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The hard-liners enter the chat

The hard-liners enter the chat

Politico14-05-2025
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IN TODAY'S EDITION:— Warning signs for the GOP megabill— The number SALT Republicans want— Backlash grows over Library of Congress firings
Tuesday was all about the SALT Republicans. Now, it's the conservative hard-liners' turn to make noise.
After the impasse over the state-and-local-tax deduction boiled over Tuesday — more on that below — several GOP hard-liners emerged late Tuesday night expressing their own dissatisfaction with the megabill to pass President Donald Trump's agenda.
Rep. Paul Gosar said 'not nearly enough' is being done to win conservatives' votes. Rep. Eric Burlison told Mia parts of it are 'disturbing' and that he isn't satisfied with the Medicaid numbers. Freedom Caucus Chair Andy Harris said in a post on X'the proposal to stop waste, fraud, and abuse in Medicaid will do little to achieve that.'
'What a joke,' he wrote.
Expect hard-right pushback to come to a head on Monday when Speaker Mike Johnson has to get the bill through the Rules Committee — and, more specifically, win the support of conservative panel members Chip Roy, Morgan Griffith and Ralph Norman.
It's not just a House problem. Sen. Ron Johnson is also threatening to tank the megabill if he doesn't get several trillion dollars in additional spending cuts. As our Jordain Carney reports, it's a troubling sign for Senate GOP leaders who can only afford to lose three votes. The Wisconsin Republican has a history of forcing leadership to bend to his whims; his hardball tactics during Republicans' last reconciliation bill secured a new deduction rate for pass-through businesses.
But at the moment, the House speaker is focused on solving a different problem: working out a SALT deal with a handful of blue-state Republicans after failing to reach agreement in a Tuesday night huddle.
'More sizzle than steak in that meeting,' Rep. Nick LaLota said, while acknowledging they made progress. Johnson said similarly leaving the meeting.
Reminder: The current Ways and Means proposal would triple the existing cap to $30,000. But SALT Republicans are demanding a number closer to $60,000. To close the gap, they're pointing to the additional fiscal breathing room from the GOP's tax bill coming in underneath a $4 trillion cost target, two Republicans with direct knowledge of the matter told our Meredith Lee Hill.
'The number that we have in our bill, I advocated for,' Chair Jason Smith said Tuesday night. 'Most of the committee wanted 20 [thousand]. It covers 95 to 98 percent of every one of their districts. That's the truth. I think 30's a good deal.'
Maybe so, but expect the SALT crew to hold out for a number starting with a '4.'
Meanwhile, an update on some key markups overnight:
— Ways and Means is still ongoing, with Democrats continuing to accuse Republicans of seeking to pair tax cuts for the rich with slashing health care benefits for the poor, our Bernie Becker writes in. Republicans have so far defeated a range of Democratic amendments, including four that would have cut off tax cuts at certain income thresholds and one that sought to extend premium tax credits and expand Medicaid under the Affordable Care Act.
— Energy and Commerce is also going strong after getting off to a dramatic start when at least 26 people were arrested for protesting Medicaid cuts outside the meeting room. The panel began debate on the health policy section of the draft bill a little before 1 a.m., our Ben Leonard reports. So far, Democrats have honed in on the GOP's proposals to institute work requirements in the program, arguing they would do little to boost employment while leaving millions without coverage; Republicans have countered there are plenty of exceptions and minimal red tape.
The committee late Tuesday approved the bill's energy and environment titles, which would claw back billions of dollars in unspent funds from the Democrats' 2022 climate law and speed up permitting for fossil fuel projects. And shortly after midnight Wednesday, the panel cleared the communications portion of the draft legislation that would most notably institute a 10-year moratorium on state AI legislation — a provision that might not pass the procedural smell test in the Senate.
