Retailers and brands have turned to Vietnam to manufacture goods from sneakers to couches while moving some or all production out of China.

For years, China’s southern neighbor became a popular alternative for companies trying to avoid the crossfire of U.S. trade tensions with Beijing. Now, as President Donald Trump expands his tariff targets, they can no longer steer clear.

Trump said he will put a 46% duty on imports from Vietnam as part of a new wave of global levies announced Wednesday. That could soon raise costs for major corporations in the apparel, furniture and toy space, and some of them may pass those increases to consumers in the form of price hikes. The tariffs on Vietnam take effect on April 9.

China exported more goods to the U.S. than any other country for more than two decades, but Mexico surpassed China as the top source in 2023. China is now the second largest supplier to the U.S., accounting for $438.9 billion worth of goods in 2024, according to government data from the Office of the U.S. Trade Representative.

For companies that have looked to diversify the countries they rely on for production and reduce risks from trade conflicts with China, Vietnam has also become a popular place to go. Imports from Vietnam grew to $136.6 billion in 2024, up about 19% from 2023, according to the Office of the U.S. Trade Representative.

On the other hand, imports from China rose only 2.8% from 2023 to 2024, according to government data. Imports from China dropped about 18% last year when compared to 2022, when the U.S. brought in $536.3 billion in goods from the country.

The duties will hit companies at a time when many consumers have become value-conscious and selective about spending due to persistent inflation and concerns about the economy. While it is unclear now which companies will raise prices due to the tariffs, businesses may be reluctant to shoulder the higher costs as they forecast lackluster spending in the months ahead.

Some household names will feel the pinch from Vietnam tariffs. Nike manufacturers about half of its footwear in China and Vietnam, with about 25% coming from Vietnam. Trump will put a 34% tariff on top of existing 20% duties on imports from China, for an apparent rate of 54%, a White House official told CNBC.

The tariffs would be yet another headwind for the sneaker and athletic apparel giant, which already delivered a disappointing forecast for the current quarter. That guidance, which projects a double-digit percentage sales decline in the three-month period, included the estimated impact from tariffs on imports from China and Mexico.

Expanded tariffs could stall or slow Nike’s efforts to revive its brand and improve sales under its new CEO Elliott Hill, a company veteran who took the helm last fall.

Nike shares dropped more than 6% in extended trading Wednesday. Adidas and other major footwear players also rely heavily on Vietnam.

The two companies did not immediately respond to CNBC’s request for comment.

Nearly a third of footwear imports in the U.S. came from Vietnam in 2023, the most recent full-year data available, according to the Footwear Distributors and Retailers of America, an industry trade group.

Steve Madden, for example, said on an earnings call in early November that it would slash its imports to the U.S. from China by as much as 45% over the next year. The footwear maker made that announcement just days after Trump’s presidential victory, following his campaign trail promises to impose steep tariffs on countries like China.

Yet one of the nations Steve Madden has accelerated its move to is Vietnam, along with Cambodia, Mexico and Brazil, CEO Edward Rosenfeld said at the time on the earnings call.

Vietnam was the second largest country for suppliers of Ugg and Hoka parent company Deckers Brands as of this month. The company has 68 supply chain partners in Vietnam, which is surpassed only by its 125 suppliers in China. Deckers shares dropped nearly 9% in extended trading. The company did not immediately respond to a request for comment.

VF Corporation, which is made up of footwear, apparel and accessories brands including The North Face, Timberland, Vans and Jansport, has a heavy reliance on China and Vietnam, too. About 38% of its suppliers are in China and 17% are in Vietnam, adding up to 55% of exposure across the two countries, according to a manufacturing disclosure from December.

The company’s shares dropped more than 8% in extended trading Wednesday. VF declined to comment, citing its quiet period before its upcoming earnings report.

The furniture industry has also ramped up its reliance on Vietnam.

In 2023, 26.5% of U.S. furniture imports came from the country, close behind the 29% coming from China, according to data from the Home Furnishings Association, a trade group that lobbies on behalf of home goods retailers. The group cited investment banking firm Mann, Armistead & Epperson — one of the furniture industry’s top sources for data.

