Good morning. The National Highway Traffic Safety Administration is racing to stop more drivers from being killed or injured by air-bag parts it says appeared to originate from the Chinese manufacturer called Jilin Province Detiannuo Safety Technology, also known as DTN Airbag.

Investigators have been forced to play a game of whack-a-mole against a complex, gray-market supply chain to figure out which cars might have had air bags with the parts installed, according to emails and documents reviewed by the Journal.

• Searching supply chains: Air bags have saved tens of thousands of lives, but they can pose dangers to drivers when improperly assembled replacements are installed in used cars whose original bags have deployed in a previous accident. Such replacements, sometimes labeled with counterfeit logos of American carmakers, are widely available online. That counterfeit supply chain has long been a concern for automakers, who employ teams to scour for fake parts out of reputational fear and to protect customers.
   
• Import ban: In April, NHTSA, the top U.S. auto-safety regulator, banned the sale and import of air-bag inflaters marked with a DTN part number. It said the inflaters—a component that ignites and rapidly fills an air bag during a crash—were likely imported illegally into the U.S. and put inside air bags that were then sold online as aftermarket replacements. NHTSA ordered “each manufacturer, including each importer, of the inflaters to conduct a recall,” without naming any company.
   
• Buying online: Counterfeit air bags have sold for as little as $100 on websites such as eBay and Facebook Marketplace, one-tenth the cost of a typical authentic replacement, according to court documents and interviews with government officials and carmaker representatives. EBay said it works diligently to prevent and remove unsafe product listings, that it prohibits counterfeit products and is cooperating with the NHTSA in its investigation. Facebook said its rules prohibit the purchase, sale or trade of certain vehicle parts and accessories, including air bags. Amazon said it prohibits the sale of air bags and air-bag parts.
   
• Ready to blow: “The worry here is that a bunch of consumers are going to unwittingly purchase bombs and put them in their steering columns,” said U.S. Attorney Ellis Boyle of the Eastern District of North Carolina.

Cash App owner to pay $45 million to resolve state AG fraud claims.

Cash App’s corporate parent Block agreed to pay $45 million in a settlement with 46 U.S. state attorneys general accusing the mobile payment provider of misleading users and leaving them vulnerable to fraud, Risk Journal reports (free link).

The California-headquartered Block allegedly knew fraud was growing on its platform but opted not to invest in customer support measures such as live phone operators that could have allowed users to limit their losses to fraud, the group of states led by New York Attorney General Letitia James alleged in a legal filing made public Wednesday. The company didn’t admit to the states’ allegations under the terms of the settlement.

Corporations using AI more in reporting, but remain cautious.

Businesses are increasing their use of artificial intelligence to aid in corporate reporting, but they remain cautious, new research from a U.K. watchdog shows.

Companies when they are using AI to help reporting, tend to direct it to lower-risk activities rather than ones requiring professional judgment, the Financial Reporting Council said in research released Wednesday, citing results of a survey. The agency, which regulates auditors and accountants, engaged Lancaster University to survey companies across the economy for the research.

• Apple is ramping up its investment in U.S.-made chips, with plans to spend more than $30 billion with Broadcom. The investment is the largest Apple has specified as part of a pledge that helped the company secure an exemption from proposed Trump administration tariffs.
   
• The Securities and Exchange Commission’s proposal to cut quarterly earnings reports is triggering a public backlash.
   
• An appeals court rejected a lawsuit alleging that Hudson Bay Capital violated securities laws to reap more than $300 million in short-term profits trading Bed Bath & Beyond stock before the home-goods retailer went bankrupt in 2023.

U.S., Iran exchange fire after Trump declares ceasefire over.

The U.S. and Iran exchanged fire again on Wednesday night after President Trump pronounced the end of an eight-week ceasefire. The U.S. pounded targets that included missile and drone sites near the Strait of Hormuz, while Iran fired on Kuwait and Bahrain, which host U.S. military bases, according to a senior U.S. official.

The U.S. struck 90 military targets to “further degrade Iran’s ability to attack commercial shipping and innocent civilian mariners in the Strait of Hormuz,” U.S. Central Command said in a statement that noted the end of the latest strikes.

• Inside Trump’s Oval Office Decision to Ditch the Iran Ceasefire
• Wall Street’s Peace Trade Collides With Renewed Iran Fighting

Anthropic’s political risks are real, but OpenAI’s loom even larger.

Anthropic has been in the political crosshairs lately. But the business consequences aren’t as dire as they might seem. And among its AI rivals, there will be plenty of political risk to go around.

The AI-model developer is embroiled in a legal fight with the Trump administration, which deemed it a security risk earlier this year after the company declined to give the Defense Department unfettered access to its tools. That battle escalated last month with a government move that forced Anthropic to cut off access to its most-advanced models.

Serious though they might appear, those political challenges likely won’t be lasting. They might even prove to be much less thorny in the long term than those of its rival, OpenAI, as both companies gear up for IPOs.

• China Says It Has Found Security Vulnerabilities in Anthropic’s Claude Code

• Iraq has agreed to new controls aimed at preventing U.S. dollars from flowing to Iran and its militia allies in exchange for the Trump administration lifting a four-month suspension in shipments of American currency to Baghdad, according to U.S. and Iraqi officials.
   
• For NATO success now means keeping Trump happy.

• Companies are mobilizing internal groups of AI champions to promote technology adoption among reluctant colleagues.
   
• Federal Reserve officials broadly agreed at their meeting last month that they would need to raise interest rates if inflation stays elevated this year. They also agreed that they could stay on hold if price pressures fade soon, according to minutes of that meeting released Wednesday.
   
• A former Wisconsin state judge was spared prison on Wednesday after being convicted of obstructing federal agents seeking to arrest an immigrant who appeared in her courtroom.
   
• Americans are losing confidence in two main pillars of society: capitalism and democracy.

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