Trump’s bizarre Apple factory visit

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Why did Tim Cook let Trump’s inaccuracies slide?

President Trump toured a Texas plant that makes high-end Apple computers yesterday, and inaccurately played up the six-year-old factory as evidence of success for his three-year-old presidency, Jack Nicas of the NYT reports. Apple’s C.E.O., Tim Cook, didn’t correct the president, raising questions about whether he may be compromised over his company’s desires to skirt tariffs.

“For me, this is a very special day,” Mr. Trump said during the visit. “I said, ‘Someday we’re going to see Apple building plants in our country, not in China. And that’s what’s happening.’ ” Later he posted on Twitter “Today I opened a major Apple Manufacturing plant in Texas that will bring high paying jobs back to America.”

But the plant opened in 2013. It’s owned and run by a company called Flextronics, and builds devices on Apple’s behalf.

Mr. Cook spoke immediately after Mr. Trump but did not correct him. Instead, he thanked the president and his staff. “I’m grateful for their support in pulling today off and getting us to this far. It would not be possible without them,” he said.

Perhaps tariffs were in Mr. Cook’s mind. Apple pays the trade levies on Apple Watches, iPhone components and other consumer products as a result of Mr. Trump’s trade war, and has sought waivers. When Mr. Trump was asked yesterday if he would exempt Apple from tariffs, he said, “We’ll look into that.”

“It illustrated the complicated position that Mr. Cook and other corporate executives find themselves in with this president, forced to stand silently by while he sometimes misleads about their businesses,” Mr. Nicas writes. But if Apple succeeds in wriggling its way out of tariffs, Mr. Cook’s spot could become even tighter — especially if the president speaks out on topics such as immigration, on which Mr. Cook has disagreed with him in the past.

Henry Paulson’s warning on U.S.-China relations

Even if the world’s two biggest economies reach a truce, their relationship is likely to worsen, Henry Paulson, the former Treasury secretary, tells Andrew for his latest DealBook column.

Animosity between the two countries has merged “military prisms and ideas into economic policies,” Mr. Paulson said in a preview of a speech he planned to make today at a Bloomberg event on the economy in Beijing.

• “It should concern every one of us who cares about the state of the global economy that the positive-sum metaphors of healthy economic competition are giving way to the zero-sum metaphors of military competition,” he planned to say.

More worrisome: the U.S. could close off its financial markets to Chinese investment, Mr. Paulson said. “It would eventually threaten U.S. leadership in finance, as well as New York City’s role as the world’s financial center,” he said.

He also raised a worst-case scenario. China, which owns more than $1 trillion in U.S. debt, could decide to sell Treasury bonds, potentially sending their value down and pushing interest rates much higher, a worry that Andrew raised in a previous column.

A U.S.-China trade deal could slip into 2020

Negotiators are said to be making progress on a first trade deal with China, but reports suggest that hopes of an agreement being reached before the end of the year are beginning to evaporate.

“Trade negotiators from the U.S. and China are making progress in key areas even as concerns grow that efforts to nail down the first phase of a broader deal are stalling,” Bloomberg News reports. It adds that “some people close to the talks describe them as being in a sensitive, make-or-break stage and caution that what President Donald Trump proclaimed as a done deal a month ago, sending U.S. stocks soaring to records, could still easily fall apart.”

• Separately, Bloomberg News reported that China’s chief trade negotiator, Vice Premier Liu He, has said that he is “cautiously optimistic” about reaching a “Phase 1” deal with the U.S.

But the timeline for a deal remains unclear. Reuters, citing trade experts and people close to the White House, reports that the “completion of a ‘Phase 1’ U.S.-China trade deal could slide into next year,” as “Beijing presses for more extensive tariff rollbacks, and the Trump administration counters with heightened demands of its own.”

• When Mr. Trump was asked yesterday if he would secure a deal by the end of the year, he said: “I haven’t wanted to do it yet. Because I don’t think they’re stepping up to the level that I want.”

And some people doubt further progress will be made any time soon after a preliminary deal is signed.

