Luke Vargas (3:27)

President Trump says that future peace talks with Iran can be held over the phone after he declined to send negotiators to Pakistan over the weekend. Our Benoit Fouqan left Islamabad this morning and says the move away from in person diplomacy comes as the sides remain far apart on key issues, including maritime trade and Iran's nuclear program.

Benoit Fouqan (3:47)

There is no prospect of immediate agreement. They're on the same page on Hormuz. There is no agreement on Nucleophile. But most crucially, the US Continues to blockade Iranian ports and Iran continues to blockade the Strait of Hormones. So in terms of just the conflict itself, it's not resolved, not to mention still the attack by Israel in Lebanon. But one crucial point the Iranians sort of keep on highlighting is that Trump continues to do severe threats on Iran, existential threats or threats to bomb infrastructure. And that makes it very difficult for the Iranian to sell any conversation at home when it looks like they would be talking under duress, under threats, under almost death threats.

Luke Vargas (4:28)

Oil futures and US Gasoline prices are once again moving higher today amid rising tensions in the Strait of Hormuz after Iran's Revolutionary Guard boarded a pair of container ships yesterday. Well, those elevated fuel costs have led a group of US Budget airlines, including Frontier and Avelo, to ask the Trump administration for two and a half billion dollars in federal assistance. In exchange, we report that the government would get warrants giving it the option to turn that debt into equity stakes in the airlines. Here's Journal aviation reporter Ben Katz.

Ben Katz (5:02)

What we've really seen in the last few years is the budget airlines in the US really struggling. And that's left them really exposed to the fallout from the war in Iran. And that's really what pushed these budget airlines into seeking this kind of bailout package. It's not unprecedented. We saw back in Covid during the pandemic the airlines receiving tens of billions in bailout out funds. This is a lot less 2.5 billion. But it's really all comes down to how they can weather the storm effectively. Of higher jet fuel prices with a forecast that prices will remain high through at least the end of the year.

Luke Vargas (5:40)

And Ben says that the timing of the request is key. As the Trump administration weighs a rescue

Ben Katz (5:44)

of Spirit airlines, the other airlines are seeing an opportunity. They're seeing the fact that Trump is encouraging competitive environment when it comes to the aviation market in the US So Spirit's rivals are seeing kind of those conversations between the administration and the airline and they're saying, you know what, we were asking initially for some tax cuts, but we actually see an opportunity here to get more support.

Luke Vargas (6:07)

A White House spokesperson didn't respond to a request for comment. Backers of a proposed California billionaire tax believe that they've gathered over a million and a half signatures, more than enough to get the one time 5% wealth tax on November's ballot. The tax was proposed by a union for health care workers in order to offset cuts to health care funding in President Trump's signature tax and spending law last year. California Governor Gavin Newsom opposes the tax, warning that it could spark an exodus of the wealthy, while some billionaires say it would stifle innovation in the state. Meanwhile, the fight over how to regulate AI in the US Is coming to a head as we report that the Trump administration is fighting to stop Republican led states like Florida, Utah and Tennessee from enacting their own AI laws. Tech reporter Amruth Ramkumar says the White House efforts include threats to withhold federal broadband funding.

Amruth Ramkumar (7:03)

This shows how divided the Republican Party is over AI. You've had senators like Marsha Blackburn of Tennessee, Josh Hawley of Missouri in the past year voice their concerns about AI, say they need more aggressive guardrails to come from the federal level. And they've said that if Congress is not going to act, that these states should be allowed to do something. And it's notable that Missouri and Tennessee were two of the states where the White House told them not to pursue state AI bills. So you do have an increasing number of Republicans, including former Trump adviser Steve Bannon, who have really opposed the White House policy on this and criticized it for being too friendly. So it's definitely causing friction within the MAGA movement.

Luke Vargas (7:44)

While the administration argues that a federal standard is vital to ensure US Dominance in the global AI arms race, Amrith notes that internal party divisions may leave AI almost unregulated while the technology develops.

Amruth Ramkumar (7:57)

The White House campaign could definitely delay AI regulation in a lot of parts of the US for six months or a year or even longer, and that's very meaningful. AI is developing so quickly that new models come out at a rapid pace. And six months or a year, even longer without rules can make a huge difference. A lot of lawmakers in these states are worried about kids who have committed suicide after having relationships with chat bots. They're worried about power prices going up, potentially because of data centers that are used to run these AI models. And they're worried about job losses caused by AI. And we haven't even seen the worst of those job losses yet. You would think. So this issue is only going to become more salient.

Luke Vargas (8:37)

Artificial intelligence is also likely to be key in the upcoming midterms, with recent polling showing it's the fastest rising issue in terms of importance to U.S. voters. Coming up, we'll look at what the world's largest auto show reveals about the cars of the future and the Chinese competition in store for Detroit. That's after the break.

