Trump’s Trade War Is Bad for Business

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Today’s Agenda


Stocks tumbled. Everybody got pardoned. Mitt Romney voted for his wife.

Trump’s Trade War Is Bad for Business

Trade War: What Is It Good For?

Famous deal-maker Michael Corleone once said, “Keep your friends close but your enemies closer.” Famous deal-maker President Donald Trump seems to have embraced this, but interpreted it to mean you should treat your friends like garbage and your enemies slightly better.

Today he slapped tariffs on steel and aluminum from long-time friends Canada, Mexico and the European Union. All retaliated. Just a week ago, the Trump administration had cooled its rhetoric against China, America’s true “enemy” when it comes to unfair trade practices. But Trump’s trade hawks got the upper hand again yesterday and threatened tariffs on Chinese imports after all.

That was unfortunate, but was at least somewhat understandable. Turning the same blunderbuss on America’s biggest trading partners just left everybody confused about what Trump is thinking. At its simplest level, it’s about fulfilling his “America First” campaign promises, but in a ham-fisted and self-defeating way. Trump is also using tariffs to force allies to play along on NATO spending and isolating Iran, writes Melvyn Krauss. This may actually work in the short term. But the long-term cost may be high.

Contra Trump, trade wars are bad and hard to win and can backfire on other parts of your economy. Republican Senator Ben Sasse of Nebraska, in calling the tariffs “dumb,” evoked the ghosts of Smoot and Hawley and the Great Depression when he wrote, “‘Make America Great Again’ shouldn’t mean ‘Make America 1929 Again.’” Such fears contributed to  stocks falling today. And Komal Sri-Kumar warns we should expect more of the same the longer tensions continue.

To quote another deal-maker: “Blood is a big expense.”

Volcker’s Makeover

The Federal Reserve is tweaking the Volcker Rule, the Dodd-Frank prohibition against banks gambling too much with their own money. This may sound like a boon for banks and a blow to those favoring stricter regulation. But the rule seems mainly intact, write Bloomberg’s editors. It now hinges on how diligent regulators are about watching risks – but that is no mean feat, notes Matt Levine. And to the extent it makes trading less cumbersome for banks, then that is removing a feature, not a bug, of the rule, warns Stephen Gandel.

Tech Vs. Democracy

There have been many sham elections recently, from Turkey to Venezuela, but the one that may have the biggest impact on your life will happen today in Menlo Park, California: Facebook’s shareholders will vote on a bunch of proposals, including one to strip away CEO and founder Mark Zuckerberg’s comically oversized voting rights.

Last year, most shareholders approved a similar measure, but then Zuckerberg used those same comically oversized voting rights to render their votes moot:

Trump’s Trade War Is Bad for Business

Such futile protest votes are increasingly common in Silicon Valley, Shira Ovide notes, as are un-democratic ownership structures such as Facebook’s. “The trappings of good corporate governance tend not to matter unless things are going wrong,” Shira writes. “You may have noticed, though, that some things are going wrong in tech” – starting with Facebook. Shareholders need to keep fighting the power.

GM’s Fuel Injection

General Motors Co. turns 110 years old this year. But it just got a $2.25 billion shot of youthful vigor from Japan’s Softbank Group Corp., in the form of an investment in its self-driving-car unit. Shira OvideLiam Denning and Brooke Sutherland write this increases crowding and confusion in a field that already includes the SoftBank-backed Uber Technologies Inc., among others. It may also cut off a potential cash source for Tesla Inc., which will likely need more soon.

Ultimately, though, it may help GM prove that the slow, steady pace of a centenarian can still win the race.

Brittle Italy

Italy’s markets caught a break today after populist factions agreed on a new government. Still, they plan to push ahead with budget-busting policies that would break European Union rules, so the troubles aren’t over. Mark Gilbert warns that the most powerful voters in Italy are the bond vigilantes, and we haven’t really heard from them yet. And as long as Italy struggles, French President Emmanuel Macron’s grand plans to strengthen euro-zone ties are on hold, writes Lionel Laurent.

Chart Attack

Madrigal Pharmaceuticals Inc. has just eight employees –  eight suddenly very rich employees, writes Max Nisen.

Trump’s Trade War Is Bad for Business

Brian Chappatta tells the sobering tale of bond guru Bill Gross’s very bad day:

Trump’s Trade War Is Bad for Business

Speed Round

Tomorrow morning we get the May jobs report. What we may not get is much stronger wage growth. – Mohamed El-Erian

The U.S. should give Chinese students green cards, not chase them away. – Adam Minter

Whatever happens to Obamacare, Medicaid expansion is here to stay. – Jonathan Bernstein

The faked death of Russian journalist Arkady Babchenko  raises many questions and problems. – Leonid Bershidsky

Uber’s IPO timing could land right in the middle of a political minefield. – Conor Sen


Here’s every Star Wars movie, ranked by female screen time. The story of how humans populated the Americas is complicated. 

Note: Please send movie rankings, suggestions and kicker ideas to Mark Gongloff at


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