California sues to challenge Trump's US$4bil high-speed rail clawback
A lawsuit challenging the rescission as an "arbitrary and capricious" abuse of authority was filed on Thursday in US District Court in Los Angeles by the California High Speed Rail Authority, which oversees the project.
Trump's announcement on Wednesday added yet another hurdle to the 16-year effort to link Los Angeles and San Francisco by a three-hour train ride, a project that would deliver the fastest passenger rail service in the United States.
Newsom said the move by Trump's Transportation Department came as the high-speed rail project was on the verge of laying track, with "active construction" under way on the initial 171-mile segment between Bakersfield and Merced in California's politically conservative Central Valley.
The governor said termination of the grants amounted to "petty, political retribution, motivated by President Trump's personal animus toward California and the high-speed rail project, not the facts on the ground."
The rail system, whose first US$10 billion bond issue was approved by California voters in 2008, has built more than 50 major railway structures, including bridges, overpasses and viaducts, and completed more than 60 miles (97 km) of guideway, the governor said.
"California is putting all options on the table to fight this illegal action," Newsom said in a statement hours before the lawsuit was filed.
The funding cancellation marked the latest confrontation between the Republican president and a Democratic governor widely viewed as a leading contender for his party's 2028 White House nomination.
The two men have clashed over issues from transgender athletes and electric car rules to the use of National Guard troops during Los Angeles protests and even egg prices.
'LEGALLY BINDING AGREEMENTS'
Ian Choudri, chief executive officer of the California High Speed Rail Authority, said that canceling the federal rail grants "without cause isn't just wrong, it's illegal."
"These are legally binding agreements, and the authority has met every obligation, as confirmed by repeated federal reviews, as recently as February 2025," Choudri said, adding that the program has created some 15,500 jobs.
The Federal Railroad Administration issued a 315-page report last month finding the project was plagued by missed deadlines, budget shortfalls and questionable ridership projections.
Choudri's rail authority has called those conclusions "misguided," saying they failed to reflect "substantial progress made to deliver high-speed rail in California."
Transportation Secretary Sean Duffy chided the project for having failed to lay a single mile of track after spending US$15 billion over 16 years. But Choudri said installing track is a final step after land acquisition, environmental clearances and construction of supporting structures.
Still, the project has faced its share of setbacks.
The San Francisco-to-Los Angeles route was initially supposed to be completed by 2020 for US$33 billion. But the projected cost has since risen to US$89 billion to US$128 billion, and the start of service is estimated no sooner than 2030.
As designed, the system would feature electric locomotives traveling at up to 220 mph (354 kph), powered entirely by renewable energy. Planners said it would eliminate 200 million miles driven by vehicles on highways.
'WE HAVE TO PULL THE PLUG'
A second phase of the project called for extending the rail line north to Sacramento and south to San Diego. A separate project plans to link Los Angeles and Las Vegas with high-speed rail.
Duffy said on Thursday that he was confident the Trump administration will defeat any lawsuit challenging the department's move.
"We have to pull the plug," he told reporters outside the department's headquarters.
In 2021, Democratic President Joe Biden restored a US$929 million grant for the project that Trump revoked in 2019 during his first term in office after calling the project a "disaster."
State Assembly member Corey Jackson, a Southern California Democrat who has questioned the project's soaring costs, said Newsom's call to fight the funding cut could galvanize support for Democrats from organized labor and voters in the area where the first railway jobs would be created despite its Republican leanings.
"The people of San Joaquin Valley will now know that their economic engine is coming from the Democratic Party," Jackson said. "This is also a message to our labor friends. Democrats continue to deliver these high-paying jobs. Republicans continue to try to kill them."
