Trump wasn’t joking about new tariffs on China

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Trump’s trade team says China backtracked

President Trump’s top economic advisers have accused China of reneging on commitments to resolve the trade war and threatened retaliation, Ana Swanson and Keith Bradsher of the NYT write.

• Steven Mnuchin, the Treasury secretary, and Robert Lighthizer, Mr. Trump’s chief trade adviser, were “dismayed by China’s refusal to mention commitments it had made to update various Chinese laws in the final text of the trade agreement” during trade talks last week.
• “We’re moving backwards instead of forwards,” Mr. Lighthizer told reporters on Monday. “Over the last week or so, we have seen an erosion in commitments by China,” he added. “In the president’s view that’s not acceptable.”
• President Trump, confident that the U.S. economy can handle a continuation of the trade war, will increase tariffs on $200 billion worth of Chinese goods on Friday morning, they said.

Some critics had said Mr. Trump wasn’t tough enough on China. They argued that the trade agreement that appeared to be nearing completion didn’t do enough for the companies, farmers and consumers that have been caught in the middle of the international dispute.

This looks like a calculated response from Mr. Trump. He may believe that a harsh stance on China will be better for his 2020 campaign, and is buoyed by a “growing confidence that his trade policies are bolstering the American economy.”

There is a risk of economic upset. The U.S. economy seemed to have left a period of uncertainty, in part because that trade deal seemed imminent. New tariffs could change that.

But an agreement could yet be reached. A Chinese delegation is still coming to Washington on Thursday and Friday. “Mr. Mnuchin said the United States would reconsider imposing higher tariffs on China if the negotiations got ‘back on track,’ ” Ms. Swanson and Mr. Brasher write.

Anadarko switches suitors

The energy company, coveted for its U.S. shale oil holdings, said yesterday that it intended to reject Chevron’s takeover bid in favor of Occidental’s, Clifford Krauss of the NYT reports.

Occidental sweetened its offer over the weekend by putting more of it in cash. Its $38 billion bid was already higher than Chevron’s first offer of $33 billion. And the extra cash sidestepped the requirement for shareholder approval, happily for Anadarko’s board.

But this is “far from a final decision,” Mr. Krauss writes. “Chevron will now have four days to improve its offer, after which Occidental would have several days to revise its bid.” Chevron has deep pockets, and Anadarko has to pay a $1 billion breakup fee if its offer is rejected, which led analysts at Morgan Stanley to suggest that Chevron could win even without fully matching Occidental’s offer.

“Whichever suitor emerges victorious, the sale of Anadarko will be the largest deal in the global oil industry in three years and establish a dominant producer in the Permian Basin of Texas and New Mexico, the most productive oil field in the world,” Mr. Krauss adds.

Mnuchin won’t hand over Trump’s tax returns

The Trump administration yesterday chose to deny a House request for six years of President Trump’s personal and business tax returns, Alan Rappeport of the NYT reports.

The House request “lacks a legitimate legislative purpose,” Treasury Secretary Steven Mnuchin told the House Ways and Means Committee in a letter yesterday. That, he said, meant he was not authorized to grant access.

What happens next is unclear. House Democrats could “file a lawsuit against the Treasury Department, accusing Mr. Mnuchin of not following the law,” Mr. Rappeport writes, or “try to access Mr. Trump’s returns with a subpoena.” A protracted court fight looks likely in either case.

Meanwhile, Attorney General William Barr has become a punch bag of sorts for Democrats frustrated with Mr. Trump but leery of impeachment. “The House Judiciary Committee announced a vote for Wednesday that would recommend that the House hold Mr. Barr in contempt of Congress for defying a subpoena for Robert S. Mueller III’s full report and evidence,” Nicholas Fandos and Mr. Rappeport reported in another article.

These “are only two of a growing number of confrontations between House investigators and Mr. Trump and his administration that are threatening to boil over into court,” they add.

The Fed warns of risky corporate debt

Companies that already have lots of debt are borrowing at a breakneck pace, and the Fed is uncomfortable about it, Jeanna Smialek of the NYT reports.

• “Loans to companies with large amounts of outstanding debt — known as leveraged lending — grew by 20 percent in 2018 to $1.1 trillion, according to the Fed’s twice-annual Financial Stability Report.”
• “The share of new, large loans going to the comparatively risky borrowers now exceeds peak levels reached previously in 2007 and 2014.”

Here’s what’s happening: “The loans are either held by mutual funds, which pool money from many different investors, or are grouped together and used to back securities called collateralized loan obligations,” Ms. Smialek writes. These C.L.O.s are then sold to financial institutions.

“A greater proportion are to borrowers with lower credit ratings and already high levels of debt,” the Fed report, released Monday, explains. “Any weakening of economic activity could boost default rates and lead to credit-related contractions to employment and investment among these businesses.”

