Trump tells CNBC: ‘I don’t care’ if Iran negotiations are over

(…) “I really don’t care. I couldn’t care less,” Trump told CNBC’s Eamon Javers in a phone interview midday Monday, saying he thought the protracted discussions “started to get very boring.” (…)

Trump asserted that prices at the pump will drop “very quickly.” But he also repeatedly signaled he was in no hurry to restart the stalled negotiations with Iran.

“If they’re over, they’re over. If they’re not, you know, I think they took too much time. Frankly, I thought they started to get very boring,” Trump told CNBC.

CNBC also posted the full transcript of the interview. My picks:

• Well, that’s part of being a negotiator, but they don’t have any cards, because a lot of people would be very happy. Stock market is just down a little bit. Yeah, it’s alright.
• They would, if I wanted them to, but they would. I want them to. We don’t need them. We don’t need NATO. They were very, very weak and very sad. What they said, they said we’ll help you as soon as the war is over. NATO, Europe has lost its way. They have a tremendous immigration problem, and they have a tremendous energy problem, because all they want to do is build windmills all over the place, so anyway.
• Well, call me. You can call me tomorrow, and I’ll talk to you about it. Let’s see what’s going on – okay?

From Axios:

President Trump lashed out at Israeli Prime Minister Benjamin Netanyahu over Israel’s escalation in Lebanon during an expletive-laden call yesterday, Axios’ Barak Ravid and Marc Caputo report.

• Summarizing Trump’s remarks to Netanyahu, a U.S. official said: “You’re fucking crazy. You’d be in prison if it weren’t for me. I’m saving your ass. Everybody hates you now. Everybody hates Israel because of this.”
• A second source briefed on the call said Trump was “pissed” and at one point yelled at Netanyahu: “What the fuck are you doing?”

• “I had a very productive call with Prime Minister Bibi Netanyahu, of Israel,
  and there will be no Troops going to Beirut, and any Troops that are on their
  way, have already been turned back,” Trump
  wrote afterward.

• Israel didn’t intend to send troops to Beirut, but rather to conduct massive
  airstrikes that could have knocked down buildings in the southern suburbs of
  Beirut where some of Hezbollah’s headquarters are located.

Trump also claimed he’d had a “very good call” with “highly placed Representatives” of Hezbollah who agreed “that all shooting will stop — That Israel will not attack them, and they will not attack Israel.”

• It is not clear which representatives he was referring to.

“So, I spoke with Hezbollah, and I said no shooting, and I talked to Bibi [Israeli Prime Minister Benjamin Netanyahu], and said, no shooting, and they both stopped shooting each other.”

Trump claimed on Monday after his call with Netanyahu that the Iran negotiations “are continuing, at a rapid pace.”

In a short statement, Netanyahu said Israel’s position in Lebanon “remains unchanged” and his military will “continue to operate as planned in southern Lebanon.” (Bloomberg)

What’s so boring?

INFLATION WATCH

Commodity Prices and AI-Related Effects Continue to Boost Inflation (Goldman Sachs)

• Iran war effects: We have raised our December 2026 year-over-year headline PCE inflation forecast by 1.4pp since the start of the war, with most of the boost coming from higher energy prices.
• Oil prices have increased sharply since the start of the Iran war, with spot prices rising from $71/barrel on average in February to $117/barrel on average in April, $108/barrel on average in May, and $92/barrel today. Our oil strategists expect Brent crude oil prices to decline to $90/barrel by 2026Q4, but they see risks as two-sided with significant upside risks from potentially more persistent supply losses but meaningful downside risk from weaker demand. We expect higher energy prices to boost core PCE inflation by roughly 0.35pp this year.
• The war has also raised prices of other Gulf exports including chemical and metal products such as nitrogen fertilizer and aluminum. We expect higher fertilizer costs to boost food prices by roughly 1.0% this year.
• AI-Related effects: Strong demand for AI infrastructure has raised the prices of some key electronics inputs, including digital memory and batteries.
• For example, the producer price index for electronic components and accessories increased by 20% on a year-over-year basis in April.
  AI-related spending has likely put some upward pressure on software prices in recent years, as several companies have recently raised software prices.
• Strong demand for data centers is boosting electricity demand and power prices.
• Computer software and accessories prices in the PCE price index increased by 5.0% month-over-month in April after increasing by 4.0% in March and 6.5% in February. This likely reflects a combination of higher accessories prices as a result of memory cost increases and higher software prices.
• Tariff effects: We estimate that the share of tariff costs that has passed through to consumer prices reached 90% after 13 months.
  We estimate that tariffs have boosted current year-over-year core PCE inflation by 0.9pp and will contribute 0.1pp at the end of 2026. We expect core goods inflation to decelerate from a year-over-year pace of 2.8% in April 2026 to 1.8% in December 2026 and 0.5% in December 2027 as tariff cost passthrough to goods prices comes to an end.
• Inflation expectations: Inflation expectations have increased notably since the start of the Iran war. Short-term inflation expectations increased in both the UMich (+0.1pp to +4.8%, 1yr ahead) and NY Fed (+0.2pp to +3.6%, 1yr ahead) surveys. Long-term household inflation expectations increased notably in the University of Michigan survey (+0.4pp to +3.9%, next 5-10yr) while the New York Fed measure declined (-0.1pp to +3.0%, 5yr ahead).
  Financial market-implied expectations for annualized headline CPI inflation over the next few years were little changed over the past month but have increased sharply since the start of the Iran war.

