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Data Sheet—Why the U.S.-China Trade War Won’t Be Ending Anytime Soon

Buyers seen waiting in a queue to purchase Apple products atBuyers seen waiting in a queue to purchase Apple products at
Buyers seen waiting in a queue to purchase Apple products at an official Apple store in Hong Kong. SOPA Images LightRocket via Getty Images

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Good morning, Clay Chandler writing for Adam today. President Trump will sign an executive order this week barring U.S. companies from using telecommunications equipment produced by firms deemed a risk to national security, several wire services report. The measure won’t name specific countries or companies, but will effectively ban Chinese telecom giant Huawei Technologies from competing in the U.S. market—ratcheting up trade tensions between the world’s two largest economies.

The administration’s China hawks have urged the de facto ban on Huawei for more than a year. The order would invoke the International Emergency Economic Powers Act, which gives the president the authority to regulate commerce in response to a national emergency threat. Trump is said to have demurred asserting such powers previously in hopes of concluding a broader trade agreement with China. His willingness to sign the measure now suggests he’s digging in for a protracted standoff.

The Chinese, too, are hardening their position. In a speech in Beijing Wednesday, Xi Jinping warned it would be “stupid” and “disastrous” for one civilization to force itself on another. He didn’t name names, but it was pretty clear whose “civilization” he had in mind.

The United States blames China for the sudden collapse in trade negotiations, claiming that last weekend Beijing backtracked on a host of prior commitments to liberalize its economy and dismantle subsidies for homegrown companies. On Monday, Trump cited China’s reversal on a deal that was “95% there” for his decision Friday increase tariffs to 25% on $200 billion of Chinese products.

Beijing denies reneging, and has retaliated by declaring it will raise tariffs on $60 billion of U.S. imports starting next month. The rising tensions have already hit the stock prices of U.S. tech giants like Apple, Intel and Hewlett Packard Enterprise, causing losses of at least 10% on each over the past week.

Trump insists he enjoys a close personal relationship with the Chinese leader. He claims Xi wrote him a “beautiful letter” after talks between U.S. trade representative Robert Lighthizer and Xi’s emissary Liu He broke down. But such statements belie the new chill that has settled over U.S.-China relations. Whatever their personal rapport, it’s increasingly clear the two leaders have misread each other. Trump’s Huawei ban seems certain to invite a Chinese reprisal.

Trump and Xi are scheduled to meet at a summit for leaders of the G-20 nations in Osaka next month. But as tensions escalate, the prospects that meeting will achieve a breakthrough seem remote.

Clay Chandler
@claychandler
clay.chandler@fortune.com

NEWSWORTHY

Look away. San Francisco’s Board of Supervisors agreed to ban its police force and other municipal departments from using facial recognition apps. “The public increasingly understands the threat this technology can pose and that isn’t what they want,” ACLU attorney Matt Cagle, who helped write the law, said.

Look askance. There’s a new security flaw affecting most Intel chips made since 2011. Dubbed ZombieLoad, the weakness is similar to last year’s Spectre and Meltdown issues and allows hackers to steal confidential data. And Microsoft said it found a new vulnerability in some older versions of the Windows OS that could allow malware to spread. Time to check for the latest security patches.

Look to the future. After several rounds of dealmaking have remade the entertainment landscape, Disney is gaining full control over streaming service Hulu. The House of Mouse made a deal with Comcast to ensure Comcast’s NBCUniversal shows stay on Hulu for three years. Comcast can force Disney to buy its 33% stake in 2024, while Disney can require that Comcast sell for at least $9 billion.

Look for a deal. The various travel services unveiled by Google via the search bar in recent years are coming together under a new page called Trips. The new page offers hotel and flight searches as well as suggested travel itineraries.

Lookie loos. Cybersecurity firm Crowdstrike filed to go public, revealing a $140 million net loss on $250 million of revenue last year. The company will likely seek a higher valuation than the $3.4 billion mark it reached in a private round of backing last year.

FOOD FOR THOUGHT

At this moment in time, the scales have tipped decidedly against the technology industry as a force for good. But amid the gloom and doom, famed programmer and essayist Paul Ford has written a long, history-filled paean in Wired to the last 50 years of development. “Software has eaten the world, and yet the world remains,” Ford writes. The whole long and rambling essay is worth a read but here’s Ford on the surprise of tech’s current dominant position:

We never expected to take over the world! It was just a scene. You know how U2 was a little band in Ireland with some good albums, and over time grew into this huge, world-spanning band-as-brand with stadium shows with giant robotic structures, and Bono was hanging out with Paul Wolfowitz? Tech is like that, but it just kept going. Imagine if you were really into the group Swervedriver in the mid-’90s but by 2019 someone was on CNBC telling you that Swervedriver represented, I don’t know, 10 percent of global economic growth, outpacing returns in oil and lumber. That’s the tech industry.

IN CASE YOU MISSED IT

Esther Wojcicki, Mother of YouTube CEO, Shares Advice for Parents on Kids’ Exposure to Tech By Danielle Abril

Amazon Alexa’s New ‘Guard’ Can Help Keep Your Home Safe While You’re Away By Emily Price

Uber Eats Its Way to New Revenues Amid Post-IPO Profitability Concerns By Danielle Abril

Apple’s iPhone Could Cost 3% More to Produce Due to China Tariffs By Don Reisinger

BEFORE YOU GO

Probably my favorite movie of all-time is the remake (yes, the remake) of The Thomas Crown Affair. The original starring Steve McQueen and Faye Dunaway is a little too antiquated and misogynist for current tastes. But the 1999 remake with Rene Russo and Pierce Brosnan, directed by John McTiernan, is the caper movie done to perfection.

Scenes and lines from the movie came streaming back as I perused the papers this morning and saw that Claude Monet’s 1890 painting of haystacks at sunset had sold at Sotheby’s for $110.7 million, setting a record for an impressionist work. In the movie, Crown first steals Monet’s San Giorgio Maggiore at Dusk and later The Banks of the Seine at Argenteuil by Édouard Manet. Already guessed that was my favorite movie? Damn, I hate being a foregone conclusion.

This edition of Data Sheet was curated by Aaron Pressman. Find past issues, and sign up for other Fortune newsletters.