Pentagon Says Iran Attacks Don’t Rise to Level of Restarting War

0:00Today we helped a latte for Sam coffee shop get an insurance quote simply and easily and made sure a floral delivery van was able to make someone's day. We're the Hartford with decades of experience insuring millions of unique small businesses. When it comes to your small business insurance. Thank you. One size absolutely does not fit all. Get a quote or find an agent today at the Hartford dot com slash small business.

0:33Alex Ossola:President Trump downplays Iran's latest attacks, worrying U.S. allies in the Gulf. Plus, Beijing is using regulatory aggression to push back against the U.S. The people I talk to around the Chinese leadership keep telling me that Xi Jinping thinks he's, quote, cracked a code on Trump. And flavored vapes have become a point of tension between President Trump and the FDA. It's Tuesday, May 5th. I'm Alex Oseleff for The Wall Street Journal. This is the PM edition of What's News, the top headlines and business stories that move the world today.

1:16Alex Ossola:We begin this evening's show in the Middle East, where fighting has picked up again this week. That includes missiles and drones that Iran's firing at the United Arab Emirates, as well as attacks on commercial ships and American warships. During a press conference this morning, Defense Secretary Pete Hegseth downplayed the attacks and said the ceasefire holds for now. Ultimately, the president's going to make a decision whether anything were to escalate into a violation of a ceasefire, but certainly we would urge Iran to be prudent. Hours after Hegseth's comments, the UAE said it was intercepting new attacks.

1:49Alex Ossola:Iran denied the attacks, but said there would be a, quote, crushing response if it's targeted by the UAE. Iran and other adversaries and allies are all watching the U.S. response for a hint of how the outcome of the conflict could ripple around the world. I'm joined now by WSJ Chief Foreign Affairs Correspondent Yaroslav Trofimov. Yaroslav, what is Tehran gleaning from the Trump administration's response to its most recent attacks? What they are saying is that they think that the U.S. is in a rush to extricate itself from the conflict, And the U.S. is clearly willing to look the other way as Iran escalates and attacks other countries.

2:26Alex Ossola:And what does the U.S. response signal to other Gulf states? There is a lot of consternation across the Gulf. It seems like even as Iran is violating the ceasefire and attacking the Gulf, the U.S. is not inclined to punish Iran for that. And so, as one official told me, it looks like the Trump administration has thrown the Gulf under the bus. Once again, this reinforces the conviction held by many governments friendly to the U.S. that the U.S. administration of President Trump is a transactional one. There is growing fear that even though the U.S. is committed to helping especially its European treaty allies as well as treaty allies in Asia, that President Trump would be very reluctant to come to help, at least if there is no perceived benefit to the U.S.

3:12in his eyes.

3:13Alex Ossola:That was WSJ Chief Foreign Affairs Correspondent Yaroslav Trofimov. Thanks, Yaroslav. Thank you.

3:22Alex Ossola:Geopolitical tensions are also playing out in Asia, where China has escalated its fight against the U.S. over Iranian oil. The U.S. had sanctioned five Chinese refineries for buying Iranian crude. Well, over the weekend, the Chinese government told companies not to comply with those sanctions. In the past, Beijing has been wary of openly violating U.S. sanctions. That's not the case anymore. Lingling Wei is the WSJ's chief China correspondent and the author of the WSJ China newsletter. And in this morning's edition, she wrote all about Beijing's latest moves. If you're a bank and you refuse to process a payment for one of those refineries because of U.S.

4:01sanctions, you can get sued in China. Same if you're the insurer who won't write the policy or the shipping company that won't carry the cargo. So suddenly, complying with American law could be an offense in China. And there's really no clear way out. Follow Washington, you get sued in Beijing. And follow Beijing, you lose access to the dollar system.

4:28Alex Ossola:This isn't the only way China is pushing back against U.S. economic interests. Last week, China banned Meta's acquisition of AI startup Manus. Historically, when China didn't want the deal to go through, it would just slow walk it for many years until the parties gave up. This time, they just said no in one line sentence. So you will got two unprecedented moves in seven days, both one-sentence orders, both using tools that have been sitting on the shelf for years. That is not a coincidence. That is a posture shift. The people I talk to around the Chinese leadership keep telling me that Xi Jinping thinks he's, quote, cracked a code on Trump, that Trump can be outweighed, can be exhausted, that you can escalate without blowing up the whole relationship.