GS inflation forecast: We estimate that core PCE inflation net of tariff effects stands at roughly 2.4% in April. Inclusive of tariff effects, we expect core PCE inflation to decline to 2.8% by December 2026. We expect core CPI inflation to decline from 2.7% in April to 2.5% in December 2026 and 2.1% in December 2027.

All 3 GS scenarios see inflation peaking in Q4’26 and lead to similar inflation numbers at the end of 2027…

I wonder if GS considered that the war in Iran and the AI boom have significantly driven China’s unit export prices upward (+5% YoY), after three years of decline. Conversely, China’s import price index surged 19% in RMB due to disrupted oil supplies and semiconductor shortages.

• Commodities in ‘Super-Squeeze’ as Hormuz Risks Build, HSBC Says

“The longer the strait is closed, the more inventories are run down, the more likely it is that we reach ‘tipping points’ in the markets for some commodities,” analysts including Paul Bloxham said in a June 1 report. Still, knowing exactly when that might happen is hard to determine, they added.

(…) “this is very different to earlier ‘super-cycles’, because it is driven by supply disruptions,” the analysts said. “Rather than a ‘super-cycle’, we have been calling it a ‘super-squeeze’,” they said, highlighting earlier bank research.

With Hormuz still all-but shuttered, oil stockpiles “may reach critical functional lows, which could see sharper — non-linear — price rises and genuine shortages,” they warned.

• S&P Global US Manufacturing PMI: Notable upturns in production and new orders amid stockpiling efforts but prices surge higher again

A sharp and stronger improvement in US manufacturing conditions was signaled by May’s S&P Global PMI data amid the sharpest upturn in production since April 2022.

New orders increased markedly again, but growth in both output and sales was in part driven by stock building as firms sought to protect themselves from supply chain disruption and steeply rising prices caused principally by the war in the Middle East, which remained a notable headwind for the sector.

Overall new orders increased at a sharp pace, albeit softer than in April and largely driven by client efforts to build stock given expectations of further price rises and supply delays.

Exports remained a notable source of demand weakness, falling overall for the eleventh month in a row.

Indeed, manufacturing input costs rose at a rate unmatched in nearly four years, whilst supplier delivery times deteriorated to the greatest extent since August 2022.

Manufacturers’ own charges rose to the greatest extent since September 2022 as they sought to pass through their own higher expenses to clients wherever possible.

 

The ISM report was similar as Wolfstreet shows, adding that “employment was still in contraction in May from April (48.6%)”.

 

Asian manufacturers are also feeling it: S&P Global says “both cost burdens and charges rose at substantial and historically marked rates.”

Actually, manufacturing inflation is global as JP Morgan Global Manufacturing data shows:

Average input prices rose to the greatest extent in almost four years, with accelerations in regions such as the US, the euro area and Japan more than offsetting weaker cost increases in nations including mainland China, India and South Korea.

Average selling prices also rose sharply, with the rate of increase staying close to April’s 45-month high.

China’s manufacturing inflation:

• US Lowers Tariffs to Boost Investment in Industrial Economy

The White House said it will reduce tariffs on farm and construction equipment such as harvesters and forklifts, in an effort to boost investment in the industrial economy through next year.

Under a proclamation issued late Monday, those import taxes would drop to 15% from 25%. Foreign companies could qualify for a lower 10% duty rate if capital equipment contains at least 85% US steel or aluminum, according to a White House fact sheet.

The changes take effect June 8 and would run through the end of 2027. (…)

In April, the administration lowered tariffs to 25% on some imported derivative goods deemed to be “substantially made” of steel, aluminum or copper while maintaining a higher 50% rate on many other imports containing the metals. (…)

Trump cited rising costs as a justification for the move.

“Among other things, the Secretary has informed me that recent circumstances have affected and are affecting domestic industries that use agricultural equipment, industrial equipment and machinery, and other related products,” the president’s proclamation reads.

• Eurozone inflation rises to 3.2% in May as ECB prepares to raise rates

America’s New Financial Middle: Not in Crisis, Not Thriving Either In a poll, more than half of respondents consider themselves financially ‘conflicted’

(…) “We’re like, ‘oh my God, what if we have an emergency?’” he said. “Are we going to be able to stand up from that?’”