— Agriculture paused debate last night around midnight with plans to resume work at 10 a.m. Committee Republicans are appearing to fall in line behind a plan to cut $300 billion in spending for the nation's largest anti-hunger program, which the panel's chair, G.T. Thompson, attributed to 'member education' on the issue. Democrats delivered emotional pushback against the overhaul.
Want a bigger reconciliation update? Request an invite to our next Policy Intelligence Briefing this Thursday, 2–3 p.m with Ben and Meredith, as well as our Jennifer Scholtes and Benjamin Guggenheim. Pro subscribers should have already received an invite.
GOOD WEDNESDAY MORNING. Or good night to anyone who stayed up all night for these markups. And we'll see some of you in a few hours at the ACLI Capital Challenge footrace.
Follow our live coverage at the Inside Congress blog at politico.com/congress and email your Inside Congress scribes at mmccarthy@politico.com, lkashinsky@politico.com and bleonard@politico.com.
COMING UP IN PLAYBOOK — Sen. John Cornyn probably can't win a primary. Texas Attorney General Ken Paxton probably can't win a general election. Our Ben Jacobs dives deep into the Texas GOP Senate primary, a demolition derby that threatens to fracture the party, force the White House to intervene and perhaps put an otherwise safe seat at risk in November.
TALKING DEFENSE — Our colleagues are sitting down with 10 lawmakers tomorrow, including Reps. Mike Lawler and Michael McCaul, for a deep dive on America's latest defense and security priorities. We'll also have exclusive interviews with admin officials including Sebastian Gorka of the National Security Council. Join us in Navy Yard at 8 a.m.
THE SKED
The House is in session and voting to advance law enforcement legislation and on a likely motion to table a Trump impeachment resolution from Rep. Shri Thanedar at 1:30 p.m. and 5 p.m.
— Republicans and Democrats will hold their separate weekly conference meetings at 9 a.m.
— GOP leaders will hold their post-meeting news conference at 10 a.m.
— Appropriations will have hearings on the president's fiscal 2026 budget request, with testimony from HHS Secretary Robert F. Kennedy Jr. at 9:30 a.m. and ICE acting Director Todd Lyons and DOT Secretary Sean Duffy at 10 a.m.
— Homeland Security will have a hearing on DHS' fiscal 2026 budget request with testimony from Secretary Kristi Noem at 10 a.m.
— Democratic leaders will hold their post-meeting news conference at 10:45 a.m.
— The Republican Study Committee will have its weekly lunch, with border czar Tom Homan and Education Secretary Linda McMahon as guests at 12:30 p.m.
— Rep. Andy Ogles and House Freedom Caucus members will hold a news conference on codifying the president's executive orders at 12:45 p.m.
— Reps. Ted Kennedy, Jerry Nadler, Dan Goldman and Ted Lieu will hold a news conference to announce the Aaron Salter Jr. Responsible Body Armor Possession Act, in honor of the two-year anniversary of the Buffalo shooting at 2:30 p.m.
The Senate is in session and will vote on Katharine MacGregor's nomination to be deputy secretary of Interior, Michael Rigas' nomination to be deputy secretary of State for Management and Resources, Emil Michael's nomination to be under secretary of Defense, Eric Ueland's nomination to be deputy director at OMB and end debate on Sean Donahue's nomination to be an assistant administrator of the EPA during votes at 11:30 a.m., 2:15 p.m., 5:30 p.m. and 8:30 p.m.
— Energy and Natural Resources will consider various nominations starting at 9:30 a.m.: Catherine Jereza and Kyle Haustveit to be assistant secretaries, Jonathan Brightbill to be general counsel, Tina Pierce to be CFO and Conner Prochaska to lead the Advanced Research Projects Agency at the Department of Energy; and William Doffermyre to be solicitor and Ned Mamula to be director of the U.S. Geological Survey at the Interior Department.
— Commerce will vote on Paul Dabbar's nomination to be deputy secretary of Commerce at 9:45 a.m. It'll examine FAA reauthorization at 10 a.m.
— Finance will have a hearing on trade in critical supply chains at 10 a.m.