Rufus Jeffris, senior vice president of the Bay Area Council, a business-sponsored policy group in the San Francisco area, pointed to economic benefits associated with high-speed rail and called the funding cut unfortunate.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Star
11 minutes ago
- The Star
Japan's Ishiba stresses resolve to stay, avoid political vacuum
TOKYO: Japanese Prime Minister Shigeru Ishiba reiterated his resolve to stay on to avoid creating a political vacuum and to ensure that a trade deal with the US is fully implemented. "I intend to fulfill my responsibility so as to never create a political vacuum for the nation and its people,' Ishiba said on Monday (July 28) at the start of a rare meeting in which the ruling Liberal Democratic Party's lawmakers have gathered to assess the reasons for the party's recent election setback. The meeting, which started around 3.30pm local time, will give those in the party who seek a change at the top an opportunity to directly challenge Ishiba over his leadership. In his remarks, Ishiba apologised for the historic defeat that the LDP suffered in the July 20 election, and he said he wants to do his best to ensure the recent trade deal with the US is fully implemented. LDP Secretary-General Hiroshi Moriyama, speaking at the same venue, said he'll finish analysing the election's results in August and decide at that time how best to hold himself accountable. On Sunday, Ishiba signalled he intends to stay in office even after the ruling coalition lost its majority in the upper house of parliament in the election. "I intend to devote myself to the people and the future of the country,' Ishiba said in an interview with national broadcaster NHK. He added he wanted to ensure the successful implementation of the recently announced US-Japan trade deal. New opinion polls show support for Ishiba's administration remains low, although surveys also suggest the public sees few good alternatives to the current prime minister. Polls in the Mainichi and Asahi newspapers published on Sunday both showed approval ratings of 29% for Ishiba's government. The Asahi poll also found that 41% of respondents thought Ishiba should stand down, while 47% thought that wasn't necessary. The same survey showed that 81% of respondents thought the LDP's defeat was due to partywide issues rather than the prime minister's leadership. Ishiba has also found support on social media and in small public gatherings outside the prime minister's office from members of the public calling for him to stay on. Nonetheless, party members have been calling for someone to take responsibility for the July 20 election setback, which substantially weakened Ishiba's position. For the first time since 1955, a leader from the storied Japanese party now has to govern the country without a majority in either of the legislative bodies. Former foreign minister Toshimitsu Motegi called for a leadership change within the LDP on his YouTube channel over the weekend. The party needs a "fresh start with a new leader,' he said. While pressure mounted on Ishiba last week, the premier got good news in the form of a surprise trade deal with the US that carried relatively favourable terms for Japan, including the lowering of across-the-board tariffs to 15% from 25%. The deal doesn't appear to have given Ishiba a significant boost in popularity. - Bloomberg
New Straits Times
11 minutes ago
- New Straits Times
Analyst: Malaysia leans on quiet engagement to seek favourable tariffs revision
KUALA LUMPUR: Malaysia remains locked in quiet engagement and possibly embracing a deliberate positioning with the United States (US) to lower the 25 per cent tariffs on its exports to the American markets as the Aug 1 deadline approaches. Unlike other Asean countries, which have struck quick deals with Washington, SPI Asset Management managing partner Stephen Innes said Malaysia's more measured response to the impending US tariffs likely reflects deliberate positioning rather than passivity. He said that contrary to countries pursuing headline-grabbing diplomacy, Malaysia often leans on quiet engagement and multilateral cooperation to navigate complex trade tensions. With the Aug 1 deadline nearing, exporters and investors are keeping a close watch on the outcome of these negotiations, which would reshape the cost dynamics of doing business between Malaysia and its third-largest trading partner. While regional peers such as Indonesia and Vietnam have already struck last-minute deals to reduce their tariffs to 19 per cent and 20 per cent, respectively, Malaysia is still seeking favourable terms that safeguard local industries without compromising national interests. The proposed tariffs — a revival of protectionist measures introduced during President Donald Trump's first term — have stirred fresh uncertainties across Southeast Asia, where economies are deeply embedded in global supply chains. Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz has described the ongoing talks with the US as progressing well, with emphasis on striking a balanced outcome. "This low-profile approach fits with Malaysia's broader strategy, namely maintaining economic openness, avoiding entanglement in great power rivalries, and preserving regional alignment within Asean. "By staying restrained, Malaysia may be aiming to protect its long-term credibility as a stable, rules-based partner," said Innes. That said, he cautioned that the exposure is real as Malaysia's export economy is heavily tilted toward electrical and electronic goods, precision machinery, and intermediate components, many of which plug directly into US-bound supply chains. A 25 per cent tariff could disrupt flows, especially in semiconductors, sensors, and specialised modules that are difficult to reroute, he said. "The pain would be felt most in hubs like Penang, where small and medium enterprises and multinationals are deeply intertwined. "While some firms could shift volumes