Some 51% of U.S. adults place themselves alongside Wallace in this financial gray area, according to a new survey by Edward Jones and Gallup, their first on the topic.

The survey, expected to be released Tuesday, labels this group financially “conflicted,” with respondents describing feeling a mix of stability and uncertainty. Roughly 5,000 people were polled in late March and early April.

People feel conflicted because they are weighing more than today’s bills, according to Penny Pennington, managing partner at Edward Jones. They are looking ahead at the schools their children and grandchildren might attend, the lives they will lead and the cost of making it possible.

Just 16% of respondents expressed a state of confidence about their money, a separate bucket that the survey categorizes as financially “fulfilled.” On the other end of the spectrum, 32% said they were financially stressed.

The state of limbo cuts across income levels. Roughly seven in 10 households earning $135,000 or more said they don’t feel financially fulfilled.

Conflicted! Here’s why:

Investors are also conflicted as Ed Yardeni explains:

Now, there are some caveats to this market rally worth discussing, and even Walter Murphy is getting bothered, in this latest leg up, by the lack of breadth.

Almost every day when the S&P 500 goes up, he shows me how declining stocks are vastly outnumbering the advancers. Only one sector has made a new one-month high relative to the S&P 500.

By contrast, six are at, or near, multi-year relative lows. While the overall market is at all-time peaks, only two of the eleven sectors have managed to reach that status. It is indeed a very rare situation to be talking about a stock market at record highs at the same time that the Financials, of all sectors, are very nearly in correction mode (down almost -10% from their record highs).

Gold replaces US Treasuries as world’s top reserve asset, ECB says

Bullion accounted for 27 per cent of all global central bank reserve assets at the end of 2025, up from 20 per cent a year earlier, according to a report published on Tuesday by the European Central Bank. US Treasuries fell to 22 per cent from 25 per cent over the same period.

The share of euro-denominated reserve assets was unchanged at 15 per cent.

The shifting composition of reserve assets — highly liquid holdings that central banks use to support their currencies, meet international payment obligations and provide liquidity in times of financial turmoil — reflects an attempt by many countries to seek alternatives to the US dollar, the world’s de facto reserve currency. Those efforts have accelerated since 2022, when Washington used sanctions to freeze Russia’s dollar reserves over the full-scale invasion of Ukraine. “Geopolitical tensions continue to drive strong central bank demand for gold,” wrote ECB president Christine Lagarde in Tuesday’s report. (…)

But gold’s surge past US Treasuries — traditionally the bedrock of international dollar reserve holdings — is also the result of its spectacular price gains in recent years. The metal hit a high of more than $5,500 a troy ounce in January.

Dollar-denominated assets as a whole still make up the biggest chunk of reserves at 42 per cent, the ECB data showed. Central banks’ gold purchases slowed slightly to 850 tonnes in 2025 after three years of net purchases of more than 1,000 tonnes per year. The biggest accumulators of gold reserves since 2022 were China, Poland, Turkey and India, the report showed.

However, stablecoin company Tether became the single biggest buyer in 2025, purchasing more than 100 tonnes of gold.

After buying 220 tonnes of gold since the start of Russia’s invasion of Ukraine in 2022, Turkey in early 2026 enacted what the ECB called “one of the largest reserve drawdowns in recent years” as it sold or loaned 130 tonnes of gold after the start of the Iran war.

The ECB report said the international role of the euro grew “gradually but steadily over the past decade”. The issuance of international debt denominated in euros rose by 30 per cent to a “record high” of close to €1tn last year, while international investors poured a net €850bn into euro area assets, pushing foreign portfolio inflows “near peak levels since the creation of the euro”.

Also conflicted: the above is not totally unrelated to the below.

• Losing Trust in Justice Dept., Judges Call Out Its Lawyers’ Behavior

(…) In a scathing ruling on May 14, Judge McElroy called the government’s account “misleading, if not utterly false.” At issue in Judge McElroy’s view was the “awesome power” wielded by government lawyers and the trust that they will “play fair and be honest” with courts.

The Justice Department “has proven unworthy of this trust at every point in this case,” she wrote.

The opinion was one of several heated rulings from federal judges in recent weeks castigating the government’s lawyers for withholding information and making assertions that turned out to be at odds with the facts.

A judge in Chicago said transcripts of grand jury proceedings had been redacted to hide misconduct by her district’s U.S. attorney’s office. Another judge in Rhode Island referred an assistant U.S. attorney for potential discipline after he admitted that he had knowingly withheld information from the court.

Like the one involving the Rhode Island hospital, the complaints have come as administration lawyers seek to defend major parts of President Trump’s agenda.

