DealBook Briefing: Should the World Prepare for a Trade War?

Good Friday morning. The world is bracing for a potential trade war. Grading President Trump’s management style. And the Federal Reserve insists that the economy is fine, even as new data raises questions.

Expect today to be rough in the markets, after President Trump doubled down this morning on his threat to impose tariffs on international steel and aluminum. S. & P. 500 futures are down in premarket trading, after falling yesterday.

What Mr. Trump tweeted today:

The current plan: A 25 percent tariff on steel and a 10 percent one on aluminum.

The winners: U.S. sellers of industrial metals, like AK Steel and U.S. Steel, whose stocks jumped yesterday; trade hard-liners like Wilbur Ross, the commerce secretary, Robert Lighthizer, the White House’s top trade negotiator, and Peter Navarro, its trade policy guru.

The losers: Big metal consumers like Ford, G.M., Boeing and United Technologies; free-trade proponents like Gary Cohn, who has threatened to resign; many Republican lawmakers; Brazil; and Canada.

The world’s response: China could retaliate with tariffs on some U.S. goods. The E.U. could, too. Japan and Korea are hoping that, as allies, they would be exempted — but they appear prepared to fight back.

The context: George W. Bush imposed tariffs on imported steel in 2002. He lifted them a year later.

Peter Eavis’s take: Mr. Trump’s tariffs may be quite narrow in focus and exist for a relatively short period. Investors could learn to live with those. But the U.S. economy and stock markets have some vulnerabilities that could magnify the damage from a trade war.


Today’s DealBook Briefing was written by Andrew Ross Sorkin in New York, and Michael J. de la Merced and Amie Tsang in London.


Mr. Trump has long thrived on chaos as an organizing principle. But how much disorder is too much?

Remember that the White House has suffered from: very public infighting; off-the-cuff policy proposals by the president; a historically high 34 percent turnover rate; officials threatening to quit to win policy arguments; and an array of investigations into advisers (including Mr. Trump’s daughter Ivanka) and cabinet members.

Jim Stewart spoke with a number of experts for their takes on how the president has been running his White House. Here’s a taster:

• Jeffrey Pfeffer of Stanford University, said of the White House’s turnover rate, “This reflects badly on his leadership.”

• Charles Elson of the University of Delaware said, “He isn’t bound by any traditional norms of management.”

Here’s what the Federal Reserve chairman told the Senate Banking Committee: “Nothing is suggesting to me that wage inflation is at a point of accelerating. I would expect that some continued strengthening in the labor market can take place without causing inflation.”

But new data from the Commerce Department suggest the opposite:

• Consumer prices as measured by the personal consumption expenditures price index, or PCE, rose 0.4 percent, the biggest increase since September.

• So-called core PCE, which excludes food and energy, advanced 0.3 percent in January — the largest gain since January 2017.

• Year-over-year core PCE, the Federal Reserve’s preferred inflation measure, rose 1.5 percent in January.

In other Fed news: The White House plans to name Richard Clarida, an economist at Columbia University and an executive at Pimco, as the Fed’s vice chairman, the WSJ reported, citing unidentified sources.

• Mr. Trump may have switched his position on gun control again, after a meeting with the National Rifle Association. Georgia lawmakers punished Delta Air Lines for eliminating discounted fares for N.R.A. members. Kroger and L.L. Bean are the latest retailers to restrict gun sales to customers age 21 and older.

• An overhaul of the Dodd-Frank financial rules that would ease regulations on regional banks is moving toward a vote next week in the Senate. (Bloomberg)

• The venture capitalist Elliott Broidy, a longtime Republican donor, was in talks to earn millions if the Justice Department dropped its corruption investigation of a Malaysian government fund. (WSJ)

• Anthony Scaramucci publicly fretted that the White House chief of staff, John Kelly, would block the sale of his SkyBridge Capital to HNA of China. (Bloomberg)

Facebook has drawn criticism for inconsistencies regarding which body images are allowed in ads on its platform: a man’s bare chest was found acceptable, but a woman’s bare back was not. (The company later said the latter should have been.)

More from Sapna Maheshwari and Sheera Frankel of the NYT:

Elsewhere in digital ads: Procter & Gamble says that most online advertising is a waste. And News Corporation is still pushing Google and Facebook to share more ad revenue.

