Are Tariffs Inevitable?

Unyielding on tariffs

Investors appear largely unfazed by President-elect Donald Trump’s tough talk on tariffs, with the S&P 500 up more than 5 percent since Election Day.

But world leaders and C.E.O.s are worried he could disrupt global trade and pummel profits — and feel they’re making little headway in warning him of the consequences.

Companies have stepped up their lobbying to persuade Trump to go easy on tariffs, according to The Wall Street Journal. The president-elect warned last month that he would impose 25 percent levies on the country’s biggest trading partners, Canada and Mexico, if they didn’t tighten their borders and stem the flow of illegal migration to the U.S.

In subsequent social media posts, he went after China and BRICS countries, too.

Trump’s team is warning businesses to take him at his word on tariffs, The Journal reports. That suggests that Trump, who has called tariffs “the most beautiful word in the dictionary,” isn’t merely using tariff warnings as an opening salvo in trade negotiations.

It also calls into question how much say Jamieson Greer, Scott Bessent, Howard Lutnick and Marco Rubio — Trump’s picks for trade representative, and to run the Treasury, Commerce and State departments — will have in shaping Trump’s trade policy if his mind is already made up.

Trump conceded that he “can’t guarantee” tariffs won’t hit consumers hard. That’s a concern among economists and big companies such as Walmart and Costco, who fear that levies could lead to price rises. This earnings season, analysts have been peppering corporate leaders about how tariffs might affect their businesses.

Many companies have tried to play down the risk of tariffs, noting that they’ve been decoupling from China — the biggest target in the first Trump administration’s trade wars — in recent years. But they also acknowledge the uncertainty around Trump 2.0 trade policy.

Watch for the question on Thursday when Nike reports results. In 2019, the footwear giant was one of several industry players to urge the Trump White House to cease its “catastrophic” trade war on China.

HERE’S WHAT’S HAPPENING

Interest rates are in focus this week. The futures market on Monday was pricing in near-certain odds that the Fed would lower borrowing costs on Wednesday, for the third straight meeting on rates policy, even as some officials see reasons to hold fire as progress on fighting inflation stalls.

Calls for better drone detection intensify amid reports of new sightings. Senator Chuck Schumer, the majority leader, said he is working to pass a bill to give the police better tools to spot the craft, after reports of mysterious objects forced a runway closure at New York Stewart International Airport on Friday. The governors of New York and New Jersey have asked the Biden administration for help identifying who is behind the incidents, even as Alejandro Mayorkas, the Homeland Security secretary, said that the devices don’t appear to pose a threat.

Germany’s chancellor is expected to lose a no-confidence vote on Monday. The likely defeat for Olaf Scholz means that the country would have to hold new parliamentary elections within the next 60 days, adding to uncertainty in Europe’s biggest economy.

Trump’s big win

Business leaders from Wall Street to Silicon Valley have been working hard to build or repair ties with Donald Trump since his resounding election win. They’re betting that a show of fealty will be good for business, possibly protecting them and their companies from retribution.

But ABC’s bombshell decision this weekend to settle a defamation lawsuit with Trump is spurring worries that the president-elect is growing more confident about pushing his agenda.

Here’s a recap: Trump sued George Stephanopoulos, one of ABC News’ star anchors, in March for saying on air that Trump had been found liable of raping E. Jean Carroll. He had been found liable of sexual abusing and defaming the writer.

The Disney-owned broadcaster agreed to pay $15 million to settle. ABC News will donate that amount to Trump’s future presidential foundation and museum. The network will also pay Trump $1 million to cover his legal fees, and the network and Stephanopoulos published a statement of “regret.”

It was a big concession by a news organization. Trump has sued for defamation often but frequently lost, including against CNN, The Times and The Washington Post. Those defeats reflect how hard it is for a public figure to win such cases, because they have to overcome such a high legal bar to prove that a news outlet knew a defamatory statement was false or had acted with reckless disregard for accuracy.

ABC could have kept fighting. The network didn’t say why it settled, and both Republican and Democratic lawyers slammed the deal. Could a new business and political reality under Trump have weighed on its decision? “What we might be seeing here is an attitudinal shift,” RonNell Andersen Jones, a law professor at the University of Utah, told The Times.

Trump went after ABC during the campaign over its handling of his debate with Vice President Kamala Harris. He also grumbled about her friendship with Dana Walden, the senior Disney executive whose portfolio includes ABC News. Worth noting: Debra OConnell, the Disney executive who directly oversees ABC News, dined with Susie Wiles, Trump’s new chief of staff, in Palm Beach, Fla., last week, The Times’s Michael Grynbaum and Alan Feuer report.

Trump and his allies were already gearing up for more fights. Lawyers for Trump, Pete Hegseth, his pick for defense secretary, and Kash Patel, whom he wants to run the F.B.I., have threatened journalists or others with defamation lawsuits, The Times’s David Enrich reports. The ABC News settlement could embolden them further.