The government lawyers whose honesty the judges have called into question are a mix of career civil servants, political appointees and newcomers brought in as the Justice Department makes a public hiring push to fill its depleted ranks. Their missteps in court come as the department’s leadership takes an unusually combative tone with judges who rule against them, and department lawyers try to balance judges’ demands against the often stubborn posture of the executive-branch clients they represent.

But regardless, an increasing number of judges appear to be questioning the longtime assumption that Justice Department lawyers can be taken at their word, part of the “presumption of regularity” that experts say allows federal courts to operate swiftly and smoothly. (…)

By giving voice to their lack of trust, the judges are heralding major risk to a legal order that has been in place since Watergate. Codified in a Justice Department reference text called the Justice Manual, the basic idea is that department lawyers should be held to a higher standard because they carry with them the reputation of the entire executive branch. (…)

“You can’t hide the ball. You have to be honest,” said Andrew C. Mergen, who served in the Justice Department for more than 30 years under presidents of both parties and now teaches at Harvard Law School. The pattern of judges accusing department lawyers of dishonesty, he said, “is such an extraordinarily awful look for the Justice Department.” (…)

Judges have over the past year called out the administration for making dodgy legal arguments, filing dishonest testimony and failing to comply with court orders. Some of the earlier problems stem from the fact that Justice Department lawyers often represent other government agencies in court, including the Homeland Security Department, which has proved to be a difficult client, particularly in immigration cases.

But judges have taken a distinctly harsher tone in recent weeks, assigning responsibility directly to individual Justice Department lawyers for their own representations in court.

“This reckless disregard for the duty of candor owed to a federal court is appalling,” wrote Judge McElroy, referring to lawyers’ ethical obligation to never knowingly present false evidence or make false statements of fact or law. She cited recent cases in Pennsylvania, Washington and Oregon in which other judges raised questions about the government’s honesty.

The same issue arose in Chicago, where Judge April M. Perry found that Justice Department lawyers had improperly influenced a grand jury in a case in which the government was seeking indictments against four activists who were protesting outside an immigration detention facility.

Beyond the potential misconduct with the grand jury, Judge Perry found the lawyers were dishonest with her by cutting out portions of transcripts they provided her about what had unfolded. (…)

In public statements, Justice Department officials have attacked “rogue judges” and “activist judges,” who they claimed were abusing their authority, and in some cases filed misconduct complaints against them. Judge DuBose and Judge Perry are appointees of President Joseph R. Biden Jr. Judge McElroy was appointed by Mr. Trump.

But Mr. Mergen, the Harvard law professor, said he has heard from career Justice Department lawyers who were demoralized by the pressures of the job, particularly the flood of petitions from immigrants challenging their detention. Pressure from the high workload, he said, was aggravated by a combination of a politicized institutional culture and judges’ growing skepticism — all of which could be contributing to the courtroom missteps.

“The risk is that the longer this goes on, the fewer good people are willing to stay,” he said. “Over time, it will get harder to do even the routine cases if judges don’t trust you.”

During prior administrations, a job as an assistant U.S. attorney was a coveted status marker for lawyers. Under the Trump administration, the department has borrowed lawyers from the Homeland Security Department and the military, posted job solicitations online and offered starting bonuses. Not only are applications down, but those who are applying are also generally less qualified, officials have said. (…)

Huge AI Bonuses in South Korea Spark Fight Over Sharing Tech Wealth

A second-tier port city in South Korea is emerging as the epicenter of a growing global fight over how to split the spoils of the artificial intelligence boom.

Home to a mega-factory run by Samsung Electronics Co., Pyeongtaek nearly shut down this month as employees threatened a strike that risked disrupting global supply chains. The chip giant ended up offering some full-time employees in its memory division bonuses as high as $400,000 — roughly four times Samsung’s average annual salary — to defuse the crisis.

Yet that solution created a new set of problems. Under the tiered payout system, only employees in Samsung’s semiconductors division — about 60% of its Korean workforce — will get the largest payments. Workers who aren’t involved in chip production are set to get only $4,000 apiece, a mere 1% of the biggest winners in the labor fight.

The outcome enraged a sizable chunk of Samsung employees, prompting thousands to quit its biggest union during the wage negotiations. One employee, who requested anonymity to speak openly, said the gaping compensation divide had killed motivation for workers who don’t make memory chips. (…)

How can governments [and companies] equitably spread the benefits of a technology that threatens to render large swathes of the workforce redundant? (…)

Samsung is forecast to generate about 330 trillion won ($221 billion) in operating profit this year, with SK Hynix not far behind. Together, the two firms could contribute more than 100 trillion won in corporate taxes annually. That could exceed the amount the government expected from all companies as recently as April.

The question of how to handle a potential newfound pile of cash and spread the benefits is top of mind for South Korean officials. Kim, the labor minister, has suggested a possible social solidarity wage and vowed in a Facebook post that the government “must not simply stand by and watch the gap between workers continue to widen.” (…)

South Korea is also reportedly looking to allocate some excess tax revenue generated by the chip industry’s super-boom to a “Korean-style sovereign wealth fund.” The government said in a statement that it believed “society would benefit from discussing openly and constructively” how to deal with the AI windfall, and that no decisions had been made regarding the use of future excess tax revenues.

