The U.S. hiked tariffs on $200 billion worth of goods from China this morning, in an effort to up the pressure on China for a trade deal. The Chinese quickly responded that they would retaliate.
President Donald Trump’s effort to change the terms of the U.S. trading relationship with China has broad support among American business. Some 80% of Fortune 500 CEOs said in our new survey that they support the administration’s trade action with China.
But while they may support the goals, it’s not clear they support the tactics. I was at dinner with a large group of executives who do business in China last night in San Francisco—part of the build up to the Fortune Global Sustainability Forum in Yunnan in September—and several said the administration seems to have overlooked the importance of “face” in China. Under such overt public pressure, they argued, there is no chance President Xi Jinping will bend and make a deal. Moreover, most felt tariffs would end up hurting the U.S. as much or more than China. We shall see.
Levi Strauss CEO Chip Bergh was the headline guest at last night’s dinner. Other CEOs attending included Marc Benioff of Salesforce, Margo Georgiadis of Ancestry.com, Tien Tzuo of Zuora, and Patrick Brown of Impossible Foods.
And since it is Friday, some feedback. Lots of reaction to yesterday’s post on the social responsibility of business. Much of it was predictably partisan. Those on the left attacked me for highlighting companies like GAP that pay minimum wage to store workers, while JC wrote: “Do not send me any more of this liberal, pro-minority, pro-Democrat manure.” WM helpfully provided the link to Milton Friedman’s essay on the topic, here. And JL offered the following thoughtful comment:
“The macro-economic principle of ‘externality’ has created 100 years of a fake social balance sheet. There is no externality in this life, or in economics. It is ALL on the books.”
More news below.
Facebook co-founder Chris Hughes says it’s time to break up the company. Why? It has too much power over people and the ad market, and has become inescapable. The illusion of choice allows for poor privacy practices, he argues—and there are no checks and balances. Hughes implicitly backs the Elizabeth Warren plan for rolling back Facebook’s Instagram and WhatsApp acquisitions. Here’s the video he did for the New York Times. YouTube
Uber raised $8.1 billion in its IPO, pricing shares at $45—near the bottom of the marketed range. Wedbush Securities analyst Dan Ives: “We view Uber’s conservative pricing as a smart and prudent strategy coming out of the box as it clearly learned from its ‘little brother’ Lyft, and the experience it has gone through over the past month.” Fortune
Occidental’s $38 billion bid for Anadarko Petroleum is the winner, after Chevron pulled out with its $1 billion termination fee, which it says it will return to shareholders through share repurchases. “An increased offer would have eroded value to our shareholders,” said Chevron CEO Michael Wirth. Anadarko comes with prized assets in the Permian Basin of West Texas and New Mexico. Wall Street Journal
Jeff Bezos’s Blue Origin has unveiled Blue Moon, the lunar lander it will use to kick off its long-term strategy of building human colonies in space. “It’s time to go back to the moon—this time to stay,” said Bezos, who will presumably not be staying there himself. Rival spacelord Elon Musk trolled the recently-divorced Bezos by sharing an altered image of the lander, featuring the text “Blue Balls,” in a tweet that was as witty as it was classy. Financial Times
Around the Water Cooler
The U.S. seized a North Korean ship that was carrying coal en route to American Samoa, on the basis that it was busting sanctions—American prosecutors said it was also being used to bring heavy machinery into North Korea. The Wise Honest is/was apparently North Korea’s second largest merchant ship. The seizure actually happened just over a year ago, but the warrant was just unsealed. CNN
Tata and Jaguar
India’s Tata Motors denied it is preparing to sell off Jaguar Land Rover, the U.K.’s biggest carmaker. Reports have suggested that Tata was getting ready to sell the firm to France’s PSA Group, which owns the Peugeot, Citroën and Vauxhall brands. Tata: “As a matter of policy, we do not comment on media speculation. But we can confirm there is no truth to these rumors.” Guardian
Hamleys, the world’s oldest toy retailer, has been bought by Mukesh Ambani, India’s richest man. Ambani’s Reliance Brands picked up the almost-260-year-old British icon from China’s C Banner International, which bought it in 2015. Reliance Brands said the acquisition was “a long cherished dream come true.” BBC
China has formally charged Meng Hongwei, the former Interpol chief, with taking “huge amounts of bribes” when he was a security official in the country. Beijing had him arrested in China while he was still head of Interpol—he vanished on a visit in 2016. South China Morning Post