• “Our base case is that the Phase 1 trade deal gets done and that might be about as good as it gets, that Phase 2 and Phase 3 remain distant next year,” Andrew Sheets, chief cross-asset strategist at Morgan Stanley, told CNBC.

More: China may be running out of economic ammunition to use against the U.S.

G.M. sues Fiat Chrysler over U.A.W. contracts

General Motors sued Fiat Chrysler yesterday, claiming that it bribed United Automobile Workers officials in contract negotiations to get a leg up on G.M. over the course of a decade, the NYT’s Neal Boudette reports.

The corruption went far beyond garden-variety embezzlement and personal enrichment, G.M. claimed in its lawsuit. The company contends that:

• The illegal activity was authorized by Fiat Chrysler’s chief executive at the time, Sergio Marchionne, and helped Fiat Chrysler win union acceptance of cost concessions that were denied to G.M. in labor contracts in 2011 and 2015.
• Fiat Chrysler executives bribed union leaders to win support for Fiat Chrysler’s highly public effort to pressure G.M. into a merger in 2015.

The union’s president, Gary Jones, resigned hours after G.M. filed the lawsuit.

• “The day’s events embroiled two of the country’s three biggest automakers and the union that represents their workers, a controversy the likes of which the industry has rarely experienced,” Mr. Boudette writes.

Google’s staff clash deepens

Google has hired an anti-union consulting firm to advise its management as it deals with widespread worker unrest, Noam Scheiber and Daisuke Wakabayashi of the NYT write.

The company has grappled with internal strife recently, including accusations that it has retaliated against organizers of a global walkout and cracked down on dissent inside the company. The newly hired firm, IRI Consultants, promotes its anti-union success on its website.

The move “is the latest evidence of escalation in a feud between a group of activist workers at Google and management that has tested the limits of the company’s traditionally transparent, worker-friendly culture,” the reporters write.

But hiring IRI was a surprising turn. “Union organization — even labor unrest — has traditionally been rare among big tech companies because their employees have usually been treated and paid well,” Mr. Scheiber and Mr. Wakabayashi write.

What would a wealth tax mean for entrepreneurs?

At this stage, no one needs reminding that many Democratic nominee hopefuls want to tax the wealthy, with Senator Elizabeth Warren in particular looking to disincentivize the accumulation of fortunes above $1 billion. But in his latest column, Greg Ip of the WSJ wonders what it might mean for entrepreneurs.

• Ms. Warren’s wealth tax of up to 6 percent a year, along with other levies, are intended to shrink the fortunes of billionaires and multimillionaires.
• But, Mr. Ip writes, research shows that “countries with a lot of billionaires per capita had higher incomes per capita,” and a country’s share of the world’s billionaires also “corresponded closely to its share of the world’s largest, most successful companies.”
• “While this doesn’t mean billionaires make an economy successful, it does show the two go hand in hand,” he adds.
• For most billionaires, Ms. Warren’s tax proposal could easily eat up most if not all of their returns. “Founders would have to steadily sell off their holdings to pay their taxes, shrinking their stake,” Mr. Ip writes.
• That could disincentivize many entrepreneurs from growing huge and successful companies.
• “This isn’t a reason not to tax billionaires; it’s a reason to be careful about how it’s done.”

“We followed the president’s orders”

Gordon Sondland, the U.S. ambassador to the E.U., told the impeachment inquiry yesterday that he was following President Trump’s orders when he pressured Ukraine to conduct investigations into Mr. Trump’s political rivals, Nicholas Fandos and Michael S. Schmidt write in the NYT.

He said he reluctantly followed Mr. Trump’s directive, in what Mr. Sondland claimed was a clear “quid pro quo.” He added, “We followed the president’s orders.”

“Mr. Sondland linked the most senior members of the Trump administration to the effort — including the vice president, the secretary of state, the acting chief of staff and others,” Mr. Fandos and Mr. Schmidt write. “He said they were informed of it at key moments, an account that severely undercut Mr. Trump’s frequent claims that he never pressured Ukraine.”

Ukrainian officials may have known as early as late July that a $391 million package of security assistance was being withheld by the Trump administration, a Defense Department official, Laura Cooper, testified later.

