Trump’s potentially permanent trade war

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This trade war could last a very long time

The trade conflict between Washington and Beijing has escalated again: China retaliated against the latest U.S. tariffs, on $200 billion worth of imported Chinese goods, by adding its own levies on $60 billion worth of U.S. exports. But when will this tit-for-tat stop?

Commentators on both sides of the Pacific fear it is the new normal. Timothy Stratford, a former assistant U.S. trade representative, told CNBCthat “there’s going to be a deadlock for some time.” And Jack Ma, co-founder of the Chinese e-commerce giant Alibaba, believes it could go on for 20 years.

That may sound melodramatic. But consider what Gary Hufbauer, of the Peterson Institute for International Economics, told Axios:

“My view is that Trump has accelerated and amplified latent anti-trade and anti-globalization populist forces. And I think this represents a systemic break with the past 75 years. Trump’s successor is unlikely to go back to the postwar model of American leadership of the world economic system along liberal free trade and investment lines.”

More trade reading: Why Trump’s latest tariffs are particularly potent. Many consumers will feel pain, but retailers will feel it even sooner. China’s premier says the country won’t weaken its currency to boost exports. And why U.S. companies should get tough on Beijing.

Has Marc Benioff put a target on Salesforce’s back?

The company’s C.E.O. became the latest billionaire to save a storied media brand with his $190 million acquisition of Time. In my latest column, I ask whether Mr. Benioff risks hurting the company and his shareholders if the magazine runs critical stories about President Trump:

In the age of Trump, the extracurricular activities of public company executives — and the benefits and risks the activities may pose for the companies that made the executives wealthy — have created new corporate governance questions.

“A press organ creates a problem for your primary enterprise that I think a board should have some concern over,” said Charles M. Elson, director of the Weinberg Center for Corporate Governance at the University of Delaware.

Mr. Benioff told me that he informed the board when he began thinking about buying Time, and emphasized that the magazine would be separate from Salesforce. But Jeff Bezos said the same thing about The Washington Post.

Scrutiny for Tesla after that tweet

The carmaker said that the Justice Department had asked for documentsin the wake of Elon Musk’s tweet about taking the company private.

It isn’t clear whether the inquiry is of a criminal or civil nature. But the request for documents is likely to center on Tesla’s accounting practices, the adequacy and accuracy of its public disclosures, and whether executives sought to mislead investors. The company says that it is cooperating.

It’s the latest headache for Tesla, which is also facing a Securities and Exchange Commission investigation into its practices and communications.

Tesla shares were down about 3 percent yesterday.

The day ahead

The Commerce Department will release data on August housing starts.The real estate market has been cooling in some areas, and housing starts were anemic in June and July. Some economists expect to see a rebound for August, but continued weakness would show a downward trend.

E.U. leaders will discuss Brexit at a meeting in Salzburg, Austria. Prime Minister Theresa May of Britain hopes to persuade her peers to embrace her plan for leaving the bloc to prevent a disruptive no-deal withdrawal.

Brazil’s central bank will announce its plan for interest rates. It is expected to hold them at a record low of 6.5 percent, despite a recent slump in its currency.

Facebook job ads may have discriminated against women

A group of job seekers has accused Facebook of helping employers exclude female candidates from recruitment campaigns. More from Noam Scheiber of the NYT:

The job seekers, in collaboration with the Communications Workers of America and the American Civil Liberties Union, filed charges with the federal Equal Employment Opportunity Commission on Tuesday against Facebook and nine employers. The employers appear to have used Facebook’s targeting technology to exclude women from the users who received their advertisements, which highlighted openings for jobs like truck driver and window installer.

A ProPublica investigation also found that 15 employers, including Uber, have advertised jobs on Facebook exclusively to one sex, often relying on stereotypes. The report points out that the Supreme Court ruled in 1973 that job ads in newspapers that specify gender requirements were illegal.

More Facebook news: The social network has reportedly tussled with financial firms for years over access to customer data. And it’s building an index of news pages on its site to improve inclusivity.