Taken together, that means about 56% of U.S. furniture imports come from both regions combined.

On an earnings call in February, Wayfair CEO Niraj Shah said the shift to countries outside of China has been “a growing trend” since Trump enacted tariffs during his first administration.

He said places like Cambodia, Indonesia, Thailand, the Philippines and Vietnam “have grown as places where folks have factories and where our goods are coming from.”

Wayfair’s stock plunged about 12% in extended trading. In a statement, Wayfair said it is “closely monitoring the evolving trade landscape.” The company added it is “well-positioned to continue offering customers the best possible combination of value, assortment, and experience.”

Toymakers have also leaned on Vietnam to make more merchandise that’s imported and sold to kids and adults across the U.S. Hasbro, SpinMaster, Mattel and Crayola are among the companies that work with GFT Group, one of the largest toy manufacturers in the Southeast Asia.

In addition to long-established manufacturing facilities in China, GFT currently has five production facilities in northern Vietnam that employ over 15,000 workers.

On a call in early March, Funko Chief Financial Officer Yves LePendeven said the company, which is known for its big-eyed plastic collectibles called Pops, was working hard to control what it could in the year ahead. That includes trying to offset tariffs by “renegotiating factory costs, accelerating our shift in production to other sourcing countries, and implementing pricing adjustments,” he said.

On the call, he said about a third of Funko’s global product purchases come from China. He didn’t name the countries that Funko was moving production to, but it is a customer of GFT Group.

Those toymakers did not immediately respond to CNBC’s requests for comment.

Curtis McGill is the co-founder of Hey Buddy Hey Pal, a toy company that specializes in Easter egg decorating kits. He said he expects the 46% tariffs to raise toy costs in the U.S., but added companies will likely be negotiating with suppliers in Vietnam to try to mitigate those hikes.

“A lot of manufacturers and the actual toy companies have been already having conversations with manufacturing plants having to to help in some regards, because the toy companies are getting pressure to try and maintain prices on this side from the retailers,” McGill said.

For companies, including apparel makers, the new tariff policies have raised questions about whether — and where — to potentially move their manufacturing. Last month, an investor asked American Eagle Outfitters about its exposure to Vietnam on its most recent earnings call.

Chief Financial Officer Michael Mathias said the jeans and apparel brand’s production is similar in Vietnam and China, with “high-teens to 20%” of production in each of those countries. He said the company aims to trim that back to single-digits by the back half of the year.

American Eagle shares dipped more than 5% on Wednesday. The company did not immediately respond to CNBC’s request for comment.

Yet both Mathias and American Eagle CEO Jay Schottenstein said on the company’s last earnings call that it will be crucial to stay flexible, while waiting to see how tariffs would play out and which countries would be targeted.

Schottenstein referred to eight years ago during the first Trump administration, when American Eagle also faced challenges and had to figure out a new plan.

Schottenstein said there’s another shift coming, but “nobody knows what the story is yet.”

“I wouldn’t be rushing,” he said. “You go rush, where am I rushing to? I don’t know where I’m rushing to.”

Peter Baum is the chief financial officer and chief operation officer of Baum Essex, a New York-based manufacturer with licenses to make products for brands like Nautica, Betsey Johnson and Steve Madden. During the first Trump administration in 2019, Baum moved factories from from China to the Philippines, Cambodia, Vietnam and India.

He told CNBC on Wednesday that the reciprocal tariffs would do massive damage to his company.

“This is how you start a global depression. After 80 years and five generations Trump just put us out of business,” Baum said.

— CNBC’s Sarah Whitten, Jason Gewirtz and Eamon Javers contributed to this report.

WASHINGTON — Boeing CEO Kelly Ortberg told senators on Wednesday that he’s happy with the company’s progress improving manufacturing and safety practices following several accidents, including a near catastrophe last year.

Ortberg faced questioning from the Senate Commerce Committee about how the company will ensure that it doesn’t repeat past accidents or manufacturing defects, in his first hearing since he became CEO last August, tasked with turning the manufacturer around.

