Tariffs, Technology, McMaster, Bolton, Facebook, Yahoo Japan, Loyola Chicago, Juventus
Marc Ross Daily
March 23, 2018
Curation and commentary from Marc A. Ross
Reporting from Alexandria, Virginia
Marc Ross Daily = Global Business News at the Intersection of Politics + Policy + Profits
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TOP FIVE
✔️ Trump moves toward China tariffs in warning shot on technology transfer
✔️ China fires warning shot at US over import tariffs
✔️ EU recalls its Moscow envoy
✔️ McMaster is out as National Security Adviser; Bolton is in
✔️ Loyola Chicago, on a ‘mission from God,’ advances to the Elite 8
ROSS RANT
Pronunciation aside, America's leaders are afraid of Huawei: Chuck Grassley of Iowa, one of the longest-serving Senate Republicans, says he’s worried about the prospect of American telecommunications companies becoming dependent on a Chinese manufacturer whose motives he finds suspect. “I can’t pronounce their name,” Grassley says, “but it starts with an H and ends with a W-E-I. Whenever they’re involved, it scares the devil out of me.”
As Bloomberg reports, Huawei Technologies Co. is China’s biggest tech company by revenue, with sales 60 percent greater than those of the runner-up, JD.com Inc. Huawei is one of the world’s biggest producers of telecommunications networking equipment, despite a de facto ban that prevents America’s four principal wireless carriers—AT&T, Verizon, T-Mobile, and Sprint—from using its gear. The company also makes an ever-growing share of the world’s smartphones. These two factors have rendered it terrifying enough to many American policymakers.
As American and Chinese leaders halt one another’s tech companies for operating freely and openly in their markets, such protectionism will slow the progress of innovation worldwide. How government leaders handle the protection of intellectual property is the big game.
IP is the game that will define US-China commercial relations for the next 20 years, an issue that if mishandled, has the power to hurt global economic growth and make us all poorer.
The issue is currently a battle of free-market capitalism versus state capitalism. American business has dealt with state capitalism before and still has been successful. However, China's state capitalism is at a scale of resources, reach, and authority not seen before.
Having trepidation is not uncalled for in this new global business environment.
James Lewis, a former US State Department cybersecurity expert, now affiliated with the Center for Strategic & International Studies, believes the US has three options for dealing with Huawei - none of them all that great:
1) Throwing vast sums of public money behind American national champions to battle China’s state-owned enterprises - a concept that would be a political challenge in democratic, free-market economy to say the least
2) Subsidizing the only non-Chinese companies that can compete for big equipment contracts—Sweden’s Ericsson AB and Finland’s Nokia - see above
3) Create unbreakable encryption meant to secure hardware that can’t otherwise be trusted - this might not even be possible
As John Edwards of the Lowy Institue points out: "Tangled in this coming dispute are much bigger issues for America, China, and the rest of the world. One is the extent to which the United States may wish to obstruct China’s declared intention of becoming a leading competitor in high-technology industries. Another is the extent to which the Americans wish to frame trade disputes with China as those between a 'liberal international order' created and sustained by the United States and a state-directed transactional and opportunistic challenge by China."
How the leaders handle this matter will define US-China commercial relations for the next 20 years.
Can two nations that are strategic competitors find collaboration and not be overwhelmed by fear, uncertainty, and doubt the empowers politics that will stunt profits and prosperity?
History suggests otherwise. Add the lack of a military alliance and rising nationalism on both sides of the Pacific - it will be a challenge. Boardrooms should plan accordingly.
Enjoy the ride.
GEOECONOMICS
Trump hits China on trade but lifts steel tariff for allies: NYT reports, the $60 billion in annual tariffs are President Trump’s strongest trade action yet against a country he has branded an “economic enemy,” fulfilling one of his core campaign pledges.
Trump moves toward China tariffs in warning shot on technology transfer: Reuters reports, Trump lit a slow-burning fuse on Thursday to launch long-promised anti-China tariffs, but his actions appeared to be more of a warning shot than the start of a full-blown trade war with Beijing. Reaction from US industry groups sought to strike a balance, applauding the president for tackling the persistent drain of US technology to Chinese competitors, but urging negotiations instead of tariffs. “American business wants to see solutions to these problems, not just sanctions such as unilateral tariffs that may do more harm than good,” said John Frisbie, president of the US-China Business Council.
Trump to impose 25% tariffs on $60 billion of Chinese imports: FT reports, US targets strategic sectors such as robots and high-speed trains in fight over IP. In what the White House billed as a historic move against “economic aggression”, President Donald Trump said his administration had concluded that Beijing had for decades unfairly acquired US intellectual property and needed to pay the price.
