WSJ What’s News - What Trump and Musk Stand to Lose as Their Partnership Crumbles

Episode Date: June 6, 2025

A.M. Edition for June 6. After a public falling out between the president and the world’s richest man, the Journal’s Damian Paletta and Caitlin McCabe break down the potential political and financial consequences of their high-stakes breakup. Plus, GOP Senators move to shore up funding for NASA programs threatened by budget cuts. And reporter Laurence Norman discusses his exclusive report that Iran is turning to China as it stocks up on materials for ballistic missiles. Luke Vargas hosts. Sign up for the WSJ’s free What’s News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

As Trump and Musk torch their partnership, we'll look at what each stands to lose. Plus GOP senators move to shore up funding for NASA programs threatened by budget cuts. And we exclusively report that Iran turns to China as it stocks up on materials for ballistic missiles. President Trump has said he wants Vladimir Putin to help solve the Iranian nuclear crisis, yet he held a call with President Xi of China where they didn't discuss Iran. It is in fact China that has the leverage. It's Friday, June 6th.

I'm Luke Vargas for the Wall Street Journal, and here is the AM edition of What's News, the top headlines and business stories moving your world today. We begin today with more fallout from the show-stopping breakup between President Trump and the world's richest man, Elon Musk. That meltdown escalated quickly yesterday afternoon as Trump used an Oval Office meeting with Germany's Chancellor to publicly lay out his frustrations with Musk, and by the evening the two men were trading threats, with Trump toying with the idea of cutting off government contracts to Musk's companies, and Musk floating the creation of a new political party, suggesting Trump should be impeached and saying

his tariffs would trigger a recession. The extraordinary fight carries risks on both sides, especially as journal Washington coverage chief Damian Paletta said that the president lacks much room to maneuver on Capitol Hill as he tries to hold together his MAGA governing coalition. There are two central planks of President Trump's economic plan. One is the trade war that we're all quite familiar with. The second part is this big tax cut bill, which must pass by the end of this year

in order to prevent taxes from going up on millions of Americans. Elon Musk has come out attacking that bill, calling it an audacious waste of government money and also saying that it would explode the deficit. And it would grow the deficit by more than $2 trillion. Now, President Trump knows he has little margin for error if he wants only Republicans to pass this bill.

The bill did pass in the House, but just by one vote. In a way because Trump was twisting arms and getting Republicans across the finish line. But with Musk out attacking the bill, that's going to make it very hard for maybe a dozen, maybe more Republicans to follow through because now they've been called out for voting for a bill that would grow the debt and the deficit. We'll find out more in the coming weeks as Republicans hope to deliver the bill to Trump's desk by July 4th. But the financial toll of the falling out for Musk isn't taking that long to assess.

Caitlin McCabe is a Journal Markets reporter. Caitlin, our colleagues on the Evening What's News podcast briefly noted that a drop in Tesla's shares yesterday helped to drag down the Nasdaq overall. This has admittedly been a pretty volatile stock lately, but this was no ordinary drop. Yeah, so Tesla shares fell 14% yesterday and that wiped out about $150 billion from the company's market cap, which was its biggest one day decline ever, according to Dow Jones market data. Elon Musk himself lost about $27 billion in net worth.

But just thinking beyond yesterday's moves, there's a lot of longer term implications for Elon in the worlds of business and finance. So starting with Tesla, one of Tesla's big ambitions has been to roll out a nationwide fleet of self-driving cars. But in order to do that, Tesla needs regulatory changes at the federal level, which Elon has been pushing for. Meanwhile, a bigger blow to Tesla could come from White House efforts to weaken fuel economy and emissions rules. Last month, Congress voted to eliminate California's ability to set its own limits on tailpipe emissions, effectively killing one of the biggest drivers of EV investment

in the US. All right, Tesla very exposed to regulatory moves there as you laid out nicely. And as if that weren't enough, there's SpaceX kind of in a similar position as well. Lauren Henry SpaceX has billions of dollars in federal contracts, which could now possibly be in jeopardy. So it's the only US space firm regularly transporting astronauts to and from the International Space Station. It's struck agreements with US spy agencies, including a $1.8 billion classified deal with the National Reconnaissance Office, an agency that operates surveillance

satellites. And it's also a big part of NASA's flagship human exploration program. On top of that, SpaceX needs air safety regulators to regularly review its flight plans and environmental agencies to help regulate company plans for launch sites. And so with this sort of spectacular unraveling of this partnership with Elon and Trump, all of this just got a lot more complicated for Elon and his companies. That was Journal Markets reporter Caitlin McCabe. Caitlin, thank you so much. Thanks for having me. Meanwhile, Senate Republicans are pushing back on a recent White House proposal to cut NASA's budget by about 25 percent.

