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Trump’s Tariffs, AXA and XL, Qualcomm Pause: CEO Daily for March 5, 2018

March 5, 2018, 12:00 PM UTC

Good morning.

President Trump shows no sign of backing down from his threatened imposition of tariffs this week. Indeed, if anything, he seems to be doubling down.

After tweeting Friday that “trade wars are good, and easy to win”—a statement that flies in the face of both economics and history—he took a shot at European critics Saturday, saying: “If the E.U. wants to further increase their already massive tariffs and barriers on U.S. companies doing business there, we will simply apply a Tax on their Cars which freely pour into the U.S.”

The threatened tariffs on steel and aluminum—while cheered by those industries in the U.S.—will mean higher costs for a host of others, including aircraft and car manufacturers, beer and soft drink makers, and other canned goods companies. Most of the business community, and many of the president’s own economic advisers, are urging him not to do it, or at least soften the blow by targeting certain offending countries. But there’s no sign he’s heeding that advice (and ample signs he isn’t.) For the president, this one is about making good on a campaign promise. He also seems to believe his bellicose rhetoric will soften up U.S. trading partners into making better deals with the U.S. in the future.

Saturday night, I attended the annual Gridiron Dinner—a 132-year-old, white-tie Washington tradition that is meant to be an opportunity for the President and the press corps to do some good-natured ribbing. The president started by joking that it was “another calm week at the White House. We are finally running as a fine tuned machine.” (At least I think that was a joke.) He went on to say that his “staff was worried I couldn’t do self-deprecating humor. But nobody does self-deprecating humor better than I do.”

From there, the president descended into a series of attacks on his opponents and a defense of his administration…among other things, taking credit for driving North and South Korea together for the Olympics. The president clearly thinks his trade outburst will have the same beneficent effect on U.S. trading partners. Let’s hope he’s right.

I’m traveling to Singapore, via Korea, this morning, where FORTUNE’s Brainstorm Design conference starts on Tuesday. I’ll be reporting from there all week.

News below.

Alan Murray

Top News


France's AXA says it will spend $15.3 billion on buying New York-listed insurer XL Group and speed up its plans to spin off its American life insurance business—the IPO would give it $6 billion to help fund the XL purchase, with the rest coming in the form of cash and debt issuance. XL's shareholders would get $57.60 a share, a third higher than the firm's Friday closing price. AXA's shares dropped 7% in early European trading, though. Wall Street Journal

Qualcomm Takeover Paused

The Treasury has effectively pressed pause on Broadcom's proposed takeover of Qualcomm while the Committee on Foreign Investment in the U.S. (CFIUS) investigates the national security implications of the deal. Singapore-based Broadcom, whose $117 billion bid for the U.S. chip-maker was unsolicited, said Qualcomm's request for an investigation by CFIUS was "a blatant, desperate act by Qualcomm to entrench its incumbent board of directors." Financial Times

Italian Uncertainty

Italian stocks fell at the start of this morning's trading, after populist parties won almost half the vote in Italy's Sunday elections, and early results suggested the country is heading for a hung parliament due to no party or coalition of parties meeting the 40% threshold for stable governance. The anti-establishment and anti-euro 5Star Movement—which previously promised not to participate in any coalition—appears to have won around 32% of the vote, and the coalition of the far-right League and Silvio Berlusconi's Forza Italia picked up around 37%. Fortune

May to Trump

British Prime Minister Theresa May has urged U.S. President Donald Trump not to push ahead with tariffs on imported steel and aluminum. "The prime minister raised our deep concern at the president’s forthcoming announcement on steel and aluminium tariffs, noting that multilateral action was the only way to resolve the problem of global overcapacity in all parties' interests," said Downing Street. Times of London

Around the Water Cooler

China Growth

China's government has set the country's 2018 economic growth target at around 6.5%, below last year's 6.9%, but in line with previous expansion goals. The administration also said its crackdown on financially risky operations, which has recently seen seizures of private businesses that have been taking on too much debt, was a key policy for the coming year. BBC

Merkel's Fourth Term

Grassroots members of Germany's Social Democrats (SPD) decisively backed the party's decision to enter into another "grand coalition" government with Angela Merkel's Christian Democrats (CDU), thus bringing to an end months of uncertainty following September's general election. The SPD campaigned on a promise not to enter a grand coalition again. However, polls suggested that if the SPD's members had rejected the deal and effectively triggered fresh elections, the party would have been thoroughly thrashed by the electorate. Guardian

Apple Prognostication

KGI Securities analyst Ming-Chi Kuo, regarded as one of the more reliable crystal-ball-gazers out there when it comes to Apple, reckons the company will release a new, cheaper MacBook Air sometime in the second quarter. "We forecast total shipments of MacBook models will grow 10-15% YoY in 2018 (vs. 0-5% YoY decline for the [notebook] industry), up from 15.5-16mn units in 2017," he said in a reported note. MacRumors

Listeria Outbreak

The worst listeria outbreak on record, which has killed an estimated 180 people in South Africa over the last year, has finally been traced back to a meat-processing plant in the city of Polokwane. The source seems to have been Enterprise Food's polony—a highly-processed cold cut—but the country's health ministry is now urging South Africans to avoid all processed meat sold as "ready to eat." Enterprise owner Tiger Brands saw its stock drop almost 13% on the news. Fin24

This edition of CEO Daily was edited by David Meyer. Find previous editions here, and sign up for other Fortune newsletters here.