Good morning. The Israeli attack on Iran’s nuclear facilities has effectively derailed sanctions relief negotiations, reports Anwar Faruqi for Dow Jones Risk Journal, amid Tehran’s previous warning it may withdraw from the Nuclear Non-Proliferation Treaty if European countries proceed with efforts to reinstate U.N. sanctions.

Meanwhile, Israel’s attack on Iran, while ramping up the conflict over Tehran’s nuclear ambitions, won't likely produce changes to already tough U.S. sanctions on Iran, report Richard Vanderford and Mengqi Sun in Risk Journal. Companies, though, need to guard against evasion efforts.

The U.S. and its allies after Russia’s 2022 invasion of Ukraine hit Moscow with unprecedented waves of new sanctions and export controls. That kind of pressure on Iran isn’t likely, experts said, in part because it has for decades been one the most heavily sanctioned countries in the world. But the lack of new policy doesn’t mean businesses won’t face additional challenges.

Despite the lack of direct involvement with Iran by Western multinationals, some businesses can expect a knock-on effect from the attack. And in particular, those selling dual-use goods should be on guard against shipments ultimately being diverted to Iran, said Michael Huneke of law firm Hughes Hubbard & Reed.

• Where Israel Struck Iran’s Nuclear Program: A Visual Breakdown
• Israel’s Fight With Iran Spreads to the Energy Sector
• Trump, a Self-Styled Peacemaker, Gets Drawn Into Foreign Entanglements
• What Israel’s Attack on Iran Means for Business and Markets
• Israel Has Struck a Blow to Iran’s Nuclear Program—But It Isn’t Yet a Knockout
• Israel Takes Control of Iran’s Skies—a Feat That Still Eludes Russia in Ukraine

Chinese AI companies dodge U.S. chip curbs by flying suitcases of hard drives abroad.

Since 2022, the U.S. has tightened the noose around the sale of high-end AI chips and other technology to China over national-security concerns. Yet Chinese companies have made advances using workarounds.

In some cases, Chinese AI developers have been able to substitute domestic chips for the American ones. Another workaround is to smuggle AI hardware into China through third countries. But people in the industry say that has become more difficult in recent months, in part because of U.S. pressure.

That is pushing Chinese companies to try a further option: bringing their data outside China so they can use American AI chips in places such as Southeast Asia and the Middle East. The maneuvers are testing the limits of U.S. restrictions.

Nippon to close U.S. Steel deal after national-security pact With Trump.

Nippon Steel plans to complete its purchase of U.S. Steel after reaching an agreement with the Trump administration to resolve national-security concerns.

The Tokyo-based steelmaking giant beat out rival steelmakers in a bidding competition with a $14.1 billion offer in December 2023, but was blocked from completing the purchase by then President Joe Biden in January on national-security grounds.

The pact with the Trump administration includes an issuance of a so-called golden share to the U.S. government, giving it authority over the Pittsburgh-based steelmaker’s production and trade matters.

• The U.S. Securities and Exchange Commission on Thursday formally withdrew 14 rules proposed during the Biden administration, which were the unfulfilled ambitions of former SEC chair Gary Gensler, reports Barron's.
   
• The State Bar of California has opened an investigation into the tactics used by Gloria Allred’s law firm in its dealings with clients.
   
• The Australian Sanctions Office has released 10 new guidance and advisory notes to assist the regulated community understand their sanctions obligations, including specific guidance for artificial intelligence, fintech and the maritime sectors.
   
• Australia’s securities regulator has launched an inquiry into share-market operator ASX after what it called repeated and serious failures that raise doubts over its ability to maintain critical trading infrastructure.
   
• Markets cheered last month’s Supreme Court decision suggesting the Federal Reserve is exempt from a rollback of agency independence. But the ruling’s logic may be too weak to hold and could leave the central bank exposed just when it needs autonomy the most, according to Barron’s. 

Europe’s exporters feel the chill from Trump tariffs.

Europe’s exports to the U.S. plunged by a third in April as demand was squeezed by President Trump’s tariff increases, leading to a fall in factory output that suggests economic growth has slowed after a strong start to the year.

European Union exports to the U.S. dropped to 47.6 billion euros ($55.2 billion) from 71.5 billion euros a month earlier, statistics body Eurostat said Friday, marking a dramatic reversal from March’s record high, when American importers were stocking up ahead of Trump’s tariff announcement. The steep drop in U.S. demand for European goods left the continent’s factories idling.

• Trade With China Is Becoming a One-Way Street
• The Fog of Trade War Is Causing Confusion About Price Increases
• These Companies May Be Best Able to Handle High and Changing Tariffs

• A large contingent of Willkie Farr’s San Francisco office is leaving after the law firm made a deal with the White House to avoid a punitive executive order.
   
• Indian authorities have ordered what they called “extended surveillance” of all Boeing 787 aircraft in the country’s fleet while they investigate the cause of Thursday’s crash of an Air India plane that killed at least 265 people.
   
• The Trump administration said it has directed immigration officers to pause arrests at farms, restaurants and hotels, stressing that sweeps should focus on people in the U.S. illegally who have criminal backgrounds.
   
• Activist investor Barington Capital Group has built a stake in Victoria’s Secret and believes the lingerie retailer hasn’t lived up to its full potential, according to people familiar with the matter.
   
• Some of the biggest merchants are exploring how to issue or use stablecoins, potentially shifting the high volumes of cash and card transactions that they handle outside the traditional financial system and saving them billions of dollars in fees.

• A man suspected of shooting two state Democratic lawmakers was arrested late Sunday after authorities tracked him into the woods in rural Minnesota, law-enforcement officials said.
   
• President Trump expressed to the Israelis he is opposed to a plan to kill Iran's Supreme Leader Ayatollah Ali Khamenei, according to a senior U.S. official.
   
• The fragile nature of American unity was on display across the country Saturday. President Trump presided over a military parade celebrating the 250th anniversary of the U.S. Army. Meanwhile, hundreds of thousands of protesters used the day to take to the streets throughout the country to demonstrate against Trump’s policies. 
   
• Prime Minister Mark Carney wants to use a Group of Seven summit starting Sunday to showcase Canadian strength and unity. But global leaders will be visiting an oil-rich province that is considering a divorce from Canada.
   
• Ever since FIFA President Gianni Infantino cooked up a soccer extravaganza called the Club World Cup, he has promised to deliver “the greatest spectacle in club football history.”  There was just one major unknown: Would anyone actually watch?

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