In the Middle East, countries such as Saudi Arabia and the United Arab Emirates have used sovereign wealth funds to channel oil income into global investments and domestic diversification, though these have had limited success in spreading gains broadly across society. Other approaches have focused more on direct redistribution. Alaska’s Permanent Fund pays annual dividends to residents from oil revenues — a rare example of a universal payout that has helped reduce poverty, though the payments are relatively modest. (…)

As workers in South Korea become increasingly vocal about the windfall from the AI supercycle, Barclays economist Bumki Son said it could evolve into a broader social issue with more people feeling “relatively deprived.” (…)

Bonuses from Samsung and SK Hynix — which already distributes 10% of operating profit in cash bonuses — are increasingly becoming reference points for wage negotiations across corporate Korea, and beyond. Asia’s other major chip giant Taiwan Semiconductor Manufacturing Co. reassured workers in the wake of Samsung’s decision that a 30% bump in profit-sharing payouts was coming their way, after a chorus of online complaints. (…)

“A rare historical possibility now lies before Korea,” Kim wrote on Facebook. “The possibility of becoming not only a country that supplies AI infrastructure, but the first country to return the excess profits of the AI era to human life.” (…)

For some, the gap between the bonuses of chip workers and electronics staff hurts all the more because for decades Samsung’s smartphone and home appliances divisions sustained South Korea’s biggest private corporation. Woo Ha-kyung, acting head of the company’s second largest union, said the decision to “gloss over issues” with a mere $4,000 payment to staff not involved in chipmaking undermined their contributions. (…)

Separately, the company has unveiled a $3.33 billion fund to be deployed over the next five years for supplier support, AI talent development and community assistance. (…)

As the Samsung standoff gripped South Korea, Labor Minister Kim Young-hoon emerged as a central figure. After his last-minute mediations helped stave off a strike, the former union leader held a press conference telling reporters he understood it wasn’t just Samsung staff who felt left behind, but also the general public. (…)

Turning point?

Samsung and SK Hynix are private corporations benefitting from the AI boom. They are not the only ones. But the AI riches are not spread equally, far from it.

It’s not only revenues, profit margins are exploding, also unequally:

Even the dash line will eventually stop rising.

Productivity growth has accelerated post-pandemic but labor is not sharing proportionately. This next chart needs explaining.

The nonfarm business price deflator is an implicit price index that measures price changes for the value-added output produced by the U.S. nonfarm business sector, whereas the CPI measures price changes in a fixed basket of goods and services purchased by consumers. They differ in what they cover (business output vs consumer purchases), how they treat imports/exports, and in the index formula (chain-weighted deflator vs fixed basket).

The NFB deflator tracks prices received for domestically produced output. Weights correspond to shares in sectoral value‑added, so capital‑intensive or high‑margin industries carry more weight in the index.

CPI can rise faster than production‑side deflators over long periods because it includes imports and is heavily weighted toward categories like services and housing that may have faster price growth. Researchers like Ed Yardeni  emphasize that the “productivity–pay gap” is much smaller when you use the nonfarm business deflator rather than CPI, arguing that it’s closer to the true split of productivity gains between wages and profits inside the business sector.

The CPI‑deflated compensation line answers a different question: how fast has workers’ pay grown relative to the consumer cost of living, including imports and heavily weighted items like shelter and medical care.

Debatable between economists but consumers will always argue that they have not shared productivity gains since the 1970s. The 1973–74 and 1979 oil shocks drove up consumer energy prices and general CPI inflation much faster than wages, compressing CPI‑deflated pay. Also, housing, healthcare, education, and some services became a larger share of consumer spending and saw faster price growth than many goods, particularly after China joined the WTO and began exporting lower priced goods.

BLS work and later research show that, when you deflate compensation with a production‑side index (like the GDP or nonfarm business deflator), the productivity–pay gap is modest through the 1980s and 1990s and then widens noticeably from the early 2000s. The green NFB‑deflated line tracks productivity fairly well until roughly 2000–02, then lags.

Multiple studies (and simple decompositions of labor share) find that the nonfarm business labor share trends down and mark‑ups/profit shares trend up starting in the late 1990s/early 2000s. Output per hour is rising faster than compensation per hour valued at output prices, boosting profit margins.

The post‑1995 IT‑driven productivity acceleration initially translated fairly well into pay, but over time more of the gains were captured by owner’s income and high‑return intangible capital rather than broad‑based compensation. Offshoring, global supply chains, and increased competition for routine labor further weakened the bargaining position of many workers, so compensation growth lagged the productivity of the firms they worked for.