Trump's China tariffs get bipartisan support: LAT reports, that reflects the growing disillusionment with Beijing on the part of many American officials and business leaders. The order was the largest move yet in Trump's rapidly unfolding effort to use tariffs — taxes on imported goods — to counter what he sees as unfair trade practices by other countries. It aimed to stop what U.S. officials describe as a years-long effort by China to steal American technology. The US-China Business Council, which represents American companies that do business in China, similarly said in a statement that "China's technology transfer practices and protection of intellectual property need to be addressed and improved." But the group's president, John Frisbie, added that "American business wants to see solutions to these problems, not just sanctions such as unilateral tariffs that may do more harm than good."
China fires warning shot at US over import tariffs: WSJ reports, China unveiled plans for tariffs against $3 billion in American goods and said it is readying more actions against the US.
China readies $3 billion in US tariffs: NYT reports, responding to Trump’s tariff plan, China said it would impose levies of its own on American-produced fruit, pork, wine, seamless steel pipes and more than 100 other goods.
China may hike tariffs on US pork, aluminum, other goods: AP reports, China lists $3 billion in US goods including pork and aluminum pipe to maybe face higher tariffs in response to President Donald Trump's higher import duties on steel and aluminum. Chinese officials are trying to figure out how to "engage constructively" with the Trump administration, said Jake Parker, vice president for China operations of the US-China Business Council, which represents American companies that do business with China. "They want to understand what the Trump administration's priority is for China to be able to offset some of these concerns," said Parker. "Until the Trump administration articulates those concerns and how China can address them, it's going to be very, very difficult for China to make those changes domestically."
China's Xi holds fire as Trump poses unprecedented test on trade: Bloomberg reports, Trump fired the first shots in what may be an extended trade war, Chinese President Xi Jinping made clear he’s going to wait before unleashing his country’s formidable arsenal in response. Xi has a lot at stake in his next move. Fresh off securing the power to rule indefinitely, he must look strong to reassure his 1.4 billion citizens that China won’t back down to a global challenge. At the same time, he wants to avoid an escalation that could tank China’s debt-laden economy and undermine the Communist Party’s legitimacy.
Market overreacts: China 'tariff' not really a tariff: Forbes reports, the $50 billion China tariff deal out of Washington today was a shot across the bow of Beijing. The market fell, as it always does on anti-free trade headlines. But this may be an overreaction as the tariff is -- so far -- not a tariff at all. And with regards to intellectual property, the biggest US-China business lobby is on board with the President. https://goo.gl/2hRpv6
Venezuela knocks three zeros off ailing currency amid hyperinflation: Reuters reports, Venezuela’s President Nicolas Maduro ordered a re-denomination of the ailing bolivar currency on Thursday, by knocking three zeroes off amid hyperinflation and a crippling economic crisis.
"Venezuela has been victim of a brutal, economic war"
The plot to reverse Brexit: Bloomberg reports, the UK’s anti-Brexit movement is sensing for the first time that it can win. Tim Ross and Kitty Donaldson profile Chuka Umunna, the 39-year-old Labour member of Parliament leading the effort, and reveal how, with intelligence on the negotiations supplied by EU officials, it's lobbying lawmakers to defeat the final deal a weakened Prime Minister Theresa May puts to a vote in October in order to force a new referendum. https://goo.gl/DBAzSC
TPP on table for UK after Brexit, trade chief Fox says: Nikkei reports, Britain plans to pursue free trade pacts during transition period.
EU recalls its Moscow envoy: The Times reports, Russia’s spy networks across Europe were under threat last night as at least five EU countries prepared to follow Britain and expel diplomats, while the European ambassador to Moscow was recalled. The moves, in response to the Salisbury poisoning, came as Theresa May appeared to have won a battle to unify all 28 countries behind a statement blaming Moscow
Europeans eye Russian expulsions over UK spy attack: Reuters reports, several European governments moved closer on Friday to expelling Russian diplomats in a show of support for Britain, which ordered out 23 "undeclared intelligence agents" after a nerve agent attack on a former Russian spy.
AMERICAN POLITICS
WSJ: Congress passes mammoth spending bill, averts shutdown
WP: In late-night drama, Senate passes spending bill, averting a shutdown
HR McMaster is out as national security adviser, to be replaced by John Bolton: WP reports, in a move that could lead to dramatic changes in the administration’s approach to crises around the world, the president said in a tweet that he was naming Bolton — a former UN ambassador, Fox News commentator and conservative firebrand — as his third national security adviser.