Mr. Sondland’s testimony may be a career-endangering blow for Secretary of State Mike Pompeo, who has long tried to portray himself as balancing loyalty to Mr. Trump with defending the traditional security interests of the U.S., write David E. Sanger and Edward Wong in the NYT. But the testimony undercut any notion that Mr. Pompeo was not a participant in Mr. Trump’s efforts to pressure Ukraine.

More: Mr. Sondland had not even finished his testimony before it was called the “John Dean moment” of the impeachment drama. The F.B.I. tried to interview the anonymous whistle-blower who helped ignite the inquiry, several people familiar with the matter said, but the interview never took place.

Revolving door

HSBC is reportedly planning to replace Samir Assaf, the long-serving head of its investment bank. He is expected to be moved to a non-executive role.

The speed read

Deals

• Alibaba’s $13 billion I.P.O. in Hong Kong and Saudi Aramco’s anticipated $26 billion I.P.O. in Riyadh will reportedly deliver only modest fees for the banks that are advising the companies. And many global banks have been sidelined in Aramco’s offering. (Reuters, FT)
• LVMH has reportedly increased its offer for Tiffany, to around $130 a share, valuing the company at around $15.8 billion. The offer prompted the jeweler to open its books to the luxury goods giant, raising expectations that a deal could happen. (FT)
• PayPal announced the $4 billion acquisition of the private e-commerce company Honey, which tracks prices and automatically applies online discounts for consumers. (FT)
• SoftBank is reportedly sounding out Japan’s top three banks to borrow around 300 billion yen, or about $2.8 billion, to help fund its WeWork bailout. (Reuters)

Politics and policy

• A federal judge halted the executions of four federal prisoners, essentially stymieing the Trump administration’s plan to resume the use of the death penalty. (NYT)
• A bill compelling the U.S. to support pro-democracy activists in Hong Kong is headed to President Trump’s desk. The president is expected to sign it, setting up a confrontation with China that could imperil a long-awaited trade deal. (NYT, Bloomberg)
• Senator Kamala Harris said at the Democratic debate yesterday that “Donald Trump got punked” into meeting with Kim Jong-un, North Korea’s leader. (Axios)
• Mr. Trump’s nominee for Food and Drug Administration commissioner sidestepped questions about whether he would push for a ban on flavored vaping products. (NYT)

Brexit

• The opposition Labour Party unveiled its election manifesto, which includes scrapping university fees, reducing the workweek and nationalizing utilities. (Reuters)
• Boris Johnson pledged to delay tax breaks for high earners if he is elected, in favor of a tax change that would help those with lower incomes. (FT)
• The Conservative Party has come under fire for rebranding one of its Twitter feeds as an account that critics say tried to appear to be a neutral fact checker. (FT)

Tech

• Elon Musk’s announcement of a Tesla factory in Germany took the industry by surprise, but the deal had been in the works for months. (NYT)
• The Trump administration has approved “several” individual licenses for U.S. companies to do business with Huawei. (FT)
• The U.K.’s Labour Party said that it would provide government-sponsored broadband service if it wins the December election. But is that even possible? (NYT)
• China set up a $21 billion fund to further develop its advanced manufacturing sector. Don’t expect the Trump administration to be happy about it. (WSJ)
• Apple and Intel have filed an antitrust lawsuit against the SoftBank-owned Fortress Investment Group, alleging that it stockpiled patents to initiate lawsuits against tech companies that demanded as much as $5.1 billion. (Reuters)

Best of the rest

• Minutes of the Fed’s last policy meeting reinforced its message that it may be done cutting rates, barring economic weakness. But its officials are puzzled about how to best regain their handle on short-term interest rates. (NYT, Bloomberg)
• Prince Andrew said yesterday that he would step back from public duties, seeking to contain a firestorm over his ties to the disgraced financier Jeffrey Epstein. (NYT)
• Media workers have anonymously posted salary information on crowdsourced spreadsheets, many of them hoping their efforts will lead to higher pay. (NYT)
• FedEx delivers billions to the taxman, the company’s chief executive says. (WSJ)
• As businesses try to correct power imbalances, they find a growing need for experts who can help address issues like unconscious bias. (NYT)

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