Sen. Ted Cruz, R.-Texas, the committee’s chairman, said he wants Boeing to succeed and invited company managers and factory workers to report to him their opinions on its turnaround plan. “Consider my door open,” he said.

Ortberg acknowledged the company still has more to do.

“Boeing has made serious missteps in recent years — and it is unacceptable. In response, we have made sweeping changes to the people, processes, and overall structure of our company,” Ortberg said in his testimony. “While there is still work ahead of us, these profound changes are underpinned by the deep commitment from all of us to the safety of our products and services.”

Boeing CEO Kelly Ortberg testifies on Capitol Hill on April 2.Brendan Smialowski / AFP – Getty Images

Boeing executives have worked for years to put the lasting impact of two fatal crashes of its best-selling Max plane behind it. 

Ortberg said Boeing is in discussions with the Justice Department for a revised plea agreement stemming from a federal fraud charge in the development of Boeing’s best-selling 737 Maxes. The previous plea deal, reached last July, was later rejected by a federal judge, who last month set a trial date for June 23 if a new deal isn’t reached.

Boeing had agreed to plead guilty to conspiring to defraud the U.S. government, pay up to $487.2 million and install a corporate monitor at the company for three years.

“We’re in the process right now of going back with the DOJ and coming up with an alternate agreement,” Ortberg said during the hearing. “I want this resolved as fast as anybody. We’re still in discussions and hopefully we’ll have a new agreement here soon.”

Asked by Sen. Maria Cantwell, the ranking Democrat on the committee, whether he had an issue with having a corporate monitor, Ortberg replied: “I don’t personally have a problem, no.”

Ortberg and other Boeing executives have recently outlined improvements across the manufacturer’s production lines, such as reducing defects and risks from so-called traveled works, or doing tasks out of sequence, in recent months, as well as wins like a contract worth more than $20 billion to build the United States’ next generation fighter jet.

But lawmakers and regulators have maintained heightened scrutiny on the company, a top U.S. exporter.

“Boeing has been a great American manufacturer and all of us should want to see it thrive,” Sen. Ted Cruz, a Texas Republican and chairman of the committee, said in a statement in February announcing the hearing. “Given Boeing’s past missteps and problems, the flying public deserves to hear what changes are being made to rehabilitate the company’s tarnished reputation.”

The Federal Aviation Administration last year capped Boeing’s production of its 737 Max planes at 38 a month following the January 2024 door plug blowout. The agency plans to keep that limit in place, though Boeing is producing below that level.

Ortberg said at the hearing Wednesday that the company could work up to production rate of 38 Max planes a month or even higher sometime this year, but said Boeing wouldn’t push it if the production line isn’t stable.

Acting FAA Administrator Chris Rocheleau said at a Senate hearing last week that the agency’s oversight of the company “extends to ongoing monitoring of Boeing’s manufacturing practices, maintenance procedures, and software updates.”

United Airlines plans to add daily flights to Vietnam and Thailand in October, further expanding the network for the U.S. carrier that already has the most Asia service.

In the expansion, United is using a tactic that’s unusual in its network: Its airplanes from Los Angeles and San Francisco that are headed for Hong Kong will then go on to the two new destinations. The Bangkok and Ho Chi Minh City, Vietnam, service is set to begin on Oct. 26.

On Oct. 25, United plans to add a second daily nonstop flight from San Francisco to Manila, Philippines, and on Dec. 11, it will launch nonstops from San Francisco to Adelaide, Australia, which will operate three days a week.

The carrier has aggressively been adding far-flung destinations not served by rivals to its routes, like Nuuk, Greenland, and Bilbao, Spain, which start later this year. Getting the mix right is especially important as carriers seek to grow their lucrative loyalty programs and need attractive destinations to keep customers spending.

Bangkok, in particular, “is in even more demand now given the popularity of ‘White Lotus,’” Patrick Quayle, United’s senior vice president of network and global alliances, said of the HBO show.

He said the carrier isn’t planning on cutting any international routes for its upcoming winter schedule.

