Diddy, tax bill and UK gilts
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Today, Sean Diddy Combs is guilty of prostitution offenses, but cleared of the most serious charges. Trump's budget bill heads back to the House, where some Republicans have already voiced their opposition to Senate provisions.

We'll look at how the spending and tax cut package could impact Elon Musk's business interests. British Prime Minister Keir Starmer rushes to back his finance minister, even as her budget plans look to fall apart. And Alligator Alcatraz gets set to open.

It's Wednesday, July 2nd. This is Reuters World News, bringing you everything you need to know from the front lines in 10 minutes every weekday. I'm Kim Van Nel in Whanganui, New Zealand. And I'm Sharon Reich-Garson in New York. A partial win for Sean Diddy Combs. The hip-hop mogul has been cleared on charges of sex trafficking and racketeering after a trial in which two former girlfriends testified he physically and sexually abused them.

The verdict means 55-year-old Combs will dodge the 15-year mandatory minimum sentence, which could have been extended to life in prison. Combs has been found guilty of transportation to engage in prostitution. The verdict comes after two days of deliberation and an 11th hour deadlock on the racketeering charge. Combs pled not guilty to all charges. Our legal reporter Luke Cohen has been covering the case.

What this trial comes down to is the question of consent. The defense has made the argument throughout that, sure, you don't have to agree with his sexual preferences. That may not be how you live your life, but that's not what he is on trial for. At the same time, the defense recognized that he was occasionally violent and he's caught on tape beating Cassie. They didn't deny that. In fact, they even went so far as to say in closing arguments that

that if he were on trial for domestic violence, they wouldn't be here because he would have pleaded guilty. But really what their argument was, was domestic violence aside, these freak-offs, these sexual performances, the defense is arguing that those were consensual and that the

the women took part in them of their own accord, and that any domestic violence that Combs committed was not a way of coercing them into those sex acts. On the other hand, the prosecution has said there are more subtle forms of coercion that he exercised here, even if the defense says it wasn't related to the threat of physical violence. Both Cassie Ventura and Jane testified that Combs at times threatened to cut off financial support

or threatened to leak sex tapes of them. And so the prosecution says that was part of pressuring them, of coercing them to take part. U.S. President Donald Trump's sweeping tax cut and spending bill is now heading to the House of Representatives after passing through the Senate. And even though Republicans control the House, the bill's path to Trump's desk is still uncertain, as our politics editor Scott Malone explains.

Trump's Republicans control the House, but by a narrow margin. They can only afford to lose three votes if they want to pass a bill that Democrats are united in opposition to. It's not going to be smooth sailing. The House Republicans have been a rowdy caucus. They're very supportive of Trump, but there are concerns about the bill from multiple camps on the right.

You have the House Freedom Caucus and their allies who are concerned about the heavy toll that the bill will take on the U.S. national debt. You also have moderates who are concerned about the bills hit to Medicaid.

And while Washington focuses on pushing the bill through the House, in the UK, a tearful appearance in Parliament caused British bonds their biggest sell-off in three years. Rachel Reeves, Britain's finance minister, appeared visibly upset in the chamber after a series of U-turns on welfare reforms blew a hole in her budget plans.

Bonds and the British pound fell over speculation about her future, prompting Prime Minister Keir Starmer to give Reeves his full support. Yields on government bonds rose as investors ditched British debt, but have since recovered. Rachel Reeves' office says her reaction was due to a personal matter.

While D.C. focuses on the budget, markets are focused on trade tensions. President Trump says he won't extend the July 9th deadline for imposing higher tariffs on trading partners. Kamal Crimmins explains. More than a dozen countries are negotiating with the Trump administration to avoid a steep hike in tariff rates next week. Now, Trump told reporters that the U.S. could reach a trade agreement with India, but he's threatening to hike tariffs on Japan.