Will more media companies toe the line? Jeff Bezos, the Amazon founder and owner of The Washington Post, sparked a furor when the newspaper refused to endorse a candidate. But he told Andrew at this month’s DealBook Summit that he was “proud of the decision” and would try to change Trump’s view that the media was the enemy. “I’m going to try to talk him out of that idea,” he said. Bezos is due to meet with Trump in the coming days.

• In other transition news: Masa Son, the founder of the Japanese tech investor SoftBank, will announce plans to invest $100 billion in the U.S. after a meeting with Donald Trump on Monday, CNBC reports.

Saudi Arabia’s next goal

Saudi Arabia has spent billions on global sports, culminating in its selection last week to host the 2034 World Cup soccer tournament. It’s part of a drive by Crown Prince Mohammed bin Salman, the kingdom’s de facto leader, to use sports as a way to diversify the economy and help repair its reputation with the West.

DealBook spoke to The Times’s Tariq Panja about the wider significance of its World Cup win, and what Saudi will target next.

Where does hosting the World Cup sit in Saudi efforts to become a global player in the business of sport?

The World Cup is the pinnacle of its ambitions. It’s the most-watched sporting event in the world and will give the kingdom a monthlong opportunity to project itself to a global audience.

Saudi Arabia’s bid was virtually unchallenged. What does that reveal about how far global sports organizations will go to do deals with the kingdom?

It signifies the power of Saudi Arabia’s wealth on the sporting world. FIFA, soccer’s governing body, bent its own rules to give the tournament to the kingdom, and other sports bodies have loaned their properties to act as billboards in return for billions of dollars.

What is the next big target?

Nothing is off the table. A final deal between the Saudi-backed LIV Golf and the PGA Tour now looks more likely than ever with President-elect Donald Trump, one of its biggest supporters, set to return to the White House. And having secured the World Cup, Saudi Arabia’s attention will likely swing toward the other big-beast competition: the Summer Olympic Games. Do not bet against them.

Anger at Big Business wells up

With the killing of UnitedHealthcare’s C.E.O., Brian Thompson, front and center in the national conversation over the past two weeks, it was inevitable that it would feature heavily on “Saturday Night Live” this weekend.

But the “S.N.L.” mentions underscore why the killing continues to have a grip on the popular consciousness: Americans are discontented with the health care industry, and perhaps corporate America more broadly.

“I have real condolences for the health-care C.E.O. I mean, this is a real person,” Chris Rock, who hosted “S.N.L.,” said in his opening monologue. But he flicked at the anger that has driven fascination with Luigi Mangione, Thompson’s accused killer: “You also got to go, you know, sometimes drug dealers get shot.”

Thompson himself believed his company had a problem, according to The Washington Post: Early this year, he lamented to colleagues that average Americans didn’t understand the role UnitedHealthcare plays in the health care system.

That said, The Post notes that patient advocacy groups have argued that UnitedHealthcare denied too many requests for care under his tenure.

Other health care leaders have also acknowledged Americans’ anger. Thompson’s boss, Andrew Witty, the C.E.O. of UnitedHealth Group, wrote in a Times Guest Essay on Friday that “we know the health system does not work as well as it should, and we understand people’s frustrations with it.” (Witty added that no employees “should have to fear for their and their loved ones’ safety.”)

And Mark Bertolini, the former C.E.O. of Aetna who now leads the insurer Oscar, told The Financial Times that patients are “caught right in the middle” of a battle between health care providers and health insurers over which treatments get covered.

Does this reflect greater frustration with corporate America? The Wall Street Journal reports that Americans are feeling increasingly angry about big business. According to the data:

• 68 percent of respondents to a January Pew Research Center online survey said such businesses had a negative effect on the country’s direction, up sharply from 2019.

• Just 53 percent of Americans trust business, according to a survey by the communications firm Edelman, among the lowest rates of the 28 countries surveyed.

The shooting was “a wake-up call,” Richard Edelman, the firm’s C.E.O., told The Journal.

THE SPEED READ

Deals

• The government panel reviewing Nippon Steel’s proposed $15 billion takeover of U.S. Steel is reportedly split over whether to approve the deal. (FT)

• An activist hedge fund’s nominee for the board of Air Products was involved in an insider-trading leak a decade ago, according to a court filing. (Semafor)

Politics and policy

• Trump advisers are said to be drafting an executive order ending birthright citizenship for the children of undocumented immigrants, as part of an effort to get the issue before the Supreme Court. (Politico)

• Republican talk of drastically cutting down financial regulators is making it hard to recruit leaders for those agencies. (FT)

Best of the rest

• “Automakers Thrived in the Pandemic. Many Are Now Struggling.” (NYT)

• Isak Andic, the founder of the big Spanish fashion brand Mango, died on Saturday when he fell during a hike. He was 71. (NYT)

We’d like your feedback! Please email thoughts and suggestions to [email protected].

The post Are Tariffs Inevitable? appeared first on New York Times.