A larger share of total compensation goes to high‑income workers (equity‑based pay, executive comp, finance/tech) after 2000, while median or typical workers see slower gains.

So the early‑2000s break reflects a distributional shift inside the business sector: an increasing share of value added started going to capital and high‑end labor, not to broad‑based compensation, which is why the green line peels away from productivity.

This was particularly noticeable in services where productivity really accelerated since 2000.

The more recent jump in margins is impressive…

…but not so in mid and small cap companies:

Beware of extrapolations, particularly given workers’ growing reaction to the AI boom, coming right after COVID.

This chart plots real income measures (blue and black) with corporate profits after taxes all indexed to early 2020:

Keeping the trend in profits in mind, this next chart shows how rising inflation has eaten away most of the nominal increase in disposable income since the pandemic.

The AI boom with its exploding corporate profits and stock market gains is compounding the pain from the open inflation wound (pandemic and war “created”).

Profit margins cannot keep rising like they have lately. (Thanks to Ed Yardeni for many charts above).

These two Axios charts sum it up:

 

Data: U.S. Bureau of Economic Analysis; Chart: Matt Phillips/Axios

BTW:

Trump Clears Way for Corporate Tax Dodge Hidden in the Fine Print

A year ago, the Trump administration withdrew from a global effort to curb offshore tax-dodging by multinational companies. That decision has been a huge gift to corporate America, enabling companies to avoid at least $40 billion in income taxes since the beginning of 2025.

A New York Times review of securities filings from nearly 500 companies showed that they avoided taxes by attributing hundreds of billions of dollars in earnings to low- or no-tax foreign locales like Cyprus, Bermuda, Switzerland and the Cayman Islands. Often, corporations funneled the profits through subsidiaries in places where they had no employees, offices or customers.

Tax havens became more appealing after President Trump signed an order on his first day back in office withdrawing the United States from a 13-year international effort to end such schemes. The effort led dozens of countries to impose a minimum corporate tax and rules for pursuing companies using tax havens. After House Republicans passed legislation last year targeting some of those countries with a new tax, international officials agreed to exempt U.S. companies from much of the crackdown.

American Express avoided paying $423 million in taxes last year using the island of Jersey. PayPal trimmed its taxes by nearly half during 2025 thanks to its units in Singapore. Stanley Black & Decker cut its bill by $27 million — nearly one-third — using the island of Cyprus.

A favorite destination was the tiny Mediterranean island of Malta, where Abbott Laboratories, the pharmaceutical giant, has claimed all its global profits were earned by a subsidiary with no employees. Malta helped the company cut its tax bill by $336 million last year, the filings show.

Companies making similar moves spanned nearly every sector of the economy: Walmart and Uber; Mastercard and Pepsi; Crocs and Merck; Honeywell and Cigna. To put the $40 billion in taxes they avoided in perspective, it would be enough to triple the annual budget of the Federal Aviation Administration or U.S. Customs and Border Protection.

On the face of it, the offshore tax strategies don’t necessarily violate any laws. But the Internal Revenue Service says some of the companies have gone too far, and tax advisers say the Trump administration’s actions will make it easier to pursue even more aggressive dodges.

“Accommodating the U.S.’s refusal to participate in the global reforms opens up the door to abuse,” said Philip Marcovici, a former chair of the European tax practice at the law firm Baker McKenzie.

The Times’s analysis relied on a new disclosure required by federal accounting rules. For the first time, in annual 10-K reports filed with the Securities and Exchange Commission, public companies are required to include footnotes reporting the precise amount of tax avoided through each foreign jurisdiction.

Some companies using tax havens to avoid U.S. income tax rely on federal funding for their profits. (…)

The Trump administration’s agreement with the Organization for Economic Cooperation and Development this year frees U.S. companies to park profits in favorable locations — often in conflict with I.R.S. enforcement efforts. (…)

Time is not on Trump’s side:

Trump Says Deal Will ‘Work Out Well’ Even as US, Iran Clash

Trump, in a Truth Social post late on Sunday US time, said constant speculation over whether he’ll agree to a deal — which will likely see the two sides extend their ceasefire by around two months, with Iran reopening the strait and the US lifting a blockade of Iranian ports — weren’t helping.

“It is MUCH tougher for me to properly do my job and negotiate, when political hacks keep negatively ‘chirping,’” Trump said, “that I should move faster, or move slower, or go to war, or not go to war, or whatever. Just sit back and relax, it will all work out well in the end.” (…)

Iran’s semi-official Tasnim news agency, which has close ties to the IRGC, said Sunday that both sides continued proposing amendments to the draft deal, though stressed there’s no guarantee they’ll reach an agreement. (…)

On Saturday, Iranian state TV reported the existence of a new draft agreement, which it said gives the Islamic Republic “exclusive authority to determine the nature of transiting vessels” in Hormuz, a negotiating point the US is unlikely to accept.

