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DealBook Briefing: Trump Plays Chicken With China on Trade

Credit...Alex Brandon/Associated Press

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President Trump threatened yesterday to impose more tariffs on Chinese goods in an attempt to win concessions from Beijing during what was expected to be a final round of trade talks, Ana Swanson of the NYT writes.

• Mr. Trump tweeted that he “would increase tariffs on $200 billion in Chinese goods at the end of this week and ‘shortly’ impose levies on hundreds of billions of dollars of additional imports.”

• The tweets came “after Chinese officials took a tough line in high-level trade negotiations last week in Beijing,” Ms. Swanson writes.

• Mr. Trump, she adds, is “emboldened by a strong American economy and wary of criticism that an evolving trade deal with China would not adequately benefit” the U.S.

This is a familiar tactic. Mr. Trump has also used the threat of tariffs against Canada, Europe, Japan and Mexico to help speed up negotiations and win concessions from trading partners.

But it caught Chinese officials off guard. “On Monday morning in Beijing, they were trying to decide whether Vice Premier Liu He should go ahead with his visit” to Washington later this week for a round of negotiations, Ms. Swanson writes. Mr. Liu’s plans were unclear at the time of writing.

New tariffs could hurt China if they lead to long-term trade tensions. Tao Wang, an economist specializing in China at UBS, told the NYT that a full-blown trade war with the U.S. could cut China’s economic growth rate 1.6 to 2 percentage points over the next 12 months.

But while the U.S. “believes it has leverage over China, huge swaths of the American economy depend on access to the Chinese market for materials, products and sales,” Ms. Swanson adds. “It remains to be seen whether Mr. Trump’s threat will produce a beneficial trade agreement for the United States — or whether his attempts to pressure China will backfire by pushing already-tense relations past the breaking point.”

The markets didn’t like the news. Stocks in Asia and Europe tumbled, and futures suggest that major U.S. indexes will open lower today.

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Warren BuffettCredit...Scott Morgan/Reuters

With many billionaires apologizing for what capitalism has wrought, at least one man isn’t distancing himself from his love of the free-market economy, Andrew writes in his latest column.

“I’m a card-carrying capitalist,” Mr. Buffett said at Berkshire Hathaway’s annual meeting over the weekend. “I believe we wouldn’t be sitting here except for the market system,” he added. “I don’t think the country will go into socialism in 2020 or 2040 or 2060.”

“There is something oddly refreshing about Mr. Buffett’s frankness,” Andrew writes. “Many of today’s business leaders appear to publicly wring their hands over the state of inequality or take moral stands on public policy issues. But when it comes to offering up concrete solutions and actually making the hard decisions that could affect their bottom lines, they have much less to say.”

“He believes that the pursuit of capitalism is fundamentally moral — that it creates and produces prosperity and progress even when there are immoral actors and even when it creates inequality.”

Mr. Buffett also dismissed the E.S.G. movement, in which investors and policymakers attempt to fix capitalism by focusing on environmental, social and governance initiatives. “We are not going to tie up resources doing things just because it is the standard procedure in corporate America,” he said.

More: ICYMI, here’s a cheat sheet to the highlights from Berkshire’s annual meeting.

Occidental juiced its acquisition bid last night by increasing the cash component of its offer in an effort to outdo Chevron, Clifford Krauss of the NYT reports.

Its offer is now 78 percent cash, up from 50 percent. Its total cash-and-stock proposal remains unchanged, at $76 per share, or $38 billion. Chevron has offered $33 billion.

Some of the cash comes from Occidental’s sell-off of investments across Africa to Total, the French energy giant. Under a binding agreement, Occidental would receive $8.8 billion from Total for assets in Algeria, Ghana, Mozambique and South Africa after a successful acquisition of Anadarko. (Berkshire Hathaway previously committed $10 billion.)

The move could help “win the support of Anadarko’s shareholders who may well make the final decision,” Mr. Krauss writes.

But it’s not a done deal. “Chevron is expected by some Wall Street analysts to sweeten its offer to counteract Occidental’s recent moves,” Mr. Krauss adds.

Confusion inside Boeing about a feature implicated in two fatal crashes involving its 737 Max jets has underlined the flawed design and rollout of the airplane, David Gelles and Natalie Kitroeff of the NYT report.

• “When Boeing began delivering its 737 Max to customers in 2017, the company believed that a key cockpit warning light was a standard feature in all of the new jets.”

• “But months after the planes were flying, company engineers realized that the warning light worked only on planes whose customers had bought a different, optional indicator.”

• “In essence, that meant a safety feature that Boeing thought was standard was actually a premium add-on.”

• “Because only 20 percent of customers had purchased the optional indicator, the warning light was not working on most of Boeing’s new jets.”

• “Boeing said it did not inform airlines or the Federal Aviation Administration about the mistake for a year.”

