WSJ What’s News - The Trump-Musk Alliance Unravels in Real Time

Episode Date: June 5, 2025

P.M. Edition for June 5. President Trump and Elon Musk traded barbs today as ​Trump threatened to eliminate government subsidies and contracts for Musk’s businesses, while the billionaire called the president ungrateful. Plus, the U.S. trade deficit collapsed in April, with a record drop in imports. WSJ reporter Matt Grossman discusses where tariffs fit in, and whether we can expect future data to remain at similar levels. And we exclusively report that Humana, the second-biggest Medicare insurer, has told congressional staffers that it will support moves that would curtail billing practices worth billions in extra payments to the industry. We hear from Journal reporter Christopher Weaver about why the company is making such a move, and how it could affect the broader Medicare business. Alex Ossola hosts. Sign up for the WSJ's free What's News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

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Rise to rewards with the BMO Eclipse Rise Visa Card. Terms and conditions apply. The relationship between President Trump and Elon Musk ruptures in real time. Plus, the U.S. trade deficit marked a record-breaking decline in April. And Humana backs changes to lucrative Medicare billing practices. That represents kind of a crack in the unity of the industry in opposing changes to this at a time when a bipartisan consensus about potentially doing something about it has emerged in Congress.

It's Thursday, June 5th. I'm Alex Osala 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. Long simmering tensions between President Trump and Elon Musk burst into the open today as the two men traded barbs and insults. Speaking in the Oval Office alongside German Chancellor Friedrich Merz, Trump addressed

Musk's latest attacks on his signature tax bill for the first time, saying he was disappointed in his former White House adviser and suggested he was suffering from quote, Trump derangement syndrome. The president attributed Musk's frustrations to provisions in the legislation that repeal tax credits for electric vehicles. I'm very disappointed because Elon knew the inner workings of this bill better than almost anybody sitting here, better than you people. He knew everything about it.

He had no problem with it. All of a sudden he had a problem. And he only developed the problem when he found out that we're going to have to cut the EV mandate because that's billions and billions of dollars. The war of words and tweets on the social media app X escalated from there. Musk, who spent hundreds of millions of dollars to help get Trump re-elected, shot back that Trump was ungrateful and wouldn't be sitting in the Oval Office without his support. Musk also indicated he was fine with the electric vehicle provisions in the legislation, even

if he considered them unfairly singled out, as long as Republicans, quote, ditch the mountain of disgusting pork in the bill, Musk wrote on X. In a separate post, Trump threatened to, quote, terminate Elon's governmental subsidies and contracts, to which Musk responded by saying that Trump is in the Epstein files, and that's why they haven't been made public.

Musk was referring to files from a federal investigation into alleged sex trafficking and abuse by disgraced financier Jeffrey Epstein. Epstein, who died by suicide in 2019, had well-known connections to many in elite New York society, including Trump. The FBI and Justice Department didn't immediately return requests for comment.

The White House didn't immediately respond to a request for comment. [♪ music playing -♪ Separately, President Trump has said that Russia and Ukraine might need to keep fighting before either side is ready for a ceasefire. Trump said that neither Moscow nor Kiev were ready to make peace and that it might be wiser to let the war continue before

seriously pursuing diplomacy. You have two kids, they fight, fight, fight. Sometimes you let them fight for a little while. You see it in hockey, you see it in sports. The referees let them go for a couple of seconds, let them go for a little while before you pull them apart. It's an acknowledgement that Trump's sprint for a peace deal has failed.

Trump said repeatedly during the 2024 presidential campaign that he could end the Russia-Ukraine war in a day. He has since claimed that he was speaking sarcastically. Merz asked if he also saw the conflict as between two children, said Trump was the most important player in ending the war and that it's their duty to do something now to stop it. President Trump spoke today with Chinese leader Xi Jinping. Trump wrote on social media that the one and a half hour call was productive and focused almost entirely on trade, and

that they didn't discuss the war in Ukraine and other global hotspots. Trump said that one point leading to a breakdown in trade talks, the export of rare earth minerals which are critical to the US auto industry, had been addressed. Details were unclear, however, and Beijing struck a less conciliatory note in its account of the call, raising questions of whether Trump had extracted a firm commitment from Xi to loosen controls over rare earths and other critical minerals. And you can hear more about the economic and security implications of these critical minerals and the challenges to scaling up US mining interests this Sunday on What's New Sunday. The U.S. trade deficit marked a record-breaking decline in April.

The Commerce Department said today that U.S. imports fell 16% versus March to $351 billion in April, the biggest drop in dollar terms on record. Exports, meanwhile, rose 3% to about $289 billion. That yielded a trade deficit of roughly $62 billion, the smallest imbalance since September 2023. For more on the numbers and what they mean, I'm joined by WSJ reporter Matt Grossman. So Matt, this April data reflects the time after President Trump imposed the U.S. tariffs. Are we seeing the first results of that here? Reducing the trade deficit is basically the reason that Donald Trump wanted to put on the tariffs that he did in the first place. As you said, this is one of the biggest swings

that we've seen in a long time, if not ever. And I think that reflects how quickly trade policy has been changing. Earlier this year, there was a very rapid increase in the trade deficit because American importers were expecting steep new tariffs. And they realized they had to do as much importing as they could before those import tariffs hit. So in February and March, we had record levels of trade deficits and the imbalance was bigger than we'd ever seen it. The tariffs hit in April and that quickly reverted to a much more balanced trade picture. Okay, so the tariffs are having their intended effect, as you say.