The draft also said the US has committed to giving Iran access to $12 billion in frozen funds within 60 days, to be sent directly to Iranian banks without restrictions, according to Iranian TV. It said the document was “unofficial” and not “finalized.”

Meanwhile, Windward last week updated us on the Strait:

Day 89 is the analytical milestone, not just a date. Three months into Operation Epic Fury, the Hormuz operating environment looks structurally different from how it looked on February 28, and the difference is not closure relaxing, but closure restructuring into permission-based control, eastward export bypass, and embedded strait-body IRGC presence.

The April 7 ceasefire and the May 23 announcement that an agreement has been “largely negotiated” sit on top of an operational picture that has hardened. Iranian crude exports are at a fraction of pre-conflict volumes, but Iran has built, and is continuing to build, the channels to keep volumes moving without Hormuz transit at all. The Kuh Mubarak SPM, the Bandar-e Jask sequencing yard, the Chabahar holding area, and the Goreh-Jask pipeline together form an export apparatus that did not exist operationally three months ago.

If the announced diplomatic framework materializes and the strait reopens, this architecture remains. If the framework does not materialize, the architecture absorbs an increasing share of Iranian crude flow.

The indicators to watch in the coming cycle are whether the Kharg loading cadence sustains after the May 25 Suezmax restart, whether the Bandar-e Jask sequencing yard accumulates additional VLCC-class tonnage, whether IRGC small-craft posture remains in open strait-body configuration or returns to coastal patrol, and whether the dark ship-to-ship trade off Fujairah and Muscat continues to expand its operator pool.

The campaign has not de-escalated. It has restructured. The next phase will determine whether the restructuring becomes permanent.

Could Trump’s Iran ‘excursion’ be a bigger global turning point than Vietnam?

This is by Patrick Wintour, The Guardian’s Diplomatic Editor

(…) Assured by limitless military superiority and filled with such noble intent, US presidents have repeatedly been lured into launching wars only to find themselves confounded, ensnared and then broken by their inability to overpower an inferior opponent they wholly misjudged.

(…) Trump’s “little excursion to Iran”, judging by the drafts of the potential peace agreements that are circulating, is being universally perceived as a defeat. Almost regardless of the outcome – most likely a return to the old status quo – the war looks ill-conceived, a monument to confused objectives, bad planning and misplaced assumptions. (…)

By comparison with the Vietnam odyssey, Iran feels more like a day trip.

But in terms of consequence, it is still possible that the “excursion” will prove to be the bigger geopolitical turning point for the unrivalled superpower, the moment when the US will have to concede it mishandled a war not just because it had no convincing battle plan, but also no grand strategy to match how the contemporary world works. In an interconnected world, Trump believes progress is achieved through conflict, not cooperation. (…)

Clearly the domestic US consequences of Iran will never match Vietnam. True, the war was unpopular from the start, but society has not been torn apart by it. Only 13 body bags, each a personal tragedy, have been sent home. At the most, inflation caused by the energy shock will ensure an already unpopular president is punished in the midterms, something he professes not to concern him.

But it is arguable that the international consequences of the Iran war could yet prove more long lasting. (…) Trump’s war of choice looks to be a signal of defeat that will have an effect in several fields.

It marks the collapse of Israel’s 20-year Iran strategy to produce regime change and will accelerate the already rapid decline in the influence of this Israeli government in Washington. Danny Citrinowicz, the former head of an Iran branch of Israeli military intelligence, describes the war as an operational success but a strategic fiasco for Israel.

The war is also prompting Gulf monarchies to profoundly reappraise their geopolitical relationships, including the question of whether the existence of US bases brings the security required for their economies to diversify. (…) claims by Trump that countries such as Saudi Arabia or Qatar would now normalise relations with Israel, or join the Abraham accords, sound absurd – in the words of the former US ambassador to Israel Dan Shapiro: as “delusional as a moon made of green cheese”.

The Gulf states would prefer an imperfect peace because they see no other way out, Barbara Leaf, a former US undersecretary for the Middle East, told a seminar last week. (…)

The fallout is likely to hit Europe hard. As a squeeze on living standards seeps through the global economic system over the next year, centrist incumbents in France, Germany and the UK may face an electoral beating that tears at the architecture of the EU. The task of the incumbents will be made harder if Trump acts on his threat to withdraw US troops from Nato states in retribution for their “cowardly” refusal to come to his aid.

For the US foreign policy establishment, exemplified by the Council on Foreign Relations, the missteps in Iran are the final confirmation that Trump’s highly personalised, instinctive system of predatory diplomacy creates only more disorder.

Last week, the CFR launched a fundamental review of US strategy post-Trump. Its convener, Rebecca Lissner, has already warned the war “has delivered a potentially fatal blow to a US-led international order that was already on life support”. Allies are hedging, middle powers are forming their own coalitions, and regions once firmly in Washington’s orbit are shifting toward new power centres, she said. The former state department official Mira Rapp-Hooper was more brutal at Chatham House, describing it as superpower suicide.