“The revelations add to Boeing’s mounting problems, which include frayed relations with airlines and customers, multiple federal investigations, growing financial costs and the remaining work to get the Max flying again,” Mr. Gelles and Ms. Kitroeff write. “The initial lack of knowledge about the feature’s functionality, along with the delayed disclosure, add to the concern about Boeing’s management of the Max’s design.”

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Credit...Justin Sullivan/Getty Images

Holding Facebook accountable for its mishandling of users’ personal data appears to be a no-brainer for the Federal Trade Commission. But deciding what that penalty should be is proving difficult, Cecilia Kang of the NYT writes.

• “The F.T.C.’s five commissioners agreed months ago that they wanted to pursue a historic penalty that would show the agency’s teeth.”

• “But now, the members are split on the size and scope of the tech company’s punishment,” according to unidentified sources.

• One of the most contentious issues “has been the degree to which Mark Zuckerberg, Facebook’s chief executive, should be held personally liable.”

• Differences among the commissioners are “complicating the final days of the talks.”

“The stakes are enormous” for both the agency and Joseph J. Simons, its Republican chairman, Ms. Kang writes. “The case is being closely watched globally as a litmus test on how the United States government will police the country’s tech giants.”

Don’t expect new limits on Facebook’s data practices, like tracking of users and sharing data with its partners. “Mr. Simons has argued that the settlement proposal sets a new bar for enforcement of privacy violations and wants to avoid litigation that risks losing that opportunity,” Ms. Kang writes.

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Gayle KingCredit...Krista Schlueter for The New York Times

Susan Zirinsky, the new president of CBS News, is about to put her stamp on the network by changing the anchor lineup, John Koblin and Michael M. Grynbaum of the NYT write.

• Gayle King, whose string of recent successes includes an interview with R. Kelly that was widely shared on social media, “would be the centerpiece of Ms. Zirinsky’s revamped ‘CBS This Morning.’”

• Unidentified sources said that John Dickerson, an anchor since 2018, “would slide over to ‘60 Minutes,’” its most popular and prestigious show.

• “Norah O’Donnell, Ms. King’s other co-anchor, is the likely contender to take over ‘CBS Evening News,’ replacing Jeff Glor, who has been in the job for 18 months.”

The changes would bring some certainty to the news operation, which has struggled after revelations of workplace misconduct felled the network’s chief executive, Leslie Moonves; its star morning-show host, Charlie Rose; and Jeff Fager, executive producer of “60 Minutes.”

President Trump named Mark Morgan, a former Obama administration official who has embraced some of Mr. Trump’s hard-line positions on border security, as the head of Immigration and Customs Enforcement.

Deals

• SoftBank is reportedly considering an I.P.O. of its $100 billion Vision Fund. (WSJ)

• Sinclair confirmed that it had agreed to acquire 21 regional sports networks from Disney in a deal worth $10.6 billion. (NYT)

• Siemens is reportedly considering spinning off its gas and power unit. (Reuters)

• Tesla completed its $2.4 billion stock and bond sale. (WSJ)

• Elliott Advisors is pushing the hotel company Whitbread to sell off some of its property portfolio. (Telegraph)

• ICYMI: Here’s everything you need to know about the Uber I.P.O. (DealBook)

Politics and policy

• The White House is again looking for Fed board candidates who would reflect President Trump’s economic priorities. Paul Winfree, who was deputy director of the White House Domestic Policy Council, is reportedly under consideration. (WSJ)

• Mr. Trump has said that Robert Mueller should not testify before Congress. Also: The president said that he had discussed the “Russian hoax” in a phone call with President Vladimir V. Putin of Russia. (NYT)

• Lawmakers from both parties are gearing up to tackle robocallers. (NYT)

Tech

• Facebook has set up a special operations center in Dublin to thwart meddling in European Union elections this month. (NYT)

• The social network has been using hundreds of contract workers in India to hand-label users’ posts to help it develop new features. (Reuters)

• The Justice Department has urged the Federal Trade Commission to ensure that its punishment of Qualcomm over inappropriately high patent royalties minimizes impact to public and private interests. (WSJ)

• The E.U. will start a formal antitrust investigation into Apple after Spotify accused the iPhone maker of anticompetitive practices in its App Store. (FT)

• Google is reportedly planning to introduce shopping links beneath YouTube videos as its ad growth slows. (Information)

• President Trump continues to accuse social media giants of political bias. (Politico)

• Europe is racing to rein in tech giants. Is it going too far? (NYT)

Best of the rest

• The global economy might not be as gloomy as we thought. (FT)

• Carl Icahn received a second subpoena from federal prosecutors in Manhattan relating to a series of stock trades in Manitowoc, a crane manufacturing company. (NYT)

• The London office of Lehman Brothers, still home to some administrators, is getting ready to close for good. (Bloomberg)

• Fox is cutting the number of commercial breaks for the 2020 Super Bowl. (WSJ)

• Why it might be a good — if risky — idea to tell your colleagues how much you earn. (FT)

Thanks for reading! We’ll see you tomorrow.

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