— Appropriations will have a hearing on the president's fiscal 2026 budget request for the EPA, with testimony from Administrator Lee Zeldin at 10:30 a.m. and testimony from Senate Sergeant at Arms Jennifer Hemingway and U.S. Capitol Police Chief Thomas Manger at 3 p.m.
— Environment and Public Works will have a hearing on nominations for Sean McMaster to be Federal Highway Administration administrator, John Busterud to be assistant administrator for the EPA Office of Solid Waste and Adam Telle to be assistant secretary of the Army for civil works at 10:30 a.m.
— HELP will have a hearing on the president's fiscal 2026 budget request for HHS with testimony from Kennedy at 1:30 p.m.
The rest of the week: The House will take up law enforcement legislation. The Senate will continue working through Trump's nominees.
THE LEADERSHIP SUITE
Senate GOP marches toward contentious emissions vote
Senate Republicans could vote as soon as next week on a controversial proposal to nix federal waivers allowing California to set its own emissions standards, Jordain reports. 'We're going to pass it next week,' Majority Whip John Barrasso told reporters Tuesday.
Senate Majority Leader John Thune hasn't committed to that timeline. A key sponsor, Sen. Shelley Moore Capito, also cautioned the schedule isn't '100 percent decided.' Some GOP senators remain wary that the chamber's parliamentarian is backing a Government Accountability Office finding that the waiver isn't subject to the Congressional Review Act. Overruling her, they fear, would weaken the Senate's rules in a way that could benefit Democrats next time they're in power.
Bipartisan backlash over Trump's Library of Congress takeover
Top lawmakers on both sides of the aisle made clear Tuesday they aren't interested in an executive-branch takeover of the Library of Congress. 'There needs to be a consultation about this,' Thune said.
There's broad agreement that Trump likely had the authority to fire Librarian Carla Hayden. But lawmakers are trying to parse the legality of his next steps: firing the head of the U.S. Copyright Office and attempting to install allies from the Justice Department as acting heads of the library and copyright operation. Those conversations are now playing out in a series of behind-the-scenes meetings, including one between Senate Rules Chair Mitch McConnell and ranking member Alex Padilla, per our Katherine Tully-McManus. Deputy Attorney General Todd Blanche, who Trump installed as acting librarian, was also on the Hill Tuesday.
Johnson ponders consequences for Dems' ICE protest
Speaker Johnson told reporters the House will 'have to take appropriate action' against Reps. Bonnie Watson Coleman, Rob Menendez and LaMonica McIver after they were involved in a confrontation at an ICE detention center in New Jersey last week. GOP Rep. Buddy Carter is pushing to strip the trio of their respective committee assignments, and Johnson also floated censure as a possibility.
'I'm working on reconciliation at the moment, but we'll get to it,' Johnson said. 'There's a lot of very serious concern about it, and the tape is telling. Video doesn't lie.'
Senator blasts Johnson's DC funding fix delay
Today marks two months since the Senate passed the D.C. funding fix on March 14. And the chamber's top appropriator, Sen. Susan Collins, is urging the House to act to avoid cutbacks to city services.
'I don't understand why the House — especially after President Trump called for [passing] the bill the Senate passed immediately — has yet to act on it,' Collins told Mia.
House GOP leaders have blamed the delayed schedule on their reconciliation timeline, but Johnson said earlier this month it would be done 'as quickly as possible.'
House ethics watchdog up and running
The Office of Congressional Conduct is finally up and running for this Congress after the speaker took steps to slow down the process, our Hailey Fuchs reports. The House clerk read aloud the names of the watchdog's four board members Tuesday: Karen Haas, a former House clerk, will serve as board chair; former Rep. Bill Luther will serve as board co-chair. Lorraine Miller, another former House clerk, and former Rep. Lynn Westmoreland, will also hold seats.
POLICY RUNDOWN
