Good morning. David Meyer here standing in for Alan from a delightfully sunny Berlin.
Tomorrow sees the imposition by the U.S. of major tariffs on Chinese imports. The Chinese will also likely strike back with retaliatory tariffs on the same day (though China maintains it will not fire first, despite Friday arriving earlier there than in the U.S.).
The question now is whether China will stand alone in its trade fight against President Donald Trump, or whether it will find allies among others who are also being targeted by the White House.
According to the South China Morning Post, Chinese Premier Li Keqiang has proposed that the European Union—hit by U.S. tariffs on steel and aluminum imports—step up cooperation with China in order to ward off their common threat. “As two important forces in the world, China and the EU have to reach consensus, and expand cooperation and mutual interest to deal with the challenges,” Li told European Commission President Jean-Claude Juncker.
Meanwhile, the White House may be trying to pursue a divide-and-conquer approach among European countries. As the Washington Post reported last week, Trump earlier this year suggested to French President Emmanuel Macron that France should leave the EU in order to win a bilateral trade deal with the U.S. that’s on better terms than current U.S.-EU agreements—a ludicrous suggestion, as the EU market is worth a lot more to France than the American market is.
And Germany’s Handelsblatt has now reported that the American ambassador to the country, Richard Grenell, told big German automakers including BMW, Volkswagen and Daimler that the U.S. would be open to a zero-tariff agreement with the EU on car trade across the Atlantic. The German car firms’ CEOs were reportedly receptive to the proposal. The EU is trying to organize a united front across its member states in the face of Trump’s proposed tariffs on European vehicles and parts, so this could just be back-channel negotiating—or it could be intentionally divisive.
Either way, unless something changes suddenly today, we’re about to slip into a new phase of international trade relations. And we’ll soon know how alliances shift and coalesce in that new reality.
Daurio Speranzini Jr., the head of General Electric in Latin America, was arrested yesterday for allegedly participating in a cartel when previously working for Philips Medical Systems. Speranzini was arrested in Brazil, where investigators are probing the cash-siphoning activities of companies with public health contracts between 1996 and 2017. The companies are accused of fixing prices for medical equipment tenders. Wall Street Journal
Glencore, the leading commodity trader whose investors freaked out when they heard about a Justice Department corruption probe, has announced a $1 billion share buyback. The move might calm down some of those investors, who saw the company’s share price drop more than 8% on Tuesday alone—and indeed, Glencore’s share price rose almost 4% on the buyback news. Bloomberg
Trump’s Invasion Curiosity
Turns out President Donald Trump is very interested in invading Venezuela. An AP report details how he has repeatedly raised the issue with aides, who have repeatedly tried to explain how such a move could easily backfire. Trump reportedly “pointed to what he considered past cases of successful gunboat diplomacy in the region, according to the official, like the invasions of Panama and Grenada in the 1980s.” Associated Press
Kim Dotcom, the charismatic internet entrepreneur behind the Megaupload file-sharing service, is a step closer to being extradited to the U.S. on copyright infringement and money laundering charges. He lost his case at the New Zealand Court of Appeal today, leaving him with one more appeal to the country’s Supreme Court. Dotcom was arrested back in 2012 due to an online “piracy” investigation in the U.S., and has been fighting extradition since. New York Times
Around the Water Cooler
Volkswagen is planning a new car-sharing service in its native Germany. The electric-car-focused venture, which will compete with BMW and Daimler’s DriveNow and Car2Go services, will expand across Europe, North America and Asia in the next couple years. Meanwhile, France’s Renault is also planning to offer a ride-hailing and car-sharing service in Paris and surrounding areas. This does increasingly seem to be the future for the automotive industry. Reuters
CNBC has an interesting piece on the many ways in which Alphabet is investing in transportation, from self-driving vehicles to flying cars. The push extends from direct investment to funding via a trio of venture capital operations, and Google Maps provides the “backbone” for the strategy, allowing invested-in companies such as Uber and Lyft to advertise their prices through the mapping platform. CNBC
Sorrell Share Awards
The former WPP CEO Martin Sorrell is now, via his new S4 Capital venture, bidding against his former firm for a digital production company called MediaMonks. Sorrell is still, however, WPP’s biggest shareholder. In that context, WPP has threatened to take away Sorrell’s share awards, which are apparently worth around $26.5 million. The company ousted Sorell in April over alleged misconduct. BBC
Amazon R Us
Amazon is reportedly planning to distribute millions of copies of a printed holiday toy catalog around the U.S., effectively stepping in to fill the void left by Toys R Us and its “Big Book.” The pamphlets will go to homes and be distributed at Whole Foods outlets. Toys R Us is shuttering its U.S. operations, although it continues to be active elsewhere. Fortune