Tesla reported 336,000 vehicle deliveries in the first quarter of 2025, a 13% decline from a year ago, two days after the electric vehicle company’s stock wrapped up its worst quarter since 2022.

Here are the key numbers:

Investors were expecting Tesla to report deliveries of between 360,000 and 370,000 vehicles, according to StreetAccount. Tesla’s investor relations team sends a company-compiled consensus to select analysts, and said the average estimate was for around 377,590 deliveries. Prediction market company Kalshi on Tuesday released a forecast for Tesla deliveries of 352,000.

In the first quarter of 2024, Tesla reported 386,810 deliveries, and production of 433,371 vehicles.

Deliveries are the closest approximation of vehicle sales reported by Tesla but are not precisely defined in the company’s shareholder communications.

Tesla doesn’t break out sales and production by model or region. However, the company said that it produced 345,454 of its most popular Model 3 and Model Y cars and delivered 323,800 of them in the three months ending March 31.

The company reported 12,881 deliveries of its other models, including its angular steel Cybertruck.

During the quarter, Tesla faced planned, partial shutdowns in some of its factories that allowed the company to upgrade manufacturing lines to start producing a redesigned version of its popular Model Y SUV.

CEO Elon Musk recently said during an all-hands session with Tesla employees that he expects the Model Y to be the “best-selling car on Earth again this year.” 

But Tesla has to contend with an onslaught of EV competition and reputational damage. In the first quarter, the company was hit with waves of protests, boycotts and some criminal activity that targeted Tesla vehicles and facilities in response to Musk’s political rhetoric and his work as part of President Donald Trump’s second administration.

After spending $290 million to help return President Donald Trump to the White House, Musk is leading the Department of Government Efficiency (DOGE), where he’s slashing costs, eliminating regulations and cutting tens of thousands of federal jobs.

Musk, the world’s wealthiest person, has also involved himself in European politics, promoting the anti-immigrant AfD party in Germany in February’s elections. Tesla’s business on the continent is struggling.

Across 15 European countries, Tesla’s market share declined to 9.3% in the first quarter from 17.9% in the same period a year earlier, according to data tracked by EU-EVs.com. In Germany, Tesla’s market share in battery electric vehicles plummeted to 4% from about 16% over that stretch.

Sales of Tesla’s electric vehicles made in China came in at 78,828 in March, slumping 11.5% year-on-year, according to data from the China Passenger Car Association released Wednesday. The company is facing rising competition in the region from EV makers such as BYD.

Tesla shares sank 36% in the first quarter, their steepest drop since the fourth quarter of 2022 and third-biggest decline in the company’s 15 years on the public market. The drop wiped out $460 billion in market cap.

Meta’s head of artificial intelligence research announced Tuesday that she will be leaving the company. 

Joelle Pineau, the company’s vice president of AI research, announced her departure in a LinkedIn post, saying her last day at the social media company will be May 30. 

Her departure comes at a challenging time for Meta. CEO Mark Zuckerberg has made AI a top priority, investing billions of dollars in an effort to become the market leader ahead of rivals like OpenAI and Google.

Zuckerberg has said that it is his goal for Meta to build an AI assistant with more than 1 billion users and artificial general intelligence, which is a term used to describe computers that can think and take actions comparable to humans.

“As the world undergoes significant change, as the race for AI accelerates, and as Meta prepares for its next chapter, it is time to create space for others to pursue the work,” Pineau wrote. “I will be cheering from the sidelines, knowing that you have all the ingredients needed to build the best AI systems in the world, and to responsibly bring them into the lives of billions of people.”

Pineau was one of Meta’s top AI researchers and led the company’s fundamental AI research unit, or FAIR, since 2023. There, she oversaw the company’s cutting-edge computer science-related studies, some of which are eventually incorporated into the company’s core apps. 

She joined the company in 2017 to lead Meta’s Montreal AI research lab. Pineau is also a computer science professor at McGill University, where she is a co-director of its reasoning and learning lab.

Some of the projects Pineau helped oversee include Meta’s open-source Llama family of AI models and other technologies like the PyTorch software for AI developers.

