Good morning. David here again, filling in for Alan from Berlin.
The White House has decided to direct $12 billion in emergency aid to American farmers, to help take the sting out of the trade war that President Donald Trump started. According to Agriculture Secretary Sonny Perdue, this is a “short-term solution that will give President Trump and his administration time to work on long-term trade deals.”
Lawmakers on both sides of the aisle aren’t so sure about that roadmap. According to the Wall Street Journal, South Dakota Senator Mike Rounds, a Republican, asked: “At what point do we start seeing things move out of the chaotic state they are in now and to where we actually see new trade agreements?” And Democratic Senator Heidi Heitkamp, from North Dakota, argued that the sum would be vastly insufficient if the trade war escalates.
The sum on offer here is unprecedented, with such bailouts usually being reserved for recessions or periods of low agricultural commodity prices.
The move is quite clearly designed to prop up a key sector of Trump’s support base, as the fallout from his trade war starts to settle. That American farmers have been hard hit is no accident. While the U.S.’s tariffs on imports from China, the EU, Canada and Mexico have been relatively blunt, those levied in retaliation have been targeted with great precision at Trump’s base, which includes the producers of products such as pork and soybeans. And so, meat is now being stockpiled and jobs are on the line.
The question now is whether the agricultural aid will win over voters ahead of the mid-terms; it certainly hasn’t pleased the high priests of free trade within the Republican Party.
“Taxpayers are going to be asked to initial checks to farmers in lieu of having a trade policy that actually opens and expands more markets. There isn’t anything about this that anybody should like,” said South Dakota Senator John Thune, a senior GOP figure, while Senator Ron Johnson (R–Wis.) raised the specter of the Soviet Union and its infamous central planning.
Luckily for Trump, he doesn’t need Congress to authorize this bailout. But everyone had better hope his trade tactics pay off soon, if this isn’t going to become a burdensome trend.
More news below.
| David Meyer | |
| @superglaze | |
Top News
RIP Sergio Marchionne
Sergio Marchionne has died in a Swiss hospital. Marchionne was replaced four days ago (by Mike Manley) as CEO of Fiat Chrysler, due to a sudden deterioration in his health following shoulder surgery. Aged 66, Marchionne had worked at Fiat since 2004, and he was seen as having saved both Fiat and Chrysler. BBC
Juncker Showdown
What should we expect from Trump's talks today with European Commission President Jean-Claude Juncker? The U.S. President has previously called Juncker a "brutal killer"—which may or may not be a compliment—and has floated a trade-war-ending deal that he predicts the Europeans will turn down. But Juncker has proposals of his own. Fortune
Facebook Predictions
Analysts expect Facebook to post record revenues and user figures today, largely powered by the company's Instagram service (revenues from which the company does not break out.) Analysts also expect evidence that Facebook's users are largely unconcerned about the company's many privacy scandals. The figures they want to see: revenues of $13.32 billion, EPS of $1.71 and daily active users at 1.48 billion. Bloomberg
Deutsche Bank
Deutsche Bank's restructuring continues to hurt, but that's to be expected. The German bank has announced Q2 net profits of €401 million ($468 million,) down 14% from the same quarter last year but pretty much what DB said last week that it expected. Analysts were only expecting €321 million. CEO Christian Sewing: "We’re making important changes to our core businesses as promised, we’re headed in the right direction on costs, and our balance sheet quality is strong." Shares were down 1.3% though. CNBC
Around the Water Cooler
Ivanka Brand
Ivanka Trump is closing down her fashion brand, apparently to allow her to stay in the public policy world without people thinking she's profiting off her role in the White House. The Citizens for Responsibility and Ethics in Washington watchdog says it's the right move but too late. It's probably worth noting that the company has suffered from being ditched by retailers such as Nordstrom, TJ Maxx, Marshalls and Hudson's Bay in Canada. CNN
China Warning
If President Trump follows through with his threat to impose major new tariffs on China imports, the Chinese court system should prepare itself for a flood of corporate bankruptcies. That's according to the deputy director of an advisory committee to the Supreme People's Court, in an opinion piece for state media. "Preparedness ensures success. Unpreparedness spells failure," Du Wanhua wrote. South China Morning Post
Facebook Decisions
Facebook security chief Alex Stamos, who is leaving the company, told staffers back in March that the social network must "be willing to pick sides when there are clear moral or humanitarian issues"—a stance that's not in line with Facebook's professed neutrality when dealing with conspiracy theories and disinformation. Stamos also said the company should take heed of those who "tell us a feature is creepy or point out a negative impact we are having in the world." Fortune
Dom Pérignon
Fortune's Rachel King has a sparkling piece on the transition at Dom Pérignon, where Vincent Chaperon will soon take over as head winemaker from his mentor, Richard Geoffroy. She writes: "Chaperon, a native to Bordeaux, has already been with the house for nearly two decades, participating in 13 harvests and declared four vintages. Given how closely Chaperon and Geoffroy have worked together over the years, it's inevitable that many of the same lessons and principles Geoffroy instilled will be applied by Chaperon as well." Fortune
This edition of CEO Daily was edited by David Meyer. Find previous editions here, and sign up for other Fortune newsletters here.