If passed by Congress, the budget would prompt layoffs at the agency, reduce funding for the International Space Station, impose big cuts to science programs, and unwind the current setup of the Artemis mission to return American astronauts to the moon as soon as 2027. In response, GOP officials are discussing directing $10 billion toward programs facing reductions, with lawmakers saying the lunar program is essential for returning NASA astronauts to the moon before China. And President Trump's second attempt to bar international students from Harvard has been blocked by a federal judge in Boston after the university argued that the action

was part of a campaign of retribution over the exercise of its First Amendment rights. The ruling means Harvard can continue enrolling foreign students while the case proceeds. Coming up, Iran buys ingredients for hundreds of new ballistic missiles from China, and we'll look back at a rocky week for the London Stock Exchange. We've got those stories and much more after the break. We are exclusively reporting that Iran has ordered thousands of tons of ballistic missile ingredients from China. Journal reporter Lawrence Norman says the buildup comes after an Israeli attack last

year severely damaged Iran's military capabilities. Iran is going to get from China thousands of tons of something called ammonium perchlorate. That is a material that basically you plug into a ballistic missile to make it explode. And the purchase is a sign that Iran wants to continue to build up its production of so-called solid propellant ballistic missiles and also to pass them to its militia allies in the region like the Houthis and Hezbollah. Iran's ballistic missile arsenal is one of its strongest military assets and even though Iran's defences from the US and Israel have become pretty weak, its ability to retaliate with ballistic missiles is a significant deterrent.

Beijing has said it is unaware of any contract. According to Lawrence, the deal with the Chinese firm was almost certainly agreed to before President Trump announced new nuclear talks with Iran in April, but could nonetheless have a bearing on negotiations. Obviously, the greater Iran's military prowess than the greater leverage it has in those talks. One of the premises of the Trump administration push for talks now is that Iran was weak. It was vulnerable to Israeli and U.S. attack. Its economy was struggling.

Its most dangerous ballistic missile supply was slowing. This obviously changes one of those factors. Another factor for who holds the power in talks is that the UK, France and Germany are threatening to bring back sanctions on Iran after an IAEA report found it hadn't declared nuclear materials. And Lawrence said it's just one more example of how many countries are playing a role in complex negotiations.

There's a certain irony in the last few days that President Trump has said he wants Vladimir Putin to help solve the Iranian nuclear crisis. Yet he held a call with President Xi of China where they didn't discuss Iran. It is in fact China that has the leverage. China is buying oil from Iran, almost all of the oil that Iran exports. China is providing Iran with ingredients for ballistic missiles. Russia has provided Iran with various types of military equipment in the past, but it's not very good. So if China were helping the U.S. to solve this crisis, it would probably be more effective than anything that Putin can do." Iran's mission to the United Nations didn't respond to a request for comment.

Israel's military has carried out strikes in the Lebanese capital Beirut, saying it was targeting an underground drone facility in the south of the city. It marks one of the largest strikes on Hezbollah assets since a ceasefire was agreed to in November. The military said that Hezbollah's aerial unit was producing thousands of drones with help and funding from Iran, characterizing it as a blatant violation of the agreement between Israel and Lebanon. And at least three people have been killed and 49 injured in Russian missile and drone

strikes across Ukraine. It comes just days after Kiev's covert drone operation took out much of Russia's bomber fleet. The overnight assault hits sites across the country, with the capital, Kiev, bearing the brunt of the attack. In news moving markets today, India's central bank delivered a larger-than-expected rate cut despite the ongoing uncertainty around U.S. tariffs. The Reserve Bank of India's decision comes as cooling inflation and solid economic growth

in India supported a continuation of an easing cycle which kicked off in February. The RBI also changed its monetary policy stance to accommodative. And amid an unsettled economic picture in many global capitals at the moment, London Mayor Sadiq Khan has been pitching the city as an ocean of calm, telling CNBC earlier this week that London is back. But deputy finance editor Quinton Webb says it's been a turbulent week for the city's stock exchange with news of several high-profile exits. WISE went public in London four years ago and having a fintech company, WISE is

a kind of money transfer company, list here was seen as a bit of a win. Now this week the company has said it's considering shifting its main listing to the US and that would feed into a broader exodus of companies from the London market. We've had other high-profile companies choose to go public in the US instead of the UK, one being Arm, the semiconductor design company. Another is Klarna, which is a buy-now-pay-later provider which has been heading down the track towards a New York IPO. The delistings come despite the UK being the first country to secure a trade deal with the US and amid long-standing economic issues, with the OECD

predicting weak economic growth for the U.K. this year and next. And that's it for What's News for this Friday morning. Today's show was produced by Daniel Bach and Kate Bullivant. Our supervising producer is Sandra Kilhoff, and I'm Luke Vargas for The Wall Street Journal. We will be back tonight with a new show. Otherwise, have a great weekend and thanks for listening.