic of discussion in recent years, with companies like Burberry Group and Chanel struggling to maintain exclusivity and avoid brand dilution during the Covid-era boom. However, the luxury sector has seen a decline in recent years due to weakness in China, hit-or-miss merchandising, and tariffs. LVMH Moët Hennessy Louis Vuitton, Gucci owner Kering, and Prada have all seen their stock drop over the past two years. However, the One Big Beautiful Bill provides a 2.3% tax cut to top earners, who are also getting richer as the stock market rises. This is good news for luxury, which has seen an uncharacteristic boom/bust cycle in recent years.

Europe:
-European equities have been the global market's surprise of 2025, with a surge in European equities and high-yield corporate bonds. In June, investors ate up EUR 23B ($27B) in subinvestment-grade corporate paper, with Europe remaining a small junk-bond fish with around $350B in total issuance compared to $1.5T in the US. The market has hit a Goldilocks range that suits both borrowers and investors, with tight spreads and attractive yields. Average gross yields below 5.5% lag behind the 7% available in U.S. high yield, but with U.S. interest rates more than two percentage points higher than in the euro area, the alchemy of hedging can make up the difference. European junk on average is safer, with two-thirds of the market rated BB, the upper limit of high yield, compared with half in the US Market exuberance has opened the door for higher risk/reward credits, with Austrian auto parts manufacturer Benteler International and UK-based Punch Pubs placing paper at more than 7% annual interest. European high-yield offerings are diverse, with no single sector accounting for more than 10% of the market. Most European issuers are domestic-facing, minimizing exposure to Donald Trump's threatened US tariffs. Auto makers represent around 10% of the European market.

Emerging Markets:
-No update

Commodities:
-Copper prices have been experiencing a surge, with President Donald Trump's recent threat of a 50% tariff on copper imports causing market shock. The consensus was for a 10%-25% levy, but Commerce Secretary Howard Lutnick has announced a 50% tariff will be implemented by August 1. Investment banks like Goldman Sachs and many traders believe the threat is credible, with Goldman analysts seeing a 60% chance of a 50% tariff priced into December 2025 contracts. Copper is considered a leading indicator for the global economy and industrial activity. Demand for copper has been healthy, with the US heavily dependent on imports for the past few years. The US has imported nearly half of its copper, mainly from Chile and Canada, with Peru and Mexico accounting for 9% and 6%, respectively. A stockpiling rush as companies try to front-run tariffs is distorting prices, with copper in the US trading nearly 30% higher than prices on the London Stock Exchange. If Trump backs off from a 50% tariff, prices could tumble back to where they were before the tariff announcement. Additionally, US buyers who bought excess inventory may exit the market as prices stay elevated.

Streetwise:
-CVS Health has introduced a new feature for weight loss patients, reducing weight loss. The company's pharmacy benefit manager, Caremark, has made Wegovy its preferred obesity-fighter and dropped coverage of Zepbound. This change has affected around 200,000 Zepbound patients, but overall, Eli Lilly has been adding 500,000 Zepbound patients per month. Investors should expect a dent to revenue growth when the company reports second-quarter financial results on Aug. 7, followed by a reacceleration in the third quarter. The stock selloff hasn't left Eli Lilly's valuation particularly lean, but earnings gains through the end of the decade could be humongous. Bulls are predicting big stock returns from here. Eli Lilly's stock has been up 174% since a follow-up column two years ago, while Novo has underperformed. The company has an even newer obesity drug called retatrutide, which appears in trials to be more effective than existing meds. The bigger development might be Eli Lilly's orforglipron, which showed promising blood sugar reduction and weight loss in a late-state diabetes trial reported in April and could hit the market next year, pending approval.

The Information : How Granola—and AI Note Taking—Grabbed Silicon Valley’s Attent

How Granola—and AI Note Taking—Grabbed Silicon Valley’s Attention
The note-taking apps have quickly changed privacy norms. No one’s unhappy about it.

At the moment, many in the tech industry have developed a rather profound addiction to Granola.

No, not to the crunchy breakfast-time oats—but to a software product made by a two-year-old startup that has come to dominate a crowded field of artificial intelligence–powered note-taking options. The tool from Granola, which was valued at nearly a half-billion dollars in May, has become something of an It App this summer among venture capitalists and startup founders.

For instance, Nikhil Basu Trivedi, a co-founder of Footwork, a San Francisco–based venture firm, no longer only fires up Granola in business settings: He’s also used it while meeting with his lawyer, his fellow board members of a nonprofit and his 3.5-year-old daughter’s preschool teacher, even though he pretty much knew what to expect from the latter. “Knock on wood—she’s doing pretty well,” he said. “A good kid.”

