Prof G Markets: Tariffs Blocked by Court, U.S. Steel’s Golden Shares & Neuralink’s Funding Round

Release Date: June 2, 2025

In this episode of Prof G Markets from the Vox Media Podcast Network, hosts Kathy Jones and Ed Elson delve into significant developments impacting the capital markets. The discussion centers around the recent court ruling on Trump's tariffs, Trump Media’s ambitious Bitcoin investment plans, Nvidia’s stellar earnings amid export restrictions, the acquisition of U.S. Steel by Nippon Steel, and Neuralink’s substantial funding round. Below is a comprehensive summary of the episode's key points, enriched with notable quotes and timestamps.

1. Court Ruling on Trump's Tariffs

Overview: A U.S. trade court has determined that former President Trump lacked the constitutional authority to impose several tariffs on imports, specifically targeting cars, steel, and aluminum. These tariffs were initially justified on national security grounds under the International Emergency Economic Powers Act (IEEPA).

Key Insights:

• Constitutional Authority: The court affirmed that only Congress, not the president, holds the authority to regulate commerce with foreign nations. This decision underscores the judiciary's role in checking executive power.

  Kathy Jones [08:04]: "The gears of justice grind slowly, but they do grind on."

• Economic Impact: The ruling has led to a modest rally in major stocks such as Apple and Amazon, each rising by approximately 3%. However, the long-term fate of the tariffs remains uncertain as the Trump administration has appealed the decision, potentially escalating the matter to the Supreme Court.

  Ed Elson [09:01]: "Trump said the threat was the trade deficit... a trade deficit is completely normal. That's not a threat."

• Market Reaction: Despite the initial positive response, the overall market sentiment remains cautious, anticipating prolonged legal battles that may keep tariffs in place during the appeal process.

2. Trump Media’s Bitcoin Investment Strategy

Overview: Trump Media announced plans to raise $2.5 billion, allocating $1.5 billion through newly issued stock and $1 billion in convertible debt from approximately 50 institutional investors. The intent is to invest heavily in Bitcoin, positioning Trump Media as a Bitcoin treasury company.

Key Insights:

• Comparison with MicroStrategy: Unlike MicroStrategy, which has successfully implemented a Bitcoin treasury strategy and saw its stock soar by over 100% in the past year, Trump Media’s stock fell by 10% following the announcement. This deviation suggests diminishing hype around such financial maneuvers.

  Ed Elson [13:15]: "This could be an indication that... the hype running out."

• Market Skepticism: Ed posits that the initial excitement surrounding Bitcoin investments by corporations is waning, leading to skepticism and a lack of confidence in new entrants like Trump Media.

  Ed Elson [16:51]: "This whole operation is completely and entirely dependent on hype."

3. Nvidia’s Robust Earnings Amid Export Restrictions

Overview: Nvidia reported an impressive first-quarter performance with revenue surging by 69% year-over-year to over $44 billion. Data center revenue alone increased by 73%, driven largely by demand for AI chips. Despite facing U.S. export restrictions to China, Nvidia remains optimistic about its future prospects.

Key Insights:

• Impact of Export Ban: The Trump administration's ban on exporting high-performance H2O chips to China has significantly affected Nvidia, reducing expected Q2 revenue by $8 billion and lowering gross margins from 71% to 61%.

• CEO’s Stance on China’s AI Capabilities: Jensen Huang, Nvidia’s CEO, emphasized that China's AI advancements continue unabated, regardless of U.S. restrictions. He highlighted that China possesses the computational power to develop and deploy advanced AI models independently.

  Kathy Jones [21:53]: "China's AI moves on with or without US Chips. It has the compute to train and deploy advanced models."

  Ed Elson [22:44]: "Export restrictions have spurred China's innovation and scale."

• Market Performance: Despite the challenges, Nvidia’s stock climbed nearly 5%, reflecting investor confidence in the company’s strong fundamentals and strategic positioning in the AI sector.