MORE MEGABILL WARNING SIGNS — Key Senate Republicans are wary about E&C's plan to free up swaths of federal spectrum to raise $88 billion to help fund the megabill, believing it won't adequately safeguard Pentagon operations. Others are warning that the House's proposed rollbacks of clean-energy credits could stifle investments in newer energy technologies.
Still others are sounding caution as they review House Republicans' plans to pare back Medicaid. Collins said Tuesday she's studying the impact on rural hospitals that are already 'really teetering.'
COMING RFK JR.'S WAY — Lawmakers were already planning to hammer HHS Secretary Robert F. Kennedy Jr. over sweeping staff cuts during his testimony before both the House and Senate today. Then on Tuesday the Trump administration asked some of the thousands of federal public health workers it laid off to return permanently, according to emails reviewed by our Alice Miranda Ollstein and Sophie Gardner.
Democratic Rep. Lois Frankel, who sits on the House subcommittee Kennedy is meeting with, told Mia she's not surprised by the reversal but plans to warn the HHS chief that 'it will take so long to start' programs back up.
Who else to watch today: GOP Sen. Bill Cassidy, a former doctor who public health officials hope will challenge Kennedy's vaccine views and actions as secretary, our Carmen Paun and Adam Cancryn write.
BILLY LONG'S COMING BACK — Senate Finance scheduled a May 20 hearing on the nomination of former Rep. Billy Long to head the IRS. Long is seen as a controversial pick, and the hearing is sure to feature harsh scrutiny of Long's business ties by committee Democrats.
CRYPTO BILL TAKE TWO — Sen. Ruben Gallego said Tuesday that lawmakers are working toward restarting bipartisan negotiations over a landmark cryptocurrency bill that was rejected on the Senate floor last week. But he cautioned not to expect it back immediately, our Jasper Goodman reports.
Best of POLITICO Pro and E&E:
THE BEST OF THE REST
One of Congress' Wealthiest Members Made Stock Trades Worth Millions After Trump Announced Tariffs, from Dave Levinthal at NOTUS
Four-term former Missouri Sen. Christopher Bond dead at 86, from Jackie Wang at Roll Call
CAPITOL HILL INFLUENCE
INSURERS IN TOWN — Health insurers such as Elevance Health that participate in Medicare Advantage are trying to avoid becoming a target as Republicans struggle to pay for their megabill, our Kelly Hooper writes. Their efforts include commissioning studies and penning papers to show that the program needs more funding and arguing to lawmakers on key committees that a congressional advisory panel's findings of rampant overpayments to the program are inaccurate. The insurers are hoping to combat the narrative that Medicare Advantage is a magnet for government waste.
SPOTTED IN THE SENATE — NCAA President Charlie Baker having meetings about name, image and likeness legislation. Senate Commerce Chair Ted Cruz, who's leading the charge to regulate NIL for college athletes, told Lisa he spoke with Baker on the matter last week.
JOB BOARD
Ben Monticello is now legislative director for Rep. Darin LaHood. He previously was senior legislative assistant for Rep. Jack Bergman.
Two more aides left Sen. John Fetterman's office in recent weeks: Madeleine Marr and Caroline Shaffer, two people familiar with their departures told our Holly Otterbein.
HAPPY BIRTHDAY
Rep. Gary Palmer … former Reps. Jackie Speier, Erik Paulsen, Mimi Walters and Alan Mollohan … Susie Wiles … Tom Donilon of O'Melveny & Myers … former Sen. Byron Dorgan … POLITICO's Jason Beeferman … J.B. Poersch of Senate Majority PAC … Semafor's Kadia Goba … Jon Vogel of MVAR Media … Sydney Thomas Stubbs of Americans for Prosperity … Aneiry Batista … Rob Levinson … Kara Allen … Judith Barnett … Brian Canfield … Caleb Randall-Bodman of QuestEnd Advisors
TRIVIA
TUESDAY'S ANSWER: Kenny Robinson correctly answered that Rules was the first House select committee created in 1789. (It didn't become a permanent standing body until 1880.)
TODAY'S QUESTION, from Monday's winner Tim Trent: Who was the only founding father to become president who never owned a slave?
The first person to correctly guess gets a mention in the next edition of Inside Congress. Send your answers to insidecongress@politico.com.
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China Stops US Commerce Employee From Leaving, Reports Say
China Stops US Commerce Employee From Leaving, Reports Say

