Trump’s tariff tactics carry high economic risk

When Donald Trump started the biggest trade war since the 1930s in his first term, his impulsive combination of threats and import taxes on U.S. trading partners created chaos, generated drama — and drew criticism from mainstream economists who favor free trade. But it didn’t do much damage to the U.S. economy. Or much good.

The trade war sequel that Trump has said he’s planned for his second term could likely be costlier. Trump seems to have grander ambitions and is operating in a far more treacherous economic environment, one in which his tariffs risk rekindling inflation.

Treasury: DOGE has access to systems

A Treasury Department official has written a letter to federal lawmakers saying that a tech executive working with Elon Musk’s “Department of Government Efficiency” will have “read-only access” to the government’s payment system.

The official sent the letter Tuesday out of concerns from members of Congress that DOGE’s involvement with the payment system for the federal government could lead to security risks or missed payments for programs such as Social Security and Medicare. Democratic lawmakers have voiced frustration over the lack of transparency and public accountability, saying that Musk’s people might illegally withhold payments to suit their political agenda.

Google’s rising ad sales not easing worries

Google’s digital ad sales continued to grow at a healthy clip during the holiday season, but that wasn’t enough to offset investors’ worries about whether its big bet on artificial intelligence will be as lucrative as once envisioned.

The October-December results released Tuesday by Google parent Alphabet Inc. showed the company is continuing to reap even more profits from its dominant search engine and other peripheral services. Alphabet’s profit climbed 28% from the previous year to $26.5 billion to eclipse analyst projections, but revenue fell slightly below forecasts. More importantly, revenue growth in the Google Cloud division tethered to the AI craze wasn’t as robust as had been anticipated.

Calm returns to Street; tech leads indexes higher

Calm returned to Wall Street, and tech stocks led U.S. indexes higher. The S&P 500 rose 0.7% Tuesday, a day after swinging sharply on worries that President Donald Trump’s tariffs could spark a trade war that would hurt economies around the world. The Dow Jones Industrial Average rose 0.3%, and the Nasdaq composite climbed 1.4%.

Palantir Technologies helped lead indexes following a stronger profit report than analysts expected. Treasury yields eased in the bond market after a report suggested the U.S. job market is still solid but not adding as much upward pressure on inflation.

Judge: Musk’s claims of harm are a ‘stretch’

Elon Musk’s lawyers faced off with OpenAI in court Tuesday as a federal judge weighed the billionaire’s request for a court order that would block the ChatGPT maker from converting itself to a for-profit company. U.S. District Judge Yvonne Gonzalez Rogers said it was a “stretch” for Musk to claim he will be irreparably harmed if she doesn’t intervene to stop OpenAI from moving forward with its transition from a nonprofit research laboratory to a for-profit corporation.

But the judge also raised concerns about OpenAI and its relationship with business partner Microsoft and said she wouldn’t stop the case from moving to trial as soon as next year so a jury can decide.