WSJ: Trump taps Iran hawk John Bolton for NSA post as McMaster departs
NYT: McMaster is out as National Security Adviser; Bolton is in
LAT: John Bolton's take-no-prisoners style may prove problematic in the White House
Inside Trump’s snap decision to oust McMaster: Bloomberg reports, Trump made a snap decision to oust H.R. McMaster as national security adviser, moving as the administration weighs tough actions against Russia and acting far sooner than many White House aides expected. But Trump changed all that on Thursday evening, abruptly replacing McMaster with John Bolton, a former U.S. Ambassador to the United Nations and proponent of the 2003 Iraq War best known for his hawkish views. The move was announced by Trump on Twitter so quickly on Thursday afternoon that many of the president’s top aides didn’t know it was coming. https://goo.gl/3TQ7hz
Bolton’s appointment comes at sensitive time for China ties: AP reports, Foreign policy hard-liner John Bolton’s appointment as US national security adviser comes at a particularly sensitive time for relations with Beijing following President Donald Trump’s approval of new tariffs on China and a law encouraging closer relations with Taiwan. Bolton has taken a tough position on both issues, saying Beijing needed to be called out on what he characterized as systematic cheating on global trade while enjoying the benefits of an open US market.
Trump assembles a radically aggressive foreign policy team: NYT reports, combined with the recent nomination of Mike Pompeo as secretary of state, the decision to name Mr. Bolton as national security adviser brings together two people with little in their pasts to indicate that they have time for the diplomatic process.
Trump is ending the inter-agency process. Look next for the end of the Chief of Staff role with Trump having four to five direct reports. Think Trump Tower management style inside the White House.
Trump country in greatest peril as China tariffs risk trade war: Bloomberg reports, Trump Country looks to be hit hardest as China strikes back against new tariffs the US president announced Thursday. In its initial counterstrike, China announced a 25 percent levy on US pork imports -- a heavy blow to Iowa, the top pork-producing state and a political battleground that swung to Trump in 2016 after going for Democrat Barack Obama in the previous two elections.
Why America is so scared of China’s biggest tech company: Bloomberg reports, Chuck Grassley of Iowa, one of the longest-serving Senate Republicans, says he’s worried about the prospect of American telecommunications companies becoming dependent on a Chinese manufacturer whose motives he finds suspect. “I can’t pronounce their name,” Grassley says, “but it starts with an H and ends with a W-E-I. Whenever they’re involved, it scares the devil out of me.” https://goo.gl/B4tybv
ENTERPRISE
LAT: Amazon patents delivery drones that can react to people screaming and flailing
Nikkei: Yahoo Japan to open cryptocurrency exchange
Byron Allen's Entertainment Studios is acquiring the Weather Channel for around $300 million.
Silicon Valley played by a different set of rules. Facebook’s crisis could put an end to that: LAT reports, after data wound up in the hands of a political consulting firm, users may be changing their minds about the social network.
Facebook employees fear ‘golden’ years are over: Politico reports, even some staffers who respect Mark Zuckerberg as an inspirational figure are discouraged at how he has navigated the company's crises since the 2016 election.
TRENDS
Author Steven Pinker on how science, reason, and progress will allow humanity to triumph despite itselfhttps://goo.gl/Qj7VBq
At Mars, Jeff Bezos hosted roboticists, astronauts, other brainiacs and me: NYT reports, Mars, an exclusive three-day conference at a midcentury-modern hotel here in the California desert run by Amazon and its founder, Jeff Bezos, for some of the world’s most successful geeks. For its first two years, Mars was largely secret; the most prominent image that leaked was a photo of Bezos piloting a 13-foot robot last year. This year, Amazon lifted the veil and invited a handful of reporters into Bezos’s brainiac pow-wow. https://goo.gl/kR4VZ3
CULTURE
How do coyotes thrive in urban Southern California? The answer is not for the weak-stomached https://goo.gl/b6UXAa
‘Toy King’ who turned a Washington bike shop into Toys R Us dies at 94: WP reports, Charles Lazarus seized the postwar baby boom market and transformed his father’s bicycle business into an international toy empire before it declared bankruptcy last September.
The Americans review: From Russia with no love: WSJ reports, in the final season of the Cold War drama, married spies go to war with each other. https://goo.gl/rj7oBn
NYT: Wes Anderson’s bleakly beautiful Isle of Dogshttps://goo.gl/u3fjnV
SOTD
Freur - Doot Doot https://goo.gl/HHnFGa
SPORT
ESPN: Juventus named opponents for 2018 MLS All-Star Game in Atlanta
WP: Zlatan Ibrahimovic tweets image of himself arm-wrestling the devil to announce MLS move
LAT: Michigan runs wild over Texas A&M 99-72 to reach Elite Eight
Loyola upsets Nevada to extend its run into the Elite Eight: NYT reports, he 11th-seeded Ramblers came from 12 points down and then held on for a 69-68 victory, keeping them and Sister Jean, their 98-year-old team chaplain in the spotlight for at least another game.
Loyola Chicago, on a ‘mission from God,’ advances to the Elite 8: WP reports. the 11th-seeded Ramblers and their suddenly famous chaplain, Sister Jean Dolores-Schmidt, pulled off another upset, edging Nevada, 69-68, to continue their improbable run in the South Region.