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time19 minutes ago

  • Yahoo

China Stops US Commerce Employee From Leaving, Reports Say

(Bloomberg) -- China has stopped an American citizen who works for the US Commerce Department from leaving the nation for several months, according to media reports — an episode that coincides with Beijing and Washington trying to arrange a leaders' summit so they can address their differences on trade. Why the Federal Reserve's Building Renovation Costs $2.5 Billion Milan Corruption Probe Casts Shadow Over Property Boom How San Jose's Mayor Is Working to Build an AI Capital The Chinese-American individual who works for the Patent and Trademark Office had traveled to meet relatives, the Washington Post reported, citing four people familiar with the matter, who asked not to be identified discussing the sensitive issue. The US sent a very high-level message to Beijing to let the man depart, the newspaper added, citing one person. It said it didn't know the name of the man facing a so-called exit ban, which was put in place over an apparent failure to disclose on a visa application that he worked for the US government. Officials from Beijing and Washington — including in the Commerce Department — are negotiating a trade deal after President Donald Trump hit goods from China with heavy tariffs that he later paused. Trump also wants a meeting with Chinese leader Xi Jinping to sort through their problems, which touch on technology curbs, rare earths and the status of Taiwan. To get the sitdown and a trade pact, Trump has recently softened his harsh campaign rhetoric that focused on the US's massive trade deficit with China and resulting job losses. Earlier this month, US Secretary of State Marco Rubio said after meeting his Chinese counterpart, Wang Yi, that there was 'a strong desire on both sides' for a Xi-Trump meeting. The outlook for such a meeting could be complicated if the episode involving the employee of the US Commerce Department escalates. The incident is somewhat magnified because Wells Fargo & Co. recently suspended travel to the world's second-biggest economy after one of its top trade financing bankers was blocked from leaving. 'These cases in combination are significant and will have a chilling effect on US business travel to China,' said Jeremy Chan, a senior analyst on the China and Northeast Asia team at Eurasia Group, who once worked as a diplomat in China and Japan. 'Given that Trump's team is reportedly planning to bring a group of CEOs along with him for his summit with Xi later this year, these reports may complicate that effort or make US business executives less willing to participate.' The Commerce Department employee, a veteran of the US army, was detained when he arrived in the southwestern city of Chengdu in April, the South China Morning Post reported Sunday, citing a person familiar with the situation. He was being prevented from leaving China because his case was 'related to actions Beijing deemed harmful to national security,' the newspaper reported, though the specifics couldn't be confirmed. Since the man arrived in Chengdu, he had also traveled to the Chinese capital with a US official, the newspaper reported. The Patent and Trademark Office the man works for handles US patents and registers trademarks. It says on its website that its 'mission is to drive US innovation and global competitiveness.' A spokesperson US Embassy in Beijing said that its 'highest priority is the safety and security of US citizens overseas.' It added that 'we track these cases closely, and have raised our concern with Chinese authorities about the impact these arbitrary exit bans have on our bilateral relations and urged them to immediately allow impacted US citizens to return home.' The Foreign Ministry in Beijing didn't respond to a request for comment. China's use of exit bans has been a point of contention between Beijing and Washington in recent years. The US State Department has repeatedly advised citizens to reconsider travel to China based on what it called the 'arbitrary enforcement of local laws, including in relation to exit bans.' The move by Wells Fargo came after Chenyue Mao, an Atlanta-based managing director for the bank who was born in Shanghai, was banned from departing after entering China in recent weeks, according to a person with knowledge of the situation. The case underscores multinational companies' fears about the risks of operating in China, especially in regard to staff safety and restrictions on movement. Among notable incidents in recent years, the Wall Street Journal in 2023 reported a senior executive at US risk advisory firm Kroll was prevented from leaving China. In 2019, Bloomberg reported that a UBS Group AG wealth manager was detained for about three months before returning home. An academic analysis published in 2022, based on data from six governments, found 128 cases of foreign citizens facing Chinese exit bans, with at least a third of the cases driven by business disputes. Chinese law prohibits people suspected of crimes from leaving the country. Chinese citizens judged to have endangered national security can also face exit bans under the country's recently updated espionage law. --With assistance from Catherine Lucey and James Mayger. (Updates with comments from Eurasia Group analyst.) 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Brexit made businesses abandon the UK. Trump's hefty EU tariffs could bring them back
Brexit made businesses abandon the UK. Trump's hefty EU tariffs could bring them back

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time21 minutes ago

  • CNBC

Brexit made businesses abandon the UK. Trump's hefty EU tariffs could bring them back