elsewhere, the high-tech nature of these exports makes substitution harder than it sounds," said Innes. The absence of a bilateral Free Trade Agreement (FTA) with the US limits Malaysia's negotiating toolkit, but Innes believed it doesn't shut the door entirely. He pointed out that Malaysia remained strategically important to US firms seeking reliable, non-China supply bases, which provides leverage particularly if Malaysia targets exemptions for specific sectors tied to US industrial or security interests, such as chip packaging or electric vehicle components. While countries like Indonesia have dangled major purchases to secure tariff relief, Malaysia's options are different, Innes said. "It is unlikely to buy its way into a deal with big-ticket orders. Instead, it can offer alignment, which is co-investment opportunities in green tech, digital infrastructure, or rare-earth refining," he said. According to Innes, these would support Malaysia's industrial roadmap while offering Washington something it values: supply chain resilience and diversification, but from a policy standpoint, the trade-off is nuanced. He noted that offering short-term concessions or budget support might help shield critical sectors from long-term dislocation. "But any deal must be carefully structured. It should channel benefits beyond just large exporters towards local suppliers, workers, and tech development ecosystems," said Innes, highlighting that if no deal is reached, the impact may not be catastrophic at a national level, but could be meaningful in key sectors. "Export growth could slow, investment plans may be paused, and employment could tighten in affected industries. The greater risk is longer-term: losing ground in a global supply chain reshuffle that increasingly rewards agility and alignment. Malaysia still has room to move, but the window is closing," he added. Meanwhile, Moody's Analytics economist Denise Cheok said Malaysia's economic exposure to the US through value-added trade is more significant than headline export figures suggest. Citing calculations based on OECD Trade in Value Added (TiVA) data, Cheok said that Malaysian domestic value added embedded in foreign final demand to the US accounted for slightly over 5.0 per cent of the country's gross domestic product. She noted that this includes not only direct exports of final goods but also intermediate components that eventually reach the American consumers and provide a more comprehensive measure than gross exports alone. "This compares to over 9.0 per cent of GDP for Singapore, which is highly trade-exposed, and about 2.0 per cent of GDP for Indonesia, which is more domestically focused and not as reliant on exports to the US," Cheok said. If the full 25 per cent tariff is imposed without any rerouting of supply chains, Cheok estimates the impact could shave up to 2.6 per cent off Malaysia's GDP in 2025, with the effects likely to be uneven across sectors. "The key manufacturing sector is likely to be hit hard — not only by the direct impact of the tariffs but also by global supply chain disruptions caused by the uncertainty surrounding tariff policies," she said. Cheok added that Malaysia, like many of its Southeast Asian peers, relies heavily on exports as part of its growth model, and structural changes to this would be difficult, even in the long term. "The fractured relationship between the US and its trading partners will likely continue beyond the next three years, and Malaysia should continue strengthening its trade relations with other economies, including Asean, as a counterbalance to this," she said. — BERNAMA
New Straits Times
41 minutes ago
- New Straits Times
New Zealand plans to scrap card payment surcharges
SYDNEY: The New Zealand government on Monday proposed to ban surcharges on most in-store payments made using debit and credit cards from May next year, a move it said could save roughly NZ$150 million (US$90.20 million) for Kiwi consumers. The plan follows the decision last year by New Zealand's Commerce Commission to lower fees that local businesses pay to accept Visa and Mastercard payments. "We are scrapping surcharges at the till. New Zealanders are paying up to NZ$150 million in surcharges every year. That's money that could be saved or spent elsewhere," Prime Minister Christopher Luxon told reporters. "You no longer will be penalised for your choice of payment method, whether that's tapping, swiping, or using your phone's digital wallet." Visa and Mastercard both welcomed the decision. Banning surcharges was "a welcome win for transparency and fairness at the checkout for consumers and reflects Visa's long-held view on surcharging globally," Anthony Watson, country manager for New Zealand and South Pacific, said. A spokesperson for Mastercard said the ban aligns New Zealand "with other leading economies at a time when payment acceptance costs have never been lower". The proposed ban will not include online payments or transactions made using foreign-issued cards, prepaid, travel and gift cards. New Zealand's Commerce Commission estimates consumers pay about NZ$150 million in surcharges annually, including up to NZ$65 million in excessive surcharges. "Surcharges cover the fees businesses pay for accepting contactless payments and credit cards, but we know these are often excessive. In some cases, the retailer doesn't even make it clear what the percentage is," Commerce Minister Scott Simpson said in a statement. The government plans to introduce the bill to ban most card surcharges by the end of this year. Shops in New Zealand typically charge consumers around 0.7 per cent for debit card payments and up to 2 per cent for credit card payments, according to New Zealand's Commerce Commission. Australia's central bank this month proposed to scrap surcharges on most debit and credit card payments for consumers, saying it no longer achieved the intended purpose of steering consumers to make more efficient payment choices.
