DealBook Briefing: Trump’s Trade War Finally Hits Consumers
U.S. wades deeper into its trade war
President Trump escalated his trade war with Beijing yesterday by imposing tariffs on $200 billion worth of Chinese goods, many of them consumer products. The levies, scheduled to go into effect on Sept. 24, will start at 10 percent and climb to 25 percent on Jan. 1. The staggered increase will reduce the impact to American consumers over the holidays, though Apple has dodged the tariffs.
A refresher on why this is happening: The tariffs aim to pressure China into changing longstanding trade practices that Mr. Trump says hurt the U.S. The administration says China could win relief by giving U.S. companies more access to its markets, among other things.
China’s stock market opened at a four-year low today, and its currency slipped on the news. (One upshot: The tensions appear to be making Chinese businesses more competitive.) A Foreign Ministry spokesman said that equal and respectful talks were the only way to settle the dispute, but added that the U.S. hadn’t shown any kindness. So Beijing says it must retaliate at an “appropriate time.”
Broadly, however, markets shrugged off the latest tariffs. Why? Suggestions from Bloomberg: Markets have already accounted for the levies; the economic impact is some ways off; and the staggered increases suggest room for negotiation
What is clear is that U.S. consumers will start to bear the cost of American protectionism.
More trade news: U.S. sanctions are crippling Iranian oil exports. The U.S. and the E.U. may strike a small trade deal. And the I.M.F. says Britain could face “substantial costs” from a no-deal Brexit.
DealBook Briefing: Trump’s Trade War Finally Hits Consumers: Brace for a wave of health care mergers
The Justice Department has approved Cigna’s $52 billion takeover of the pharmacy benefit manager Express Scripts. The decision suggests that the industry will be free to consolidate even further.
In approving the deal, the Justice Department decided that combining an insurer and a pharmacy benefit manager wouldn’t reduce competition. It appears to be another sign that vertical mergers, where two companies in different industries combine, are acceptable to the Trump administration. (Its effort to block AT&T from buying Time Warner increasingly looks like a political anomaly.)
Trump’s Trade War Finally Hits Consumers: Coke might turn to cannabis
The beverage giant is reportedly in talks with Aurora Cannabis to develop cannabis-infused drinks, according to BNN Bloomberg. It would be the biggest sign yet that corporations are eager to explore mainstream uses for marijuana-based products.
Shares in cannabis companies have risen 30 percent on average since August. Investors hope that the companies will continue to garner interest from consumer-products giants. Constellation Brands and Heineken have already taken the plunge.
Coke would be a different player. The company is openly pushing into new markets to offset slowing soda sales. (See: its $5.1 billion deal for Costa.) The company says it’s watching the growth in cannabis-infused drinks for now, but it’s not hard to imagine buzz-inducing Coke products hitting store shelves.
More marijuana news: Teens are increasingly vaping weed, according to the C.D.C.
DealBook Briefing: Trump’s Trade War Finally Hits Consumers: The day ahead
The European Central Bank’s president, Mario Draghi, will discuss banking supervision. At an event in Paris, he will defend the decision to centralize eurozone banking oversight after the financial crisis.
We’ll get insight into the health of the U.S. housing market. A survey by the National Association of Home Builders is expected to show a decline in confidence among homebuilders. More figures are set to be published this week.
Oil companies are back in court over corruption charges. The trial of Royal Dutch Shell and Italy’s Eni will resume in Milan over a deal for an exploration tract off Nigeria.