In 2016, the U.K.'s vote to leave the EU prompted many businesses to shift operations to the European continent, taking investment and headcount with them. Fast forward to 2025, and the specter of U.S. President Donald Trump's 30% trade tariffs on the EU, which will kick in on Aug.1 unless a trade deal is reached, could bring them back. "The U.K. could be a big indirect winner" if the threatened U.S. duties on the EU become a reality, according to Alex Altmann, partner and head of the German desk at London-based accountancy and business advisory firm Lubbock Fine. "If the tariff rate for the EU finally ends up anywhere near this 30% level then the U.K.'s much lower U.S. tariffs would offer a major incentive for EU companies to shift some of their manufacturing to the U.K. or to expand their existing U.K. facilities," he noted in emailed comments. "The U.K. has a lot of spare manufacturing capacity after Brexit. A big gap between U.K. and EU tariffs would be a major opportunity for the U.K. to regain some of its lost status as a key European manufacturing hub," added Altmann, who is also the vice president of the British Chamber of Commerce in Germany. As things stand, the U.K. has already struck a trade deal with the U.S. that reduces duties on cars to 10% and grants it the lowest duty on steel imports. London also has a "reset" deal with the EU, after the Labour government under Prime Minister Keir Starmer — who was opposed to Brexit — carved out a trade agreement following years of post-referendum acrimony. The sweet spot the U.K. now finds itself in comes after several years of uncertainty and angst for businesses, as they've tried to navigate a post-Brexit world of more red tape and barriers to export. That's been an ongoing gripe for exporters, given that the 27-country EU remained the U.K.'s largest trading partner after Brexit was finally enacted in 2020. The EU accounted for more than 50% of Britain's foreign trade in goods in 2024, according to the European Commission. A number of big businesses, and particularly financial services firms such as Goldman Sachs and JPMorgan, sought to avoid the transnational regulatory complexities of the post-Brexit landscape by relocating operations and assets to other financial hubs in the EU, such as Dublin, Paris, Amsterdam and Frankfurt. The exodus was ultimately not as dramatic as was initially feared. Supporters and critics argue over the merits and disadvantages of Brexit and the divorce from the EU's single market and customs union, as well as the free movement of goods and people that came with EU membership. Yet most economists agree that Brexit dented U.K. exports, jobs and economic growth. The Office for Budget Responsibility, the U.K.'s independent forecaster, estimates that exports and imports will be around 15% lower in the long run, compared to if the U.K. had remained in the EU. Although economists argue over the impact on the wider economy, it's generally agreed that the U.K.'s GDP is around 5% lower than it would have been, had Britain not voted to leave the bloc. While the U.K. is reveling in its newfound harmony with its American and European business partners, the extent of any windfall that comes as a result of the EU's trading pain with the U.S. remains to be seen. It remains unclear whether Trump's planned 30% tariff on the bloc will actually go ahead on Aug.1. The U.S. president's mercurial nature means the ultimate levy rate could go higher — he previously threatened a 50% tariff — or lower, toward the baseline 10% level that the EU is pursuing. Not everyone agrees that the U.K. could benefit from trade misfortunes that befall the EU, whatever the outcome of last-ditch talks between Brussels and Washington. "First of all, the 30% tariffs for the EU, they're not a given," Carsten Nickel, managing director at Teneo, told CNBC last week, pointing out that any potential post-tariffs shift in business investment from Europe back to the U.K. would be unlikely to happen quickly. "If we were to talk about moving production facilities from Europe to the U.K. because the U.K. has a deal with the U.S. — the time horizon for that is a multi-year, if not decade-long, kind of time horizon," he said. In addition, Nickel noted that the U.K.'s strength remained in financial services rather than in manufacturing, which remains more prevalent in export-oriented countries like Germany and Italy. "The reality is that the U.K.'s comparative advantage is not in high-end manufacturing ... so the idea that you're going with this stuff that you're currently producing in, say, Germany and Switzerland, and you're moving that to the U.K. tomorrow ... it's just not a decision that that a business leader in Europe can take just like that," Nickel said.

