WSJ What’s News - Harvard, Trump Administration Face Off in Court Over Research Funding

Episode Date: July 21, 2025

P.M. Edition for July 21. The battle between Harvard University and the Trump administration reached a crescendo today as they met in a federal courtroom in Boston over the government’s cancellation of more than $2 billion of research funding. We hear from WSJ higher education reporter Sara Randazzo about the case, and where it goes from here. Plus, as the valuations of chip companies rise, Heard on the Street writer Asa Fitch says investors are ignoring the looming threat of tariffs on chips. And slumping U.S. EV sales mean that battery makers have capacity to spare, so they’re turning to a new market: energy-storage systems. WSJ autos reporter Chris Otts tells us what the impact of such a pivot might be. Alex Ossola hosts. Sign up for the WSJ's free What's News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

Welcome to this year's championship game. This is the big one. With Amex Platinum, you have access to an annual dining credit to some of the hottest restaurants around town. Score! So you can raise the bar on game night. That's the powerful backing of Amex. Terms and conditions apply. Learn more at amex.ca slash yamex. Harvard and the Trump administration face off in court. Plus, what tariffs on chips could mean

for some of the world's most valuable companies. It could have a major impact on the industry and where the industry shifts. Of course, the level of that impact and the nature of it depends entirely on what the tariffs end up being. And with EV business slumping, US battery makers are finding a whole new market. It's Monday, July 21.

I'm Alex Osalove for The Wall Street Journal. This is the PM edition of What's News, the top headlines and business stories that move the world today. Harvard University and the Trump administration faced off in court today. In a federal courtroom in Boston, the Ivy League school argued that the government had no basis to cut more than $2 billion of its research funding. Higher education reporter Sarah Randazzo is here to tell us more.

Sarah, what are both sides saying in this case? Harvard filed this lawsuit a couple months ago, back when the Trump administration summarily cut about $2.2 billion of research funding. And the government has said it was because of concerns by anti-Semitism and that essentially Harvard was no longer in line with government priorities. And so it had the right to cut these funds. Harvard says that that was done improperly and they have two real main buckets of arguments. The first is a First Amendment case. They say the government made all these demands on us, which is something Trump administration did. They said, Harvard, we want to have control over your faculty, your hiring, did a very strong arm reach into Harvard.

Harvard rejected that, and then these funds were cut. So Harvard is essentially saying that's a free speech violation because they weren't allowed to operate and speak as they wanted to. They're also arguing something a little more boring but equally important, which is there's a process to be done if grants are getting cut. And basically basically the administration

didn't do that and they just cut them. So that's the Harvard side. And then on the government side, they're saying, hey, these are contracts, we have the right to cancel contracts if we no longer want to be in business with this party, and we don't think you're operating up to our standards. And so they're trying to make it more into a contract dispute. Okay, so the two sides were in court today. What happens next? Harvard had filed what's called a motion for summary judgment, which is basically a ruling that would shortchange the case and just land them a win pretty early without having to exchange a bunch of documents and get into all of the nitty gritty of a typical lawsuit.

And then the government similarly said, hey, no, you should hand us that early win. And so this is a typical process in most cases, but this one is a little more heated, and it could lead potentially to an early ruling. And so they're basically asking the judge to say, yes, Harvard, you should win this case at this point. What would the outcome in this case mean? I mean, if Harvard won, would that just kind of

be like waving a magic wand and Harvard would get its research funding back? Likely not. There's a lot of battles that they're fighting with the administration in addition to this. And even in this case, any win will be appealed by the Trump administration up to the next level of federal appellate court. And then that could be appealed up to the Supreme Court. So in court, there's a long potential road. And then out of court, the Trump administration

continues to pressure Harvard on other fronts, including international students, their tax exempt status, endowment taxes. And so even a win in court here, while it would be crucial for this lawsuit, it isn't everything that Harvard's looking for. That was WSJ Reporter Sarah Rendazzo. Thanks so much, Sarah.

Thanks so much for having me. McKinsey is changing the way it picks its leaders for the first time in years, in an effort to circumvent the internal tensions and infighting that marked its past two elections. As part of changes to its governance, the elite consulting firm will now elect a global managing partner to a single six-year term. Its partners will hold a confirmation vote at the four-year mark on whether the leader

should serve the remaining two years of the term. McKinsey's roughly 750 senior partners currently vote to elect a firm-wide leader every three years and that person can stand for two terms. In addition to the shifts to its election cycles, McKinsey will slim down its board from 30 people today to 12 in the future. McKinsey's current global managing partner Bob Sternfeld said the idea is that a smaller, more focused board will provide greater oversight on the firm's leaders. The artificial intelligence boom has lifted chip stocks this year and made Nvidia the

most valuable listed company in the world. But the future looks increasingly murky because of a factor that investors seem to have largely shrugged off—tariffs. President Trump threatened to hit chip imports with tariffs after he took office this year, and though those haven't happened yet, the president suggested recently that tariffs on chips may be coming soon. Asa Fitch is a writer for Heard on the Street and joins me now. Asa, what do tariffs potentially mean for chip makers? It could have a major

impact on the industry and where the industry shifts. Of course, the level of that impact and the nature of it depends entirely on what the tariffs end up being. There are a couple of ways in which chips could be tariffed. One is the US could put a direct tariff on chips imported in the US. That actually wouldn't have a major impact on chips because only roughly 45 billion dollars of chips were imported directly last year into the US. The fact is we don't tend to import chips into the U.S. directly. We import electronics that contain chips from overseas. So the real impact could be if there is a tariff on these electronics or the value of the chips within electronics that are not made in the U.S., that come into the U.S.