I mean, what happens next? Is there reason to think that things will continue in this way? It's really hard to say what happens next. A lot of the shift we saw in April was a reversal of the trends that came earlier this year. So it's not really clear yet if the deficit is going to keep shrinking, if it's going to stay at this current level. A lot of that has to do with how American companies decide to respond to the new tariffs. And of course, the tariff policy is still changing very quickly.

It's changed several times since the beginning of April. There are more changes ahead as the U.S. negotiates more trade deals, and as opponents of tariffs continue to try to use the courts to block some of them, that means there's just a lot of uncertainty ahead. I'm just curious how consumers fit in here because consumer sentiment has been quite low, but it seems like people are still spending even if it's not the same way they were spending before. So how much of what comes next hinges on what consumers do? The relationship between consumers' outlook and their income and the trade deficit is

a very dynamic situation. A lot of it has to do with, first of all, how much the tariffs lead companies to increase their prices. And depending on how much those prices go up, it will really be up to shoppers to decide whether they can afford to keep paying those prices, whether they're going to shift to buy more American products, or whether they're just going to be shopping a lot less in general. That complexity is what makes it so hard for economists

to predict where this is going to go. That was WSJ reporter Matt Grossman. Thank you, Matt. Thank you. That was WSJ reporter Matt Grossman. Thank you, Matt. Thank you. Major US indexes ended the day lower. The Dow fell a quarter of a percent, the S&P 500 dipped about half a percent, and the NASDAQ

fell about 0.8 percent, dragged down by Tesla, which ended the day down about 14 percent after that Trump-Musk faceoff. One of the stocks that did great today was crypto firm Circle Internet Group. The stablecoin issuer made its stock market debut today. Shares opened at $69, more than double their IPO price, and closed around $83. The shares were paused for volatility shortly after they began trading. The company raised over $1 billion in its IPO, signaling a potential warm-up for the sleepy IPO market this summer.

Circle issues the world's second-largest stablecoin, called USDcoin or USDC, which, according to CoinMarketCap, has a market capitalization of about $62 billion. Stablecoins are backed by reserves of cash or cash-like assets such as treasuries and are supposed to maintain a one-to-one exchange ratio with the dollar or other government currencies. Coming up, why Insurer Humana is supporting changes to practices that generate billions for the Medicare industry.

That's after the break. industry. That's after the break. When does fast grocery delivery through Instacart matter most? When your famous grainy mustard potato salad isn't so famous without the grainy mustard? When the barbecue's lit, but there's nothing to grill? When the in-laws decide that, actually, they will stay for dinner? Instacart has all your groceries covered this summer, so download the app and get delivery in as fast as 60 minutes. Plus enjoy zero dollar delivery fees on your first three orders. Service fees exclusions and terms apply. Instacart, groceries that over deliver.

Humana, the second biggest Medicare insurer, has told congressional staffers that it will support moves that would curtail billing practices worth billions in extra payments to the industry. That's according to staffers and a document viewed by the Wall Street Journal. The stance by a leader in the Medicare Advantage business represents an important development in a growing debate over how the companies are paid. Christopher Weaver covers healthcare companies for the journal. Okay, Christopher, what exactly is changing here?

For years, Medicare Advantage companies like Humana, United Health Group, and others have made a lot of money from adding diagnoses to patients' records in the Medicare Advantage system by doing home visits, where they send a nurse practitioner to somebody's house to look them over, look at their medicines, do assessments and add extra diagnoses that can trigger payments. It's been incredibly lucrative for some companies and an analysis we did last year showed it generated about $15 billion over a three-year period and by all accounts it's only gone

up since. For years the industry's defended these practices and Humana has essentially reversed its position, signalling an openness to a quite sweeping change. And that represents kind of a crack in the unity of the industry in opposing changes to this at a time when a bipartisan consensus about potentially doing something about it has emerged in Congress. What would the impact be of some of these changes on Medicare and on patients? For Medicare and for the taxpayers who fund it, the changes could be significant savings. The Congressional Budget Office estimated that a similar proposal to curtail payments based on

diagnoses from home visits could generate $124 billion over 10 years. For patients, it's less clear. This is a nurse practitioner in somebody's house, and it may have some genuine clinical benefit for many patients to help make sure people are getting the right connections to the primary care doctors who see them. So it's not clear whether they would drastically rein in the volume of visits that they're doing or not, but the potential is there if they're not as lucrative.

As you mentioned, Humana's move represents a crack in the unity of the industry. Will that put pressure on other insurers to follow suit? The reality is Humana has always been more conservative in using some of these tools to amplify its revenue. So while they would take a hit from those policies, it would be less than some of their competitors. At the same time, everybody in this industry

knows the writing is on the wall with regard to these practices and they're all gonna signal some openness to change. It's just a question of where on the spectrum that falls. That was WSJ Reporter Christopher Weber. Thank you, Christopher. Thank you. And the US Supreme Court made it easier for workers

to sue for reverse discrimination. In a ruling today, the court unanimously agreed to allow a woman to pursue a claim that she was denied a job promotion because she is straight. Claims of discrimination from members of majority groups have already become more common in recent years. And that's what's news for this Thursday afternoon. Today's show is produced by Pierre Bienimé and Anthony Bansi with supervising producer Michael Kosmides. I'm Alex Osola for The Wall Street Journal.

We'll be back with a new show tomorrow morning. Thanks for listening.