5:23Alex Ossola:Lingling says the timing is not a coincidence. These moves come ahead of the meeting between President Trump and Chinese leader Xi Jinping, planned for next week. Coming up, what the U.S.'s crumbling infrastructure means for cities' budgets. That and more after the break.

5:46Ready to soundtrack your summer? With Red Bull Summer All Day Play, you choose a playlist that fits your summer vibe the best. Are you a festival fanatic, a deep end DJ, a road dog, or a trail mixer? Just add a song to your chosen playlist and put your summer on track. Red Bull Summer All Day Play. Red Bull gives you wings. Visit redbull.com slash bright summer ahead to learn more. See you this summer.

6:17Alex Ossola:Stocks climbed today with the Nasdaq and S &P hitting their latest records. The Nasdaq led the gains and closed up 1%. The Journal has learned that PayPal plans to cut 20 % of its staff, more than 4 ,000 jobs, over the next few years. The job cuts are part of the company's new plans to adopt AI and cut costs. Its stock closed down 7.8%. And Frontier Airlines expects to gain from Spirit Airlines collapse. Its parent company projected today that it will make 3-5 % more revenue for every seat it flies as a direct result of Spirit's demise. From the earnings call. We have more route overlap with Spirit than any other U.S.

6:58carrier, uniquely positioning us to recapture the demand they left behind.

7:01Alex Ossola:Like other airlines, Frontier also plans to raise airfare prices this year to offset higher fuel costs. Its stock ended the day 6.9 % higher. Heads up that we dropped a special bonus episode earlier today. In the latest What's News and Earnings, we look at how U.S. oil companies are navigating a world short on crude. That's in your What's News feed now.

7:25Alex Ossola:In health care news, doctors have long complained about the paperwork they have to do to get insurers permission for care. They say the process can lead to delays and denials. Now, UnitedHealth says it plans to stop requiring doctors to get approvals for things like certain outpatient surgeries and tests like echocardiograms. And in Washington, we're exclusively reporting that President Trump has pressured FDA Commissioner Marty McCary to approve flavored vapes and nicotine products. McCary hasn't wanted to approve fruit flavors and others potentially appealing to children. He was worried about the public health risks.

7:59Alex Ossola:People familiar with the matter say McCary and Trump have discussed the FDA commissioner changing course. In his 2024 campaign, Trump had promised to, quote, save vaping. A White House spokesman said that science is guiding the Trump administration's health policy.

8:17U.S.

8:18Alex Ossola:cities are facing huge liabilities that aren't showing up on their books. It's the dilapidated roads, bridges and buildings. And now a new study from a municipal bond expert tried to put a dollar figure on that wear and tear. It arrived at just over$1 trillion. While those costs are hypothetical for now, the study offers a glimpse at just how expensive those repairs and upgrades might be. And journal reporter Heather Gillers says those can have a real impact on city operations. This whole question of should cities have to account for their long-term cost of their infrastructure repairs on their financial statements is a very sort of nerdy academic question.

8:57It starts to feel a little bit less hypothetical if you think about what happened in 2014 with pensions. prior to 2014, cities didn't really account for the promises that they had made to workers and retirees to pay pensions to them until they died, which is a lot of money.

9:18Alex Ossola:Heather says that the city's debt skyrocketed when they had to account for the full future costs of those pensions. That was when you started to see things like higher taxes, service cuts, and real strain involved in setting aside money to lessen the unfunded future pension liability. So while this seems like a very sort of hypothetical, don't have to worry about it now, future cost, it could become very real and front and center if the governmental accounting powers that be decide that cities need to face up to these costs a little bit more seriously. And that's what's news for this Tuesday afternoon.

10:00Alex Ossola:Today's show is produced by Danny Lewis and Anthony Pansy with supervising producer Tali Arbel. I'm Alex Osola for The Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening.

10:22Hey, this is Telus Demos. And I'm Miriam Gottfried. We're reporters at The Wall Street Journal and the hosts of WSJ's Take on the Week. It's a weekly show that gives listeners a leg up in the world of markets and investing. From the Fed's moves to market bubbles, we dive into the biggest deals, key players, and business news ahead. If you're looking for more news and tools that you can use to help navigate the markets, consider becoming a subscriber to The Wall Street Journal. Visit subscribe.wsj.com slash takeontheweek to subscribe now.