The other Trump trade
Investors and policymakers are getting a dose of Trumponomics déjà vu this morning.
Global stocks are falling, and the dollar is climbing. The volatility comes after President-elect Donald Trump’s vow to impose tariffs on the United States’ biggest trading partners — Canada, China and Mexico — on Day 1 in office in an apparent effort to clamp down on the flow of cross-border drugs, like fentanyl, and migrants.
The latest:
Trump wants to impose 25 percent tariffs on Canada and Mexico “on ALL products coming into the United States,” he said on Truth Social. He also wants an “additional” 10 percent tariff on imports from China, which Trump blames for the fentanyl crisis, a charge that Beijing has repeatedly disputed.
The Canadian dollar and Mexican peso fell sharply against the dollar.
Europe, Japan and South Korea weren’t even mentioned in Trump’s announcement, but stocks have fallen there, too. That suggests rising fears that a new trade war could scramble global supply chains and dent profits.
Automakers are some of the hardest hit stocks, with Volkswagen, Stellantis and Nissan, which run manufacturing operations in Mexico, all down.
Today’s losses have reversed some of yesterday’s “Bessent bounce” rally. Investors were relieved after Trump picked Scott Bessent, the market-friendly hedge fund mogul, to run the Treasury Department.
But the reverberations show that it’s Trump calling the shots. The president-elect has made no secret of his desire to use tariffs to further his America-first agenda, and he has yet to announce his pick to be U.S. Trade Representative. (Another tariff supporter, Robert Lighthizer, is in the running.)
Trump’s latest threats may be just a negotiating tactic. That’s the belief of some Trump backers, including Bill Ackman, the billionaire financier. But they are a reminder of how Trump set off alarm bells across diplomatic channels and international markets during his first term often via social media posts. “Waking up to check the tweets for any policy announcements could become the norm,” Mohit Kumar, an economist at Jefferies, wrote in a note this morning.
Prime Minister Justin Trudeau of Canada spoke to Trump about trade and border security after the president-elect’s announcement, The Times reported.
China pushed back. “No one will win a trade war,” a spokesman for the Chinese Embassy in Washington said in a statement.
Tying the tariffs to border security could make negotiations even trickier. But given the seemingly intractable nature of the U.S. border crisis, it sets a high bar for successful trade negotiations. On the flip side, calling the measures a national security imperative might bolster Trump’s legal authority to bypass Congress in enacting the measures. A reminder: once tariffs are introduced, they’re not easy to roll back.
HERE’S WHAT’S HAPPENING
The special counsel Jack Smith’s election-meddling case against Donald Trump is dismissed. A Justice Department policy bars prosecutors from bringing cases against a sitting president, making the decision inevitable. Smith had already been winding down the case, but the ruling officially removes one of the biggest legal threats hanging over the president-elect.
California will extend electric vehicle tax credits if Trump scraps them. Gov. Gavin Newsom said yesterday that the state planned to offer consumers the $7,500 subsidies to buy an E.V., a move that could undermine the Trump administration’s threats to junk the Biden era policy. One big exception to Newsom’s proposal: Teslas may not qualify.
Israel and Hezbollah appear to edge closer to a cease-fire. Prime Minister Benjamin Netanyahu of Israel was expected to meet today with senior cabinet ministers to decide whether to approve an arrangement brokered by the United States and France to potentially end months of hostilities.
Muskowars
The Onion’s messy attempt to buy Alex Jones’s conspiracy site Infowars out of bankruptcy has gotten even messier. Enter Elon Musk.
Lawyers for the tech mogul, who sees himself as a free speech absolutist, have filed a legal objection with a federal bankruptcy court in Texas that could have ramifications extending well beyond the deal.
A recap: Jones was forced to liquidate his assets and ordered to pay nearly $1.5 billion to relatives of victims of the mass shooting at Sandy Hook Elementary School in Newtown, Conn. The owner of the satirical website The Onion won a bid to buy Infowars and turn it into a parody of itself. Jones has sued to block the sale.
Musk’s legal team is not contesting the sale. Instead, it is challenging efforts by the bankruptcy trustee to transfer X handles associated with Jones to a winning bidder as part of a sale. A ruling favorable to Musk could scramble legal rights around the thorny question of who owns a social media account, and the huge following it might command.
Only a few bankruptcy courts have addressed ownership claims for social media accounts, the objection notes. A recent case that Musk’s lawyers cite involves Vital Pharmaceuticals. That ruling said that a bankruptcy estate owned an X account, not the executive who worked for the bankrupt company when the account was created.
Musk’s lawyers argue that X accounts are not actually owned by users — and hence can’t be sold off. They say X’s terms and conditions make this clear. To underscore this, they note that X has the right to suspend or terminate accounts.