Pineau’s departure announcement comes a few weeks ahead of Meta’s LlamaCon AI conference on April 29. There, the company is expected to detail its latest version of Llama. Meta Chief Product Officer Chris Cox, to whom Pineau reported to, said in March that Llama 4 will help power AI agents, the latest craze in generative AI. The company is also expected to announce a standalone app for its Meta AI chatbot, CNBC reported in February. 

“We thank Joelle for her leadership of FAIR,” a Meta spokesperson said in a statement. “She’s been an important voice for Open Source and helped push breakthroughs to advance our products and the science behind them.” 

Pineau did not reveal her next role but said she “will be taking some time to observe and to reflect, before jumping into a new adventure.”

Restaurant chain Hooters of America filed for bankruptcy protection in Texas on Monday, seeking to address its $376 million debt by selling all of its company-owned restaurants to a franchise group backed by the company’s founders.

Hooters, like other casual dining restaurants, has struggled in recent years due to inflation, the high costs of labor and food and declining spending by cash-strapped American consumers. The company currently directly owns and operates 151 locations, with another 154 restaurants operated by franchisees, primarily in the United States.

The privately-owned company, which shares a private equity owner with recently-bankrupt TGI Fridays, intends to sell all corporate-owned locations to a buyer group comprised of two existing Hooters franchisees, who operate 30 high-performing Hooters locations in the U.S., mainly in Florida and Illinois.

Hooters did not disclose the purchase price of the transaction, which must be approved by a U.S. bankruptcy judge before it becomes final.

Founded in 1983, Hooters became famous for its chicken wings and its servers’ uniform of orange shorts and low-cut tank tops.

The buyer group is backed by some of Hooters’ original founders, and it pledged to take Hooters “back to its roots.”

“With over 30 years of hands-on experience across the Hooters ecosystem, we have a profound understanding of our customers and what it takes to not only meet, but consistently exceed their expectations,” said Neil Kiefer, a member of the buyer group and the current CEO of the original Hooters’ location in Clearwater, Florida.

Hooters said it expects to complete the deal and emerge from bankruptcy in three to four months. The company has lined up about $35 million in financing from its existing lender group to complete the bankruptcy transaction.

Casual dining restaurants have been hammered by rising costs in 2024, with well-known chains like TGI Fridays, Red Lobster, Bucca di Beppo, and Rubio’s Coastal Grill all filing for bankruptcy last year.

Restaurant prices have risen about 30% in the last 5 years, outpacing consumer prices overall, according to the Federal Reserve Bank of St. Louis.

Tesla CEO Elon Musk said Sunday that his involvement in the Trump administration could be hurting the automaker’s stock price.

Speaking at a town hall event in Wisconsin, Musk said his role with the so-called Department of Government Efficiency — which is pushing for widespread government job cuts — is creating backlash against his electric car company and hurting the stock.

“What they’re trying to do is put massive pressure on me, and Tesla I guess, to … stop doing this,” Musk said, according to Bloomberg News. “My Tesla stock and the stock of everyone who holds Tesla has gone, went roughly in half. I mean it’s a big deal.”

Elon Musk at a Cabinet meeting at the White House on March 24.Win McNamee / Getty Images

Shares of Tesla entered Monday already down more than 34% year to date, and the stock has been cut nearly in half from its peak in December. Shares were down an additional 6% in premarket trading Monday.

Tesla’s stock is trading at a little more than half of its highest level from December.

The drop for the stock could be a “buying opportunity” for the long term, said Musk, who was in Wisconsin ahead of a state supreme court election there. Musk has campaigned for the conservative candidate and spent more than $12 million on the race, in addition to giving $1 million each to two voters at Sunday’s rally for signing a petition against “activist judges.”

The slumping stock isn’t the only sign of public anger with Musk for his political work. Protesters demonstrated at Tesla dealerships over the weekend, and there have been reports of vandalism against vehicles and dealers across the country.