That sent shares in Tokyo down today, highlighting the nerves in markets over what lies ahead. Trump's one-time ally, Elon Musk, renewed his criticism of the tax cut and spending plan as a feud reignited between the pair. Trump is threatening to cut billions of dollars worth of subsidies that Musk's companies receive. He also says the cost-cutting body Musk has set up may now turn its sights on its creatives.

He always is the monster that might have to go back and eat Elon. Wouldn't that be terrible? David Geffen is our U.S. Companies Editor. The risk here is certainly more for Musk than it is for Trump. Tesla benefits from billions of dollars in tax credits and other policy benefits because of its business in clean transport and renewable energy. And the administration has control over a lot of those programs, and some of that is targeted in this tax bill.

Also, there's been this long-time tax credit for consumers at $7,500 a vehicle that makes buying or leasing EVs more attractive for people. This may tamp down some of the interest in buying electric vehicles. Musk's opinion for the longest time is that this will hurt his competitors more than it hurts him. But right now...

Musk's company, their sales are falling because of the fallout from his embrace of some hard right politics that has endeared him to Trump. So you put all of those things together and you can see that there are big risks here. Trump campaigned on getting rid of this credit. This is not a surprise to him.

Paramount has agreed to pay $16 million in a lawsuit settlement with President Trump over a CBS interview from last October. Trump's lawsuit alleged that the network deceptively edited a 60 Minutes interview with then-Vice President Kamala Harris ahead of the election. The money will be allocated to Trump's future presidential library and not paid to Trump directly or indirectly.

President Trump is urging Iran-backed Hamas to agree to what he's calling a final proposal for a 60-day ceasefire with Israel in Gaza. He says the proposal will be delivered by mediators Qatar and Egypt. Trump says Israel has already agreed.

And the Dalai Lama has ended the speculation about his next successor, saying he will be reincarnated, adding that his non-profit institution will have the sole authority to identify his reincarnation. His comments counter China's insistence that it will choose the successor of the Tibetan Buddhist leader.

An isolated migrant detention center in Florida's Everglades could receive its first migrant detainees as soon as today. That's according to Florida Governor Ron DeSantis, who alongside President Trump says he'll send 100 National Guard troops to the facility, which is dubbed Alligator Alcatraz. Which is very appropriate because I looked outside and it's

Not a place I want to go hiking anytime soon. Donald Trump touring the facility on Tuesday. The complex sits in a vast subtropical wetland teeming with pythons, crocodiles and alligators, thus the name. Trevor Hunnicutt covers the White House.

President Trump has described this as a facility that's designed for the worst of the worst, people with criminal records, people who have hostile intentions when it comes to national security or street crime. But there are big questions. We don't know exactly who's going to this facility. There's been no accounting as to who or why or where from.

We know that the U.S. has really struggled to keep up with the deportation numbers that Trump promised during his 2024 presidential campaign. And more and more over time of these people who have been held in these facilities have not had a criminal record beyond their alleged illegal border crossing.

So when this place starts receiving detained migrants, what will that process look like? That's an open legal question. We know that these people have not been afforded the same rights that would be due a U.S. citizen. The Trump administration has put forward the idea that a lot of these cases would be able to be handled in the facility so that those cases can be adjudicated fairly quickly and those deportations move ahead very quickly.

Fourth of July savings are here at the Home Depot. So it's time to get your grilling on. Pick up the Traeger Pro Series 22 pellet grill and smoker now on special buy for $389 was $549. Smoke a rack of ribs or bacon apple pie. This grill is versatile enough to do it all. This summer, no matter how you like your steaks, your barbecues are guaranteed to be well done. Celebrate Fourth of July with fast free delivery on select grills right now at the Home Depot. It's up to availability.

And for today's recommended read, they tried Made in the USA, but it was too expensive for their customers. We spotlight the dilemma facing small and mid-sized manufacturers in America, facing the choice between paying steep tariffs on Chinese imports or trying to sell more expensive homemade products.

There'll be a link to that story in the pod description. For more on any of the stories from today, check out Reuters.com or the Reuters app. And don't forget to follow us on your favorite podcast player. We'll be back tomorrow with our daily headline show.