Crowdstrike Representative (8:59)

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Luke Vargas (9:18)

To understand where the global car industry is headed, look to China.

Stephen Wilmot (9:22)

Journal autos reporter Stephen Wilmot is freshly

Luke Vargas (9:24)

off the plane after returning from the

Stephen Wilmot (9:25)

Beijing Auto show, which runs until next weekend. Stephen, good to have you back. You've just peered into the automotive looking glass, if you will. What did you see?

Automotive Industry Analyst (9:35)

Well, that's right. The Beijing Auto show is a real showcase for the industry of the future, really. It's the largest show in the world. It just has hundreds of launches, hundreds of manufacturers, which is astonishing given that we've had maybe a dozen major manufacturers in the west for years. And I think this is the result of the massive capacity build that we've seen in China in the last few years, combined with actually a somewhat tepid car market. And that's led to this very, very intense period of competition.

Stephen Wilmot (10:06)

So competing for the attention of the Chinese consumer and sort of rethinking what the car is, which, for someone who covers this industry, maybe is a bit exciting.

Automotive Industry Analyst (10:14)

Yeah, absolutely. There's a lot more focus on interior tech than you get on a Western car show. At the same time, you saw a lot of vehicles which would look very familiar to Americans, big SUVs and pickup trucks, but electrified or semi electrified. So one trend of the show very much is, I would say, solving the pain points around EVs, which Chinese consumers also have people often focus on range anxiety, even though more than half of car sales last year were what they call new energy vehicles, which is electric vehicles and plug in hybrids. But yeah, they're very focused on things like fast charging technology, putting small gasoline engines into electric vehicles so that they kind of recharge the battery. That's something called extended range electric vehicles or E revs. That enables the growth of the body style from what was the dominant style, I would say, which was small SUVs, the kind of Tesla model Y look alikes essentially to what we saw a lot of at this show, which was the three row SUVs, the pickup trucks. What you think of as like the core of the American car market.

Stephen Wilmot (11:11)

These are called full size SUVs, I believe in the US and this has kind of been the domain of ford and of GM's brands. Cadillac, obviously everyone knows the Escalade, but Chevy and GMC have these full size SUV's as well. Just for a point of clarification for our American listeners, we don't expect because of really high tariff rates and other measures for those Chinese full size SUVs to be landing in America in any large numbers. So I'm curious then what this tells us.

Automotive Industry Analyst (11:39)

The manufacturers have been looking, I think, for ways to, in this intensely competitive market, to stand out and to actually make higher profit and larger vehicles tend to be more profitable. That's one of the reasons why Detroit focuses on these larger vehicles.

Stephen Wilmot (11:53)

Just to put a finer point on it, does this pose a risk then maybe to US carmaker exports to the

Luke Vargas (11:58)

rest of the world?

Stephen Wilmot (11:59)

I mean, if this trend that we're seeing in China portends kind of where

Luke Vargas (12:02)

the global car consumer market may mature

Stephen Wilmot (12:05)

into, that's a market presumably US Carmakers would ostensibly want to benefit from.

Automotive Industry Analyst (12:10)

Absolutely. It's a real challenge for global automakers, including the American ones, in places like South America, in emerging markets, also in Europe, where GM pulled out many years ago. But Ford is still there and that's going to be a real challenge for Ford. They are talking about partnerships to solve this problem. They announced a partnership with Renault, the French carmaker, in December. And we've reported that they're in talks with Geely, a Chinese automaker, also to explore options in Europe and potentially elsewhere.

Stephen Wilmot (12:37)

Though that would likely hit some political pressure in the U.S. were they to do that. I wonder if it doesn't reveal some uneasiness on Detroit's part about whether it's sustainable for them to remain shielded from Chinese competition over the long haul.

Automotive Industry Analyst (12:51)

Absolutely. I think Detroit is very concerned that in the long run they need to be competitive and that actually their home market isn't a great training ground for them. The Volkswagen CEO in Beijing spoke to us and called China the fitness center for the automotive industry. It's where the global players go to work out. They need to be competitive in China so they can be competitive elsewhere. That's particularly relevant for Volkswagen because the Chinese players are coming to its home turf in Europe now. But it will also be true eventually. The American players assume for them that they need to be competitive with Chinese technology or in the long run, they won't survive.

Luke Vargas (13:30)

I've been speaking to Wall Street Journal

Stephen Wilmot (13:32)

autos reporter Stephen Wilmot. Stephen, thanks as always.

Automotive Industry Analyst (13:34)

Thank you, Luke.

Stephen Wilmot (13:35)

And that's it for what's news for this Monday morning.

Luke Vargas (13:38)

Today's show was produced by Hattie Moyer and Daniel Bok. 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.

Stephen Wilmot (13:47)

Until then, thanks for listening.

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