The tech flyaround

• Jack Dorsey admits that Twitter still hasn’t done enough to address fake news and cyberbullying. (WSJ)

• Facebook has ended an experiment in some countries that separated news from other content — and that may have led to a rise in misinformation. (NYT)

• Germany has blamed Russian hackers for infiltrating its government’s data network. (NYT)

• Amazon hasn’t changed much at Whole Foods — yet. (NYT)

• Garrett Camp, a co-founder of Uber, is starting a virtual currency. (TechCrunch)

• Mark Carney of the Bank of England called for more regulation of virtual currencies. (CNBC)

• Google is considering whether to hire a construction start-up like Katerra to build thousands of apartments for employees and others in the San Francisco Bay Area. (The Information)

• Don’t count on 4G wireless service on the moon anytime soon. (NYT)

• A former Google employee is suing the company for allegedly restricting the hiring of white and Asian males for technical positions at YouTube. (WSJ)

• An additional 2.4 million Americans were affected by a cybersecurity breach at Equifax. (Axios)

On the U.S. front: Members of Cfius, the panel that reviews transactions for national security concerns, have debated whether it can step in before there’s even a deal, the WSJ reported, citing unidentified sources. Those who say it can point to Broadcom’s campaign to win a majority of seats on Qualcomm’s board as effectively a change in control, which will come to a head on March 6.

On the international front: European lawmakers are concerned about the privacy of E.U. citizens, according to the FT, because NXP — a chip maker that Qualcomm has agreed to buy — makes chips for German passports.

• Dell and VMware are working out the details of a combination of the two companies, though a deal is more than a month away, unidentified sources said. (CNBC)

• DoorDash has raised $535 million from SoftBank’s Vision Fund, GIC of Singapore and Sequoia Capital for a $1.4 billion valuation. (Recode)

• Carl Icahn has taken a stake in the Crock-Pot maker Newell Brands, amid the company’s fight with fellow activist investor Starboard Value. (Bloomberg)

• The Athletic has joined ABC News and The Atlantic as finalists to buy Nate Silver’s FiveThirtyEight, unidentified sources said. (The Big Lead)

• GKN, a British industrial parts maker, is in talks to sell its auto components business to Dana Inc. of the U.S. to stave off a hostile takeover bid by Melrose. (FT)

• Nippon Life of Japan will buy an 85 percent stake in the U.S. insurer MassMutual for $982 million. (FT)

• Fosun of China has bought a majority stake in the lingerie maker Wolford for 55 million euros, about $67 million. (Reuters)

At the beginning of the week, the offer by the businesswoman Maria Contreras-Sweet and the investor Rob Burkle appeared to have dissipated. But, after a meeting between the two sides at the offices of the New York attorney general, Eric Schneiderman, there is now an agreement.

What the deal entails, according to Brooks Barnes of the NYT:

• Paying off the studio’s $225 million in debt;

• Investing $275 million in the new business;

• Forming a $90 million fund for victims of Harvey Weinstein.

In other misconduct news: Two massage therapists have sued the casino mogul Steve Wynn in separate lawsuits, each accusing him of coercing them into sex more than a dozen times.

• Travis Kalanick has joined the board of Kareo, a medical software start-up. (Axios)

• Brian Gu, JPMorgan’s chairman of Asia-Pacific investment banking, will join the Chinese electric carmaker Xiaopeng Motors as vice chairman and president. (WSJ)

• Nancy Daniels, the president of TLC Network, will become the head of the Discovery Channel, replacing Rich Ross amid a ratings decline. (NYT)

• Xavier Niel, the deputy chairman of the French telecommunications company Iliad, has joined K.K.R.’s board. (K.K.R.)

• Four Wells Fargo directors plan to resign next month. The bank also disclosed that the Justice Department had ordered an independent investigation into misconduct allegations in its wealth-management business.

• Nasdaq has sued IEX, an electronic stock exchange, for allegedly infringing on seven of its patents by hiring former employees with knowledge of the technology. (Axios)

• The S.E.C. may be warming up to the idea of forced arbitration, unnamed sources said. (Bloomberg)

• According to the Hurun Report, the net worth of China’s Parliament and its advisory body has grown by nearly a third, to just below Switzerland’s annual economic output. (NYT)

• Harvard’s endowment made one big miscalculation: believing its top money managers were smarter than everyone else. (Bloomberg)

• Ye Jianming, who runs the conglomerate CEFC China Energy, is under investigation by the Chinese authorities, unnamed sources said. (Caixin)

• During his annual state of the nation address in Moscow, President Vladimir Putin effectively acknowledged that Russians cannot feed their families on restored imperial glory. (NYT)

• Row 7 Seed Company, co-founded by the chef Dan Barber, is aiming to build an audience for new vegetables (sweeter peppers, milder beets) that might otherwise never attract interest. (NYT)

• Color forecasters at Pantone have tremendous influence over the visible elements of the global economy — the parts of it that are designed, manufactured and purchased — though their profession itself is all but invisible. (NYT)

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