In the short term, two questions from the Iran war have been thrust upon the Democrats, and in effect have already been answered. Has the US interest been furthered by being so close to Israel and its leadership? Would the US not be more powerful if it returned to alliances built on values, and the law, as well as self-interest?

For Iran, weakened, impoverished and yet emboldened, the path is unclear. Tehran may yet have to make concessions in the talks on its nuclear programme, including many it was on the verge of offering in Geneva in February. Iran’s internal politics is unpredictable, but this is a more military government, and at the same time the hardest hardliners in parliament have been marginalised.

Ali Vaez from the International Crisis Group says the war has given Iran three presents: ideological revitalisation, the discrediting inside Iran of foreign military intervention, and the repair of its deterrence strategy. The US deployed its ultimate deterrent on Iran – war – and it did not work. In the strait of Hormuz, Iran has realised how geography and globalisation have given it an immeasurable asset, one that it will take years of new pipeline construction to devalue.

Not surprisingly, so universally damning are the global verdicts on Trump’s war that he agonises and balks at signing a document that will in essence get him back to where he started, at a cost of $50bn. (…)

Trump’s repeated threats to blow countries up have an eerie resemblance to Richard Nixon’s delirium, as described by the former White House chief of staff HR Haldeman in his memoirs.

Haldeman recalled Nixon explaining he “could force the North Vietnamese into legitimate peace negotiations. The threat was the key, and Nixon coined a phrase for his theory … He said: ‘I call it the Madman Theory, Bob. I want the North Vietnamese to believe I’ve reached the point where I might do anything to stop the war. We’ll just slip the word to them that, ‘for God’s sake, you know Nixon is obsessed about communism. We can’t restrain him when he’s angry – and he has his hand on the nuclear button’ – and Ho Chi Minh himself will be in Paris in two days begging for peace.” (…)

Trump’s fallback message that Iran must never have a nuclear weapon had several drawbacks. Iran had agreed to this in the deal signed in 2015 from which Trump withdrew during his first term. Moreover, Trump said he had completely and totally obliterated Iran’s ability to make such weapons in the attacks mounted in the brief war of June 2025.

A succession of experts, including the former EU negotiator for the 2015 deal, Federica Mogherini, tore into Trump’s claim that Iran was close to possessing a bomb. “There was no evidence that Tehran posed an imminent nuclear threat or that diplomacy had been ineffective”.

As a result, she said, the war was illegal and reckless from the very first day. She said: “Analysts predicted that going to war with Iran would empower the country’s most conservative hardliners, spread conflict across the region, and drive global energy prices to punishing levels”. The analysts were largely right.

Increasingly exasperated White House briefers turned to the role Benjamin Netanyahu had played in persuading Trump to attack Iran. In a recent 60 Minutes interview, the Israeli prime minister insisted it was misleading to say he had forced Trump into war. Both he and Trump jointly weighed the risks, but he admitted “the problem of the Hormuz strait became understood as the war went on”.

This was an astonishing admission. Fatih Birol, the chief executive of the International Energy Agency, recently disclosed that in job interviews at the IEA, after asking candidates why they are applying for a job at the IEA, the second is: “What would you do if the strait of Hormuz was closed?” It was a commonplace doomsday scenario, yet the US had to improvise a response.

Equally few in the Pentagon foresaw the extent to which Iran would resort to “triangular coercion” – the attack on oil and gas facilities of the Gulf states, as well as exposed US bases.

International relations literature claims this is a relatively unstudied phenomenon whereby “a coercer who lacks direct leverage over a resilient target coerces a third party who does possess leverage over the target, and to whom the target is vulnerable, and manipulates it into a clash of interests with the target”.

In short, the war might not influence the US itself, but it might get to those that could. It was the alliance of Saudi Arabia, Turkey, Qatar, Egypt and Pakistan that last weekend foreclosed Trump’s return to conflict. They can now hold the reins in the Middle East, and it will be the relationship they can forge with Iran, independent of the US, that matters.

Canada Dips Into a Surprise Recession

Canada edged into a technical recession as weak business and government spending drove a slight contraction in the first quarter, pointing to persistent slack in the economy amid the US trade war.

Real gross domestic product fell by 0.1% on an annualized basis during the first three months of the year. That follows a 1% contraction in the fourth quarter, a downward revision from a previously reported 0.6% decrease.

The weaker-than-expected GDP data coincides with a weaker job market as well, painting a sobering picture of the Canadian economy as US President Donald Trump’s tariffs squeeze Canadian businesses. Business capital investment in the first quarter posted a fifth consecutive decline, shrinking 3% on an annualized basis, driven by lower spending on engineering structures.