Meanwhile, Cat Noone, CEO of Stark, a Montreal-based software company, likes to turn on Granola while meeting with her therapist. Doing so allows her to stay more present in the conversation as it happens, she said, and she later reads the app’s auto-summaries to further reflect on what they discussed. “I don’t want to miss a thing,” she said.

Every few years, a new notes app becomes a darling of Silicon Valley, a place where digital optimization of body, mind and thought is a foremost obsession. Evernote was one, then Notion. More recently, the boom in AI has supercharged what note-taking software can do, making the apps infinitely more searchable, organizable and customizable than previous versions.

Nearly all the major meeting tools, like Google Meet and Zoom, offer an AI notes function, and older notes apps like Notion have also embraced AI. Still, Granola is the hands-down favorite among the tech elite, scooping up more than $70 million in funding from the industry’s top names, including Lightspeed Venture Partners and Nat Friedman, the investor who just became one of Meta Platforms’ AI czars.

Users prize Granola over other options for a number of reasons, including its sophisticated search function, which runs on natural language prompts—just as we might talk to ChatGPT or Claude.

More than anything else, though, people like Granola because it hides itself. After connecting Granola to an email calendar, users can join their meetings directly through Granola, and the app transcribes the conversation without ever visibly notifying the participants that it’s running. (The transcriptions happen live, and Granola doesn’t save the audio.)

The proliferation of Granola and of AI note taking has established a surreal status quo: A sizable portion of Silicon Valley’s population is recording each other all the time, often without telling the other person before doing so, upending privacy norms in a manner that would’ve been somewhat unimaginable even a few years ago.

No one seems too fussed about it. “Transparently, I kind of just assume that everyone is using a meeting note taker of some sort,” said Brett Goldstein, CEO and founder of Micro, a New York–based AI startup. And that’s apparently a universal assumption in the industry, judging by the more than half-dozen Granola devotees I spoke to.

As a result, no one expects to get a head’s up about someone using Granola to record a conversation, which makes people like Rebecca Kaden, a managing partner at Union Square Ventures, outliers. She always makes sure to ask people if they’re comfortable with Granola before she turns it on. “I’ve never had anyone say no,” she said.


4 Tips for Using Granola and AI Notes
AI has made it possible to easily record and then closely study the content of everything from a dinner conversation to a doctor’s office visit.

  • Download Granola’s mobile app and use it in settings like a dinner business meeting, where you’d like to take notes, but it would be awkward to keep scribbling them down.
  • AI note-taking apps are also helpful in situations like doctor appointments, where notes are often essential, but the conversation is laden with dense information, which can be hard to write down quickly, Pedregal said.
  • Such apps also come in handy if someone is attending a conference or seminar and wants to share the talk with people who couldn’t be there.
  • Startups such as Windsurf, which makes a popular AI coding software, have used Granola not just for external meetings—say, recording notes of a sales call—but for internal ones, too.“I use it in every meeting with my boss now,” said Rudy Garza, a salesperson at Windsurf. “And she’s doing the same thing with all of us.”
Undoubtedly, part of what’s making everyone feel comfortable—at least for now—is that there hasn’t been a public horror story of anyone using Granola or another AI note taker in some devious fashion to embarrass someone or leak information, and none of the users I spoke to recounted such an incident or had even heard about one. And as with much of AI, the audio apps exist in a legal gray area, since laws about recording another person vary across the country.

“It’s a world where the norms are changing all the time,” said Sam Stephenson, seated next to his Granola co-founder, Chris Pedregal, in their East London office. “When we started, we were more on edge”—worrying whether Granola might run into privacy concerns—“and I think norms have already shifted to a lot of this kind of thing being normal.”

Stephenson and Pedregal met in 2023 shortly after Pedregal left Google. Pedregal had previously started an AI tutoring startup, Socratic, before selling it to Google, and he found himself itching to return to artificial intelligence after fooling around with OpenAI’s GPT-3 large language model. He found Stephenson, a mobile app designer, in a thriving online group for people with a keen interest in “tools for thoughts”—note-taking apps, in other words.

For a year and a half, they labored to develop an app simple enough for users with “1% of their brain available for the tool at any given time,” Stephenson said. They launched the app in May 2024.

While Granola has a devoted coterie of loyal fans, it faces the stiff task of fending off much bigger rivals who might just copycat the startup to death. Brett Goldstein, founder of New York–based Micro, put a fine point on the problem: “Granola is more of a feature than a business product—like Snapchat stories.”

Pedregal doesn’t dismiss the size of the challenge ahead. “I don’t think the Granola product that we have today in two years would be a viable product: It needs to keep getting better—doing more and more for you. And we need to do that faster than anyone else,” he said. “That’s hard.”