Donald Trump doubled down on his carrot and stick routine with big business Monday, reinforcing the central message of his economic policy: Manufacture in the U.S., and I will shower you with benefits. Manufacture abroad, and you will be hit with tariffs and taxes.
The President met with a dozen top U.S. CEOs, and promised to wipe out 75% of the regulations that hinder their business, and to cut their taxes “massively.” But the president also made clear that he still intends to impose “a very major border tax” on U.S. companies that manufacture goods in other countries and ship them back into the U.S.
The CEOs emerged from the meeting expressing optimism. Ford CEO Mark Fields said he “came out with a lot of confidence that the President is very, very serious about making sure that the U.S. economy is going to be strong and have policies – tax, regulatory or trade – to help drive that.” Johnson & Johnson CEO Alex Gorsky called the meeting “productive.” Dow CEO Andrew Liveris acknowledged that the executives discussed “at length” the proposal to tax U.S. companies that manufacture goods in other countries and then import them back into the U.S.
Others at the meeting included Elon Musk of Tesla, Marillyn Hewson of Lockheed Martin, Kevin Plank of Under Armour, Michael Dell of Dell Technologies, Mario Longhi of US Steel, Jeff Fettig of Whirlpool, Klaus Kleinfeld of Arconic, Wendell Weeks of Corning, and Mark Sutton of International Paper.
Also yesterday, Trump signed an executive order pulling the U.S. out of the Trans-Pacific Partnership – a trade deal favored by most U.S.-based global companies. Australia and New Zealand are now scrambling to keep the deal together, without U.S. involvement. Australian Prime Minister Malcolm Turnbull said they may get China to join – an arrangement that could leave U.S. companies at a significant disadvantage.
The President will continue his dance with business this morning, in a breakfast meeting with auto industry CEOs.
More news below.
• Trump’s Ajit Prop
President Donald Trump tapped Republican Commissioner Ajit Pai to head the Federal Communications Commission. Pai, a former Justice Department, FCC and Capitol Hill staffer, is expected to roll back many of the Obama administration’s telecommunications and internet policies. In December, he’d said Obama’s landmark net neutrality rules adopted in 2015 would not last, and vowed to “fire up the weed whacker [to] remove those rules that are holding back investment, innovation and investment. Separately, the confirmation of President Trump’s new cabinet advanced as the Senate confirmed Mike Pompeo as the new director of the CIA. Fortune
• Amazon Eyes the Auto Parts Business
If there’s one thing that can hit your share price harder than Donald Trump’s Twitter account, it’s the news that Jeff Bezos wants to get into your business. Yesterday it was the turn of the auto parts industry: Shares in Advance Auto Parts, O’Reilly Automotive and Genuine Parts all lost between 3.5% and 4% on a New York Post report that Amazon was looking at getting into the business. Amazon launched Amazon Vehicles, an online platform for users to research on cars, auto parts and accessories, last year. Fortune
• New Probe at Yahoo Threatens Verizon Deal
Marissa Mayer’s tenure at Yahoo is threatening to end in total ignominy. The company is now under investigation by the Securities and Exchanges Commission on suspicion of having covered up the extent of damaging data breaches while it negotiated the sale of its internet businesses to Verizon. (The FTC and the U.S. attorney’s office in Manhattan have been on the case since November.) The company last night pushed back by three months its estimate of when the deal with Verizon will close already. On the bright side, Yahoo’s legacy business returned to profit in the last quarter of 2016, with revenue exceeding analysts’ forecasts. Fortune
• Brexit Hits a Speed Bump
The U.K.’s Supreme Court told Prime Minister Theresa May she can only trigger the two-year process of leaving the EU after a vote by Parliament (under Article 50 of the EU Treaty). The ruling is unlikely to derail the Brexit process because May’s Conservative lawmakers have swung solidly behind her, and the Labour Party is too scared to defy the wishes of its working-class base, whose votes to Leave last June were decisive. The ruling has lost some of its importance because May last week promised parliament a vote on the final deal that she hammers out with the EU. The Supreme Court made no pronouncement on whether the process of Brexit can be reversed once Article 50 is invoked, as Remainers hope. BBC
Around the Water Cooler
• Sprint Rescues a Challenged Tidal
Sprint agreed to buy 33% of Tidal, the streaming service owned by rapper Jay Z, in a deal that valued the company at $600 million, according to Billboard. Neither party confirmed that number. The logic is that Sprint will benefit from having exclusive access to new releases through Tidal, while access to Sprint’s 40 million subscribers will bolster a service struggling to compete with Spotify and Apple Music. Norway’s leading business daily Dagens Næringsliv claimed at the weekend that Tidal’s actual number of paying subscribers is less than half the 3 million it has claimed in the past. Tidal disputes that. Fortune
• Etihad CEO to Leave As Abu Dhabi Puts on the Squeeze
Abu Dhabi strapped a parachute onto Etihad Airways CEO James Hogan and pushed him out, as the oil-rich emirate tired of waiting for his aggressive expansion strategy to bear fruit. He’ll leave in the second half of the year, and CFO James Rigney will also leave sometime in 2017. It’s the latest sign of wings being clipped at the trio of Gulf-based airlines (Qatar and Emirates being the other two) that have disrupted the international long-haul market in recent years. The end of easy oil money is slowly forcing a measure of austerity on the governments behind them (albeit not the kind of austerity that any Greek shopkeeper would recognize). Hogan had taken stakes in failing airlines such as Alitalia and Air Berlin to help drive traffic. They have been a liability as much as an asset. WSJ, subscription required
• McDonald’s Struggles to Digest All-Day Breakfast Bump
McDonald’s posted a drop in revenue from its U.S. restaurants in the final quarter of last year, as the bump in sales caused by launch of the all-day breakfast in 2015 proved a hard act to follow. Wall Street wasn’t too upset though, because global sales, on a comparable basis, rose 2.7%, and per-share earnings also rose (the U.K., China and Japan put in notably strong performances). However, the company put off offering guidance for the coming year until March 1, by which time CEO Steve Easterbrook and his team should have thrashed out their strategy and targets. Fortune
• Exit Ecclestone, Enter a New U.S. Era for F1
Bernie Ecclestone, the man who turned Formula 1 into the world’s most valuable motor racing franchise, has finally stepped down as CEO after 40 years in charge. The big question now is whether F1, under its new U.S.-based ownership (Liberty Media) and CEO (Chase Carey) can establish it as more than just a niche player in the U.S.. The key to that, many would argue, will be to ensure more effective competition by redistributing the commercial revenues more equitably between the teams and lowering the barriers to entry. Fortune
Summaries by Geoffrey Smith Geoffrey.firstname.lastname@example.org;