4. Acquisition of U.S. Steel by Nippon Steel

Overview: After over 17 months of delays, Nippon Steel, a Japanese company, is moving forward with its acquisition of U.S. Steel. President Trump has endorsed the deal, referring to it as a "partnership" rather than a mere acquisition. A significant aspect of the agreement includes a golden share provision, granting the U.S. government control over key appointments and preventing production cuts.

Key Insights:

• Political Dynamics: The deal initially faced opposition from both the Trump and Biden administrations, primarily due to union concerns and perceived national security risks. The inclusion of the golden share provision addressed some of these issues, allowing the U.S. government to maintain oversight.

  Ed Elson [33:25]: "The deal will happen. Nippon will buy U.S. steel, but the U.S. government gets a golden share."

• Economic Perspective: Kathy criticizes the obstruction of the deal as driven by xenophobia and undue influence from unions. She argues that the strategic importance of U.S. Steel is overstated and highlights Nippon Steel’s commitment to investing $14 billion and potentially increasing U.S. employment by up to 70,000 jobs.

  Kathy Jones [36:54]: "There's no reason, there's no sort of strategic threat here."

• Government Intervention: The discussion touches on the broader implications of the government taking a stake in private enterprises. Drawing parallels with past government interventions during crises, the hosts debate the appropriateness and long-term impacts of such measures.

  Ed Elson [39:27]: "When you have capitalism on the way up and socialism on the way down, what you have is neither. What you have is cronyism."

5. Neuralink’s $600 Million Funding Round

Overview: Elon Musk’s brain implant company, Neuralink, is raising $600 million in a new funding round, which values the startup at $9 billion—a substantial increase from its $3.5 billion valuation in late 2023. Neuralink is currently conducting early human trials with its implant designed to aid individuals with spinal cord injuries and conditions like ALS.

Key Insights:

• Technology Breakthroughs: The Neuralink implant allows paralyzed individuals to communicate and interact with computers using just their thoughts. A patient named Brad Smith, who has ALS, demonstrated using the implant to control a computer cursor, showcasing the device's life-changing potential.

  Kathy Jones [50:42]: "This is the first video edited with Neuralink and BCI."

• Valuation Debate: Ed and Kathy discuss the challenges of valuing a pre-revenue, early-stage company like Neuralink. Ed expresses skepticism about the inflated valuation, questioning the practicality and timeline for commercialization.

  Kathy Jones [58:49]: "I don't think this company might change the world. But I think on an IRR basis it's going to take a lot longer than people think."

• Elon Musk’s Role: The hosts emphasize Elon Musk’s unique ability to attract significant capital to ambitious projects like Neuralink, which might otherwise struggle to secure funding. They contrast Neuralink’s transformative potential with what they view as less impactful ventures, such as Musk’s endeavors with Twitter.

  Kathy Jones [57:55]: "Neuralink would have a difficult time getting this type of capital if he wasn't directly involved."

• Future Prospects: While acknowledging the groundbreaking nature of Neuralink’s technology, both hosts agree that widespread adoption and commercialization are likely years away. They highlight the importance of sustained investment and realistic expectations in advancing such innovative technologies.

  Ed Elson [56:16]: "If you can turn someone HIV negative, they will pay a lot of money for that and so will their insurance company."

Upcoming Market Indicators

As the episode concludes, Jones and Elson briefly touch on the week ahead, anticipating key economic indicators such as factory orders, the US trade deficit for April, and the unemployment rate for May. They offer predictions on how ongoing trade dynamics and policy decisions might influence these metrics.

• Market Predictions:

  • Expectation of continued market skepticism toward Trump's tariff rhetoric.
  • Anticipation of Apple’s stock performance stabilizing after recent fluctuations.
  • Potential impacts of upcoming economic data on broader market sentiment.

  Kathy Jones [60:32]: "The market is going to begin to yawn. The market is going to stop."

Conclusion: This episode of Prof G Markets provides an in-depth analysis of pivotal market events, offering valuable insights into trade policies, corporate investment strategies, technological advancements, and government interventions. Kathy Jones and Ed Elson effectively dissect complex economic and business scenarios, equipping listeners with a nuanced understanding of the factors shaping today's financial landscape.