Musk’s role in politics is not limited to DOGE. He publicly campaigned with Trump in 2024 and has been a regular presence at the White House since the new administration took over in January. He also regularly comments on many different political topics on X, the social media company he owns.

The CEO’s rising political profile comes amid signs that Tesla’s core business is slowing. The automaker’s vehicle deliveries declined in 2024, and preliminary data has shown that sales are down again early this year, especially in Europe. In a note to clients Sunday, investment firm Stifel trimmed its price target on the stock and lowered its sales projections for Tesla.

Musk’s political dealings may not be the only reason for Tesla’s struggles. Other U.S. auto stocks have also labored in recent weeks, partly because of threats of higher tariffs on imported goods into the U.S. and retaliation from overseas trading partners, adding uncertainty to an industry whose supply chains are tightly woven among the U.S., Canada and Mexico.

Hollywood’s blockbuster slate is heating up, and AMC Entertainment is increasing the number of its premium screens to meet demand.

The world’s largest cinema chain is adding 40 Dolby Cinema theaters to its U.S.-based AMC locations through the end of 2027. It marks a 25% increase in the number of the branded premium screens, bringing the company’s total number to more than 200.

“Premium moviegoing is defining the modern box office,” said Kevin Yeaman, president and CEO of Dolby Laboratories. “In expanding our longstanding partnership with AMC, we look forward to providing even more audiences with access to the most immersive film experiences that you can only get at Dolby Cinema.”

The announcement comes just days after AMC revealed a partnership with CJ 4DPLEX to add 65 Screen X auditoriums and 40 4DX theaters to its theaters around the globe.

Premium large format screens, often referred to as PLFs, are elevated viewing experiences that come with a higher ticket price. The physical screens are often bigger than traditional movie screens or have auditoriums that feature higher-quality sound systems or seating options.

Dolby Cinemas are specially designed auditoriums with plush, reclining seats and a combination of Dolby Vision and Dolby Atmos, which deliver crisp visuals and immersive sound. Screen X theaters feature a 270-degree panoramic screen that extends the movie image onto the side walls using multi-projection technology, and 4DX is a premium experience that features gyroscopic seats and practical effects like fog, water and wind that play in time with the movie.

The films that benefit the most from PLF ticket sales have been Hollywood’s biggest blockbusters, as audiences want to see explosive action movies and dazzling spectacles in the most state-of-the-art locations. It’s why films like Universal’s “Oppenheimer,” Disney’s “Avatar: The Way of Water” and Warner Bros.′ “Dune” and “Dune: Part Two” captured a significant portion of the PLF box office during their runs.

The 2025 and 2026 box offices are packed with blockbuster features from major franchises like Avatar, Star Wars, Jurassic Park, the Marvel Cinematic Universe, DC comics and Mission Impossible.

“The expansion of this partnership is a powerful demonstration of AMC’s ongoing commitment to deliver this premium experience — sought out by filmmakers, studio partners, and our guests — to even more of our theaters and AMC moviegoers around the United States,” Adam Aron, AMC’s CEO, said in a statement Monday about the Dolby expansion.

As of 2024, there were more than 950 theaters in North America that had PLF screens, a 33.7% jump from just five years ago, according to data from Comscore. These screens accounted for 9.1% of the domestic box office, around $600 million in 2024.

Premium ticket prices average just under $17 apiece, according to movie data firm EntTelligence, an 8% increase since 2021, when the company first started reporting these figures.

PLF receipts still represent a small portion of the overall box office, with most audiences seeing films on traditional digital screens. However, the PLF box office has grown 33% in just five years.

Disclosure: Comcast is the parent company of NBCUniversal and CNBC.

Amazon on Monday released a new AI model that can take actions in a web browser on a user’s behalf, a move that puts it in more direct competition with OpenAI, Anthropic and other companies that have developed the so-called “agents.”

The new model, called Nova Act, is designed to help developers build agents, or AI software that can complete multi-step tasks for users without supervision. Amazon showed Nova Act searching for “apartments by biking distance to the train station” as one example of a task it can complete.

A growing number of companies are building AI agents as they look beyond text and image generators.