“X Corp. is plainly the owner of the X Accounts and the Services, and the Trustee cannot sell, assign, or otherwise transfer what it does not own or have an interest in,” the objection states.
If Musk wins, it opens big legal questions. Could Musk or X try to stop the sale of user handles when a company is sold? And what might this mean for corporate America’s already shaky relationship with the social media platform?
A big-box win for the anti-D.E.I. movement
Robby Starbuck may have scored his biggest win in his fight against diversity, equity and inclusion in corporate America. Walmart is rolling back some of its D.E.I. policies after the self-proclaimed “anti-woke” activist threatened a conservative consumer boycott before the holiday shopping season.
Many companies, including Walmart, were already adjusting before Starbuck came after them. But more businesses are bracing for attacks after Donald Trump’s election win.
Here are some of Walmart’s changes:
Third-party sellers will no longer be able to sell some L.G.B.T.Q.-themed items on Walmart.com that are marketed to children.
The company will stop funding the Center for Racial Equity, a nonprofit initiative Walmart backed with $100 million when the agreement expires next year.
The company will stop sharing data with the Human Rights Campaign, a nonprofit that tracks businesses’ L.G.B.T.Q. policies.
It will stop using the terms D.E.I. and Latinx in official communications.
Starbuck threatened Walmart last week. In an X post, he said he told executives that he was working on a story on “wokeness” at the company but instead the two sides had “productive conversations.”
A spokeswoman for Walmart confirmed the changes, some of which were already in motion. The retailer, like many other companies, has been reviewing its practices since the Supreme Court knocked down affirmative action at colleges last year.
Starbuck is on a roll. The former music video producer has used social media to go after what he calls wokeness in corporate America, starting with companies that have a large conservative consumer base. In recent months, Tractor Supply, John Deere and Harley-Davidson all pulled back from D.E.I. after coming under pressure from Starbuck.
Trump’s victory only adds to his momentum. “America just voted and we voted against wokeness,” Starbuck said in a video posted on X, as he announced his next targets: Amazon and Target.
A top tech regulator bows out
Margrethe Vestager turned the European Union into one of the world’s toughest regulators of Big Tech. Now, the antitrust chief is set to end a decade-long run during which she brought cases and fines against Google, Apple and Amazon for illegal business practices and trying to block competition.
Vestager was a pioneer at a time when American digital titans were in the ascendant. When she was appointed to police antitrust in 2014, she became one of the first government officials in the world to aggressively bring cases against Google, Apple and Amazon, The Times’s Adam Satariano writes for DealBook. At times, that generated a backlash in Washington; President-elect Donald J. Trump has reportedly said that she “really hates” America.
But the Vestager approach became mainstream. The U.S. Justice Department is trying to break up Google. The Federal Trade Commission has accused Meta of anti-competitive acquisitions to create a monopoly in social media.
“It is extremely satisfying,” she told The Times about her time in office. “People thought that we were crazy because 10 years ago, big tech was untouchable.”
The Biden administration lauded Vestager’s approach. Laws passed during her tenure for regulating tech competition and online harms have come into force, leading to investigations of companies including X and Apple. Jonathan Kanter, the head of the Justice Department’s antitrust division, told The Times that Vestager was “a transformational figure.”
How U.S.-E.U. collaboration on tech policy will change under Trump is an open question. Europe is expected to continue its assertive style to crimp the power of Big Tech, but officials in Brussels have already begun weighing what reaction a penalty against a U.S. tech firm — say, Elon Musk’s X — may draw. “When you saw how fast tech leaders congratulated President-elect Trump,” Vestager said, “you see that there was a strong hope that this will all change.”
What next? Teresa Ribera Rodríguez, a Spanish official, is lined up to succeed her overseeing competition, and Henna Virkkunen, a Finnish member of the European Parliament, is expected to take over some responsibility for the bloc’s digital policy.
But Vestager said she was only “partly successful” in her tenure and urged regulators to be “bolder.” “We are in the business of deterrence,” she said. “And if we do not once in a while use our most powerful tools, there’s no deterrence.”
THE SPEED READ
Deals
TotalEnergies, the French energy giant, has halted investments in Adani Group after the Indian conglomerate was accused of running a huge bribery scheme. (Reuters)
Quikrete agreed to buy Summit Materials for $9.2 billion, in a deal that would create an American cement and concrete giant. (WSJ)
Politics and policy
President-elect Donald Trump’s legal team found evidence that a top adviser asked for money to “promote” potential appointees. (NYT)
The U.S. authorities accused Ken Leech, a former co-chief investment officer of Western Asset Management, of criminal fraud over a $600 million scheme involving improper trades. (FT)
Best of the rest
Why a 33-year-old former television anchor is poised to become the gatekeeper of information flowing to and from Trump. (NYT)
“How Morgan Stanley Courted Dodgy Customers to Build a Wealth-Management Empire” (WSJ)
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