So to illustrate this with mobile phones, we imported last year about $114 billion worth of those phones. 60% of the value of those phones came from the chips inside of them. So you start putting tariffs on that chip content within those mobile phones, it starts to become quickly a pretty big number. Asa, I know that a lot of the world's largest chip makers like TSMC and Intel and Samsung have really increased their US presence over the past few years. Would it be possible to then make these chips in the U.S.?

Companies have invested an incredible amount of money in the past few years in expanding the chip industry and chip manufacturing in the U.S. These companies don't move on a dime. Chip factories take years to stand up from zero to full production. They cost tens of billions of dollars each if you're talking about an advanced chip factory. That's not going to be enough basically for these companies to completely replace their production overseas with production in the US. There are also EU specific tariffs that, for example, Trump has said may be coming. There's a company called ASML in the U.S. There are also EU specific tariffs that, for example, Trump has said may be coming.

There's a company called ASML in the Netherlands. This company makes very, very expensive equipment that goes into chip factories. If that gets slapped with a 30% tariff, that could change the calculations of companies that are thinking about doing domestic production in the U.S. That was WSJ herd on the street writer, Asa Fitch. Thanks Asa. Thank you. Stocks rose broadly today after last week's earnings helped drive more records. Major U.S. indexes were mixed.

The NASDAQ rose about 0.4%, the S&P 500 added about 0.1%, while the Dow ended off a tad. Leading economic indicators say the U.S. economy is set to slow. That's according to the Leading Economic Index, published today by the Conference Board. The index declined 0.3% to 98.8% in June, a stronger fall than economists expected. A spokesperson for the Conference Board said that while no recession has yet been forecast, the impact of tariffs will become more pronounced in the second half of the year through higher prices.

Coming up, the new market that EV battery makers are turning to. That's after the break. Summer is what you make of it, and Tim Horton's fruit quenchers have something for every mood. So choose from a variety of fruity flavors in sparkling, frozen, or lemonade. Order yours on the Tim's app today at participating restaurants in Canada for a limited time. Big U.S. EV battery makers are stepping back from the market that got them started and betting on a new set of customers in an entirely different business. Instead of car makers, these companies have started making batteries for utilities, wind and solar power developers, and massive data centers that train artificial intelligence.

For more, I'm joined now by Chris Otz, who covers autos for the Journal. Chris, why are we seeing this kind of pivot? Well, it's two things. Three, four, five years ago, battery companies and automakers together were laying down plans to invest billions of dollars in new factories to build electric vehicle batteries in the United States. This was all predicated on adoption of electric vehicles that was thought a few years ago to be on a much faster pace than it just turned out to be. So there's a lot of overcapacity in the battery industry for EVs. And what's helping right now to fill that capacity is the growth of electricity demand.

And the biggest thing that's changed in recent years is the development of artificial intelligence. Tech companies are standing up these data centers and batteries are the fastest way to bring new capacity onto the grid. And that's where batteries can come in as well. What could we see the impact be from this kind of expansion of this side of the business? It's certainly helpful coincidental timing that this market is growing as the EV market is really plateauing. Presumably the industry would be in an even bigger hole if it didn't have this other outlet for that capacity. That was WSJ reporter Chris Otz. Thanks Chris. Thank you.

In other news, blank check company Dynamics announced today that it plans to merge with another entity to create a new company known as the Ether Machine. The combined company plans to manage over $1.5 billion in Ether, the second largest cryptocurrency. It's a bet that investors will continue to reward businesses that pour money into crypto holdings under the industry-friendly Trump administration. And China's foreign ministry said today

that China blocked Wells Fargo banker Chen Yue Mao from leaving the country because she's required to assist in a criminal probe. This marks Beijing's first confirmation of the exit ban. A Chinese Foreign Ministry spokesman didn't give details of the case or elaborate on the nature of Mao's involvement. And finally, it's no secret that earbuds are ubiquitous, allowing people to answer calls or listen to podcasts like this one while doing other things. Some people are wearing them all the time while doing tedious tasks, sure, but also when working in customer-facing jobs and even at the doctor's office.

Journal reporter Lauren Weber told our Tech News Briefing podcast that as far as your brain is concerned, that multitasking is kind of a myth. I spoke to a psychologist who recently wrote a book about attention and she said the bad news, this was bad news for everyone, even those of us who don't keep our AirPods in, the bad news is there's no such thing really as multitasking. She said what you're actually doing

when you think you're multitasking is shifting your attention back and forth. So if you're listening to a podcast while you're reading a book or sitting on the subway, catching up on the news, you're not actually doing either one of those things well, which she said also raises the chances that you make mistakes when you're doing something like a task. To hear more, check out tomorrow's episode of Tech News Briefing. And that's what's news for this Monday afternoon.

Today's show is produced by Pierre Bienamé with supervising producer Michael Kosmides. I'm Alex Osela for The Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening. Thank you.