Anthropic, the Amazon-backed AI startup founded by ex-OpenAI research executives, released its Computer Use tool in October. The startup said the tool can interpret what’s on a computer screen, select buttons, enter text, navigate websites and execute tasks through any software and real-time internet browsing.

In January, OpenAI released a similar feature called Operator that will automate tasks such as planning vacations, filling out forms, making restaurant reservations and ordering groceries. The Microsoft-backed startup described Operator as “an agent that can go to the web to perform tasks for you.”

OpenAI followed up that release in February with another tool called Deep Research, which allows an AI agent to compile complex research reports and analyze questions and topics of the user’s choice. 

Google launched a similar tool of the same name last December, which acts as a “research assistant, exploring complex topics and compiling reports on your behalf.”

Nova Act is initially launching in research preview for developers, Amazon said. The company is also launching a website that lets users experiment with its Nova AI models.

The release is part of a broader strategy within Amazon to invest heavily in generative AI software. Amazon has introduced a flurry of AI products, including its own set of Nova models, Trainium chips, shopping and health assistants, as well as a marketplace for third-party models called Bedrock. It’s also overhauling Alexa, the digital assistant it launched more than a decade ago, with AI capabilities.

Earlier this month, Amazon’s cloud unit said it’s forming a group dedicated to developing agentic AI that’s being led by longtime Amazon Web Services executive Swami Sivasubramanian. It’s also created an internal team focused on building artificial general intelligence, or AGI, which broadly refers to AI that is as smart or smarter than humans. The team reports directly to Amazon CEO Andy Jassy.

President Donald Trump commuted the criminal sentence of Ozy Media founder Carlos Watson on Friday, just hours before Watson was due to begin serving a 116-month prison term for a multi-million-dollar scheme that included falsely claiming the start-up had deals with Google and Oprah Winfrey, a senior White House official said.

Watson had expected to surrender Friday afternoon to the Federal Correctional Institution in Lompoc, California, before he received word of Trump granting him executive clemency, according to a source familiar with the situation.

Trump also commuted the sentence of one year of probation imposed on Ozy Media for the defunct news and entertainment company’s conviction in the same case.

Trump’s actions remove the criminal penalty imposed on Watson and Ozy.

Watson, 55, was convicted at trial in Brooklyn federal court last July of conspiracy to commit securities fraud, conspiracy to commit wire fraud, and aggravated identity theft. He was sentenced in December.

In February, a federal judge ordered Watson and Ozy to pay almost $60 million in forfeiture and more than $36 million in restitution.

Watson’s defense attorney, Arthur Aidala, declined to comment Friday when contacted by CNBC.

A spokesman for the Brooklyn U.S. Attorney’s Office, which prosecuted Watson, also declined to comment on the commutation of his sentence.

Glenn Martin, a criminal justice reform advocate, in a tweet on Friday wrote, “We did it,” above a photo of him and Watson.

“President Trump commuted the sentences of Ozy Media and Carlos Watson hours before his surrender,” the tweet said.

″@CarlosWatson is not going to prison today,” Martin wrote.

“First and foremost, thank God for His grace, mercy and the power of redemption. A very special note of appreciation to @AliceMarieFree,” he added, referring to his fellow criminal justice reform advocate Alice Marie Johnson.

“Your advocacy, compassion, and relentless pursuit of fairness have made this moment possible for people like Carlos.”

When Watson was sentenced, then-Brooklyn U.S. Attorney Breon Peace said, “Carlos Watson orchestrated a years-long, audacious scheme to defraud investors and lenders to his company, Ozy Media, out of tens of millions of dollars.”

Prosecutors said that Watson and his co-conspirators between 2018 and 2021 defrauded investors by misrepresenting Ozy’s financial performance, its ongoing business relationships and its acquisition prospects, as well as its contract negotiations.

Ozy abruptly shut down in October 2021, after The New York Times reported that the company’s chief operating officer, Samir Rao, had impersonated a YouTube executive on a conference call with Goldman Sachs.

The investment bank was considering a $40 million investment in Ozy at the time.