Corporate America loves buybacks, not capital spending

Republicans sold the 2017 tax law as “rocket fuel” for investment. They said that corporations would channel money back into the economy by building factories and offices and investing in equipment. Critics contended that companies would funnel the money to shareholders through buybacks and dividends. One camp was more right than the other.

Through the first six months of 2018, capital spending increased to $341 billion, up 19 percent from the same period a year earlier, according to Goldman Sachs. But companies were spending even more to repurchase shares. Buybacks jumped 48 percent, to $384 billion in the first six months of the year; for the first time in 10 years, buybacks are accounting for the largest share of cash spending by companies in the S. & P. 500.

The pay gap is bad. The equity gap might be worse.

Female employees at start-ups appear to own just 47 cents of equity in their companies for every dollar owned by a male employee, according to a new study. The discrepancy is even more stark for female founders: They own 39 cents for every dollar owned by a male founder.

Carried out by the equity advisory firm Carta, the survey is based on data from 6,000 U.S. companies across a range of industries.

As Yoree Koh of the WSJ notes, the news may be particularly troubling for the tech industry, “which is built on the model in which employees take less pay in exchange for equity in the hopes of hitting the jackpot once the company takes off.”

Private equity firms jumped into lending. Now they face a test.

After the financial crisis, private equity giants like Blackstone and K.K.R. began to de-emphasize the kind of leveraged buyouts that created their empires in favor of a different kind of service: lending money.

The FT takes a close look at how such firms have become serious sources of capital. They charge higher rates than banks, but offer borrowers more certainty.

Many analysts think that this poses fewer risks to the financial system than the banks that nearly cratered the economy a decade ago. But there is a danger that private equity lending is getting too risky. As Howard Marks of Oaktree, a big investment firm, warns: “We don’t see the flaws until the things are tested.” And when interest rates rise, cracks may start to appear.

More lending news: Square wants to be your bank.

Revolving door

Mathias D?pfner, Axel Springer’s C.E.O., has joined Netflix’s board.

Thomas Borgen resigned as C.E.O. of Danske Bank after an investigation by the company into suspected money laundering at its Estonian branch.

HQ Trivia named Colin Kroll, a co-founder, as its new C.E.O.

Richard Levine, a former associate general counsel at the S.E.C., has joined Labaton Sucharow as a partner in the firm’s whistle-blower practice.

Jonathan Kaiman, the L.A. Times’s former Beijing bureau chief, resigned from the newspaper amid sexual misconduct accusations.

The speed read

Deals

? Tencent Music has reportedly cut the size of its I.P.O. in half, to $2 billion. (Reuters)

? Eventbrite, the ticketing company, raised its I.P.O. fund-raising target to $230 million. (Fortune)

? Twenty-First Century Fox said its bid for Sky would stand until Oct. 6. (CNBC)

? The food-delivery service Postmates raised $300 million from investors led by Tiger Global Management. (Bloomberg)

Politics and policy

? Top Republican lawmakers love tax cuts and dislike tariffs. Few Americans share that view. (NYT)

? A bipartisan group of senators wants to reimpose sanctions on ZTE. (Axios)

? The Supreme Court won’t disturb a ruling that requires disclosing contributions to groups that place political advertisements. (NYT)

? The Senate passed the first overhaul of music licensing laws in two decades. (Verge)

Tech

? A reshuffling of the S.&P. 500’s sectors next week will separate some of tech’s biggest players. (FT)

? The verdict on the new flagship iPhones: Try before you buy. (NYT)

? Apple has repaid billions in disputed back taxes to Ireland. (@vestager)

? China had an aggressive plan to lead A.I. research, but now it wants to collaborate. (MIT Technology Review)

? The E.U.’s crackdown on Big Tech may have missed its mark. (Axios)

Best of the rest

? How the next downturn may surprise us. (NYT Op-Ed)

? WeWork says it’s now Manhattan’s biggest tenant. (Bloomberg)

? Initial coin offerings are finally being tamed. (DealBook)

? Stormy Daniels’s tell-all shows that the Trump presidency has been good for the book industry. (NYT)

? Take a look inside the factory that makes the “MAGA” caps. (Business Insider)

Thanks for reading! We’ll see you tomorrow.

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