But this isn’t quite 2008 redux. The C.L.O.s are structured in a more secure way than the housing-backed bundles that went bad then, and the Fed says that banks should be able to handle their exposure to corporate debt.

Chinese spies captured the N.S.A.’s weapons

Chinese intelligence agents acquired N.S.A. hacking tools and repurposed them in 2016 to attack American allies and private companies in Europe and Asia, according to the cybersecurity research firm Symantec.

Chinese hackers intercepted the tools from an N.S.A attack on their own computers, “like a gunslinger who grabs an enemy’s rifle and starts blasting away,” Nicole Perlroth, David Sanger and Scott Shane of the NYT write. The tools were then used in cyberintrusions in Belgium, Luxembourg, Vietnam, the Philippines and Hong Kong.

The hacking group is one of the most dangerous Chinese contractors that the N.S.A. tracks, according to a classified agency memo reviewed by the NYT.

“Proliferating cyberconflict is creating a digital wild West with few rules or certainties,” they continue. And the Chinese action shows “how difficult it is for the United States to keep track of the malware it uses to break into foreign networks and attack adversaries’ infrastructure.”

“The losses have touched off a debate within the intelligence community over whether the United States should continue to develop some of the world’s most high-tech, stealthy cyberweapons if it is unable to keep them under lock and key,” they add.

The new faces of CBS News

The news division’s first female president, Susan Zirinsky, made a raft of announcements that signal a new era for the network, John Koblin and Michael M. Grynbaum of the NYT write.

• Gayle King will be the new centerpiece of “CBS This Morning.”
• Norah O’Donnell is the next anchor of the “CBS Evening News,” only the second woman to hold that role.
• Jeff Glor, the current “CBS Evening News” anchor, is “discussing opportunities” at the network.
• “CBS This Morning” will also feature two new anchors: Anthony Mason, a co-host of the morning show’s Saturday edition, and the CBS correspondent Tony Dokoupil.
• John Dickerson, the other morning co-anchor, will slide over to “60 Minutes.”

“The shake-up represents the first big stamp by Ms. Zirinsky on the network,” Mr. Koblin and Mr. Grynbaum write. She is attempting to right the network after it was “rocked by declining ratings and workplace misconduct scandals.”

Revolving door

The media company Nacelle promoted Kieran Dotti to C.O.O.

The speed read

Deals

• The founder of Papa John’s, John Schnatter, is reportedly exploring a sale of his stake. (Reuters)
• Park Hotels agreed to buy its smaller rival Chesapeake Lodging Trust in a cash-and-stock deal valued at $2.7 billion. (Reuters)
• The struggling discount grocer Save-A-Lot is reportedly considering selling itself. (Reuters)
• Sinclair, which recently announced that it was acquiring 21 regional sports networks from Disney, said it would consider working with streaming companies to offer live sports. (Reuters)
• Luckin Coffee, a Chinese rival to Starbucks, hopes to raise up to $586.5 million in its I.P.O. (CNBC)

Politics and policy

• President Trump now embraces the traditional election fund-raising that he once shunned. (NYT)
• The Trump administration may redefine the national poverty threshold, which could affect some Americans’ welfare eligibility. (Bloomberg)
• Mr. Trump’s advisers sought to downplay his suggestion that Robert Mueller should not be allowed to testify before Congress. (Politico)
• Immigration and Customs Enforcement will let local law enforcement officers arrest and detain immigrants on its behalf. (Hill)

Trade

• Here’s an interactive guide to how the rise of developing countries has changed global trade dynamics. (Bloomberg)

Tech

• Senators Richard Blumenthal and Josh Hawley urged the Federal Trade Commission to hit Facebook with more than a $5 billion fine. (WaPo)
• Google is reportedly planning tools to limit the use of tracking cookies. That could entrench its advertising dominance. (WSJ)
• Would a tax on targeted ad revenue make Facebook and Google change their business models? (NYT Op-Ed)
• The tight labor market is bad news for gig economy companies. (WSJ)
• Amazon has faced seven lawsuits in eight years from warehouse workers who were fired while pregnant. (CNET)

Best of the rest

• Roger Ng, the former Goldman Sachs banker charged with looting Malaysia’s sovereign wealth fund, pleaded not guilty in Brooklyn federal court yesterday. (NYT)
• A researcher who helped expose Volkswagen’s huge diesel emissions fraud was laid off by G.M. this year. (NYT)
• Kraft Heinz will restate nearly three years of its financial results after an internal investigation. (FT)
• How tightened rules for Europe’s financial markets are leaving a mark in the U.S. (FT)
• Who’s liable when a robotrader loses your money? A court in London may provide an answer. (Bloomberg)

Thanks for reading! We’ll see you tomorrow.

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