Tesla at a Crossroads: What to Watch in Q2 Earnings
Tesla at a Crossroads: What to Watch in Q2 Earnings

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time23 minutes ago

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Tesla at a Crossroads: What to Watch in Q2 Earnings

Tesla Q2 Earnings Preview Zacks Rank #4 (Sell) stock Tesla (TSLA) will be one of the most-watched stocks to kick-off earnings season, reporting second quarter earnings after the close on Wednesday, July 23rd after the market close. Tesla, and its eccentric and outspoken CEO Elon Musk, have been all over the news in 2025 after Musk entered the political scene, faced boycotts, and is embroiled in an ugly spat with US President Donald Trump over his 'Big Beautiful Bill.' Beyond the headline-driven noise, the upcoming earnings report will help answer many of the questions that investors have about Tesla and its future. Before we dig deeper into Tesla's future roadmap and key metrics to watch, below are some historical data points to help investors prepare for Wednesday's report: · TSLA Earnings Price Move: The options market implies an earnings move of +/- 7.4% following Wednesday's report. However, over the past few quarters, TSLA has averaged actual earnings moves that were slightly higher (~10%). · Earnings Surprise History: Tesla has missed the Zacks Consensus Estimatessix times in the past seven quarters. Over the past four quarters, Tesla has missed estimates by an average of -8.33%. Image Source: Zacks Investment Research · Tesla Stock Performance: Year-to-date, Tesla shares exhibit relative strength, down 18.4% while the S&P 500 Index is up 6.6%. Image Source: Zacks Investment Research Though Tesla remains the dominant global electric vehicle (EV) manufacturer, its legacy business has slowed. That said, in true Elon Musk fashion, Tesla is going 'all in' on transitioning and diversifying its business to dominate the future. 5 Questions to Ponder During Tesla's Earnings Call 1. Can the Tesla Robotaxi Catch Waymo? Tesla finally launched its robotaxi service in Austin, Texas, late last month. Although the launch is a beta test, utilizing a limited fleet of Model Y vehicles with safety companions on board, it is meaningful in that it signifies the company's official entrance into the robotaxi race. Currently, Alphabet's (GOOGL) 'Waymo' is off to a wide lead, operating in five major US cities. That said, Tesla bulls argue that Tesla will be able to scale much faster than Waymo and at a significantly lower cost (due to the fact that FSD does not require the expensive lidar sensors used by Waymo). A key question for Tesla investors to ask is, 'How quickly does Tesla plan to expand its robotaxi service to other cities?' 2. Will Tesla Invest in xAI? Elon Musk made headlines last week when his 'Grok' chatbot leapfrogged legacy large language AI models like Meta Platform's (META) 'Llama' and OpenAI and Microsoft's (MSFT) 'ChatGPT' to become the most powerful model in terms of pretraining and reasoning evaluations. Though Musk has ruled out a merger between 'Grok' parent XAI and Tesla, he has suggested that he may decide to hold a shareholder vote on whether Tesla should invest in xAI. A Tesla investment in xAI could provide Tesla shareholders with some reassurance in the fact that the company can diversify away from its slowing legacy business into the red-hot AI industry. 3. Will Tesla's EV-business Steady? Tesla's annual revenues are expected to shrink in 2025 for the first time in more than five years. Meanwhile, the company experienced its first ever margin decline in 2024 amid falling volumes and generous discount offers. Nevertheless, if Musk can reassure investors that the worst is behind them, Tesla shares can rally. Image Source: Zacks Investment Research 4. Can Tesla's Energy Business Remain Electric? Tesla's energy business is one of the few bright spots for the company recently, with energy storage deployments doubling year-over-year in 2024 as revenues spiked 67%. Can the momentum continue? Image Source: Zacks Investment Research 5. How will Tariffs and Politics Impact Tesla? While the global trade picture has become clearer since President Trump's 'Liberation Day,' there is still considerable uncertainty about how much pressure tariffs will put on Tesla's margins. Meanwhile, following Musk's spat with President Trump, Musk has threatened to start a new political party. Should Musk signal that he is going through with the idea, it may hurt shares. Historical precedent illustrates that investors want Musk at the helm, and any outside distractions are often met with selling. Beyond the questions above, investors will look for updated timelines on new products such as the 'Optimus' robot. Bottom Line Tesla is at a crossroads as the company looks to diversify away from its legacy business into new businesses, such as the robotaxi business. Investors will gain valuable new insights when the company reports earnings on Wednesday evening. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Microsoft Corporation (MSFT) : Free Stock Analysis Report Tesla, Inc. (TSLA) : Free Stock Analysis Report Alphabet Inc. (GOOGL) : Free Stock Analysis Report Meta Platforms, Inc. (META) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data

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