The trade fight with China is officially on, with Washington and Beijing exchanging blows that could raise prices on an array of goods. And President Trump has threatened to target the European Union next.
But as Monday’s whirlwind of news, including last-minute reprieves for Canada and Mexico, showed, it’s hard to figure out what Trump will use to declare victory — or what the costs of the tariffs-as-policy approach will be. We dive into all of this below.
Also, we have a scoop on a top deal maker returning to Goldman Sachs, and we weigh the odds for various TikTok bidders.
Another trade clash to come?
Canada and Mexico managed to win a reprieve from President Trump’s tariff threat Monday — but a trade war is still on.
Washington has moved ahead with levies on Chinese imports, prompting China to retaliate with its own tariffs, including hits to American energy and technology companies like Google. And Trump has threatened to next attack the European Union.
The prolonged trade drama has continued to baffle business leaders and investors, and prompt the big question of what exactly Trump is trying to accomplish.
The latest: Trump is delaying tariffs on Mexican and Canadian imports for at least 30 days, concluding a bumpy 48 hours of uncertainty after both countries agreed to devote more resources to border security and stamping out the fentanyl trade.
But 10 percent levies on all Chinese imports, on top of existing charges, went into effect after midnight. Beijing responded with tariffs on products such as American liquefied natural gas as well as restrictions on critical exports like tungsten and molybdenum that are used in electronics. And it announced an antimonopoly investigation into Google, which could limit the tech giant’s work with Chinese companies like Xiaomi, an electronics maker.
U.S. stock futures and European markets are down slightly this morning, after having recovered from steep drops on Monday.
The E.U. might be next in Trump’s cross hairs. “The European Union has abused the United States for years, and they can’t do that,” he said on Monday, reiterating complaints about a trade deficit in autos and farm products. European officials like President Emmanuel Macron of France said they would fight back.
It’s hard to overstate how damaging a trade battle between the two would be. The United States and the European Union each account for more than 60 percent of all foreign direct investment in the other’s economy, far more than any other trading partner.
The big question: What is Trump defining as a win in these fights? Yes, Mexico and Canada agreed to spend more on immigration and fentanyl enforcement. But John Authers of Bloomberg Opinion argues that the concessions aren’t huge, and will teach others that other governments “can parry away tariff threats by giving the U.S. the appearance of a victory.”
Trade with China has been falling since the first Trump administration, so the new U.S. tariffs may have only a limited effect on the economy. (They will deal a big blow to online retailers like Shein and Temu, however.)
The major test of Trump’s goals could be tariffs on the bloc, because there’s no real immigration or fentanyl angle there. The stakes are high, because European nations might respond by potentially cutting Washington out of future trade moves.
HERE’S WHAT’S HAPPENING
The billionaire Rick Caruso plans a rebuilding effort after the Los Angeles fires. The real estate developer and former mayoral candidate — who still has political ambitions — announced the formation of a nonprofit of private interests to “expedite the rebuilding” of the communities devastated by wildfires that ravaged parts of Southern California. The group includes Ted Sarandos, the co-C.E.O. of Netflix; Mike Hopkins, the head of Amazon MGM Studios; the venture capitalist Joe Lonsdale; and Adam Mendelsohn, LeBron James’s media adviser.
President Trump says there are limits to Elon Musk’s cost-cutting work. “Elon can’t do — and won’t do — anything without our approval and we’ll give him the approval where appropriate,” the president told reporters on Monday, adding, “If there’s a conflict, then we won’t let him get near it.” His remarks came as Musk’s cost-cutting team gained access to a Treasury Department payment system and made strides in shaking up the federal bureaucracy.
Senator Elizabeth Warren blasts Treasury Secretary Scott Bessent over the C.F.P.B. After Bessent was also named the acting head of the Consumer Financial Protection Bureau, he ordered its staff to pause much of its work and halt any new enforcement investigations. Warren called his actions a “signal to giant corporations and big banks that it is open season to cheat, trick, and trap hard-working American families.”
The U.S. answer to DeepSeek? More China tariffs.
Questions are still swirling about how DeepSeek managed to poke a $1 trillion hole in American A.I. supremacy given supposedly crippling U.S. export controls.
To solve the DeepSeek challenge, the Trump administration appears poised to turn to the president’s favorite weapon: tariffs. More tariffs, that is, in addition to the 10 percent levy President Trump just slapped on China, Grady McGregor reports for DealBook.
Expect similar tactics when it comes to A.I. and China. Howard Lutnick, Trump’s pick for commerce secretary, linked export controls to tariffs in his confirmation hearing last week.
Gregory C. Allen, the director of the Wadhwani AI Center at the Center for Strategic and International Studies and a former U.S. defense official, told DealBook that the Trump administration could impose specific tariffs on technology imports from China that include parts made in violation of U.S. export controls.
Chinese companies, for example, could be using illegally-sourced manufacturing equipment to make chips that are used to train artificial intelligence or are put into smart kitchen appliances used by American consumers, he said.
Most high-end chip manufacturing takes place in Taiwan. Last week, Trump vowed to impose up to 100 percent tariffs on chipmakers operating there and elsewhere until they agree to build more factories in the United States.
That could hurt Nvidia. Trump, who met last week with Jensen Huang, its C.E.O., said that while it was a “good meeting” he still planned to impose tariffs on chips made outside the country.
Some experts are skeptical that additional tariffs would be effective in curbing Chinese A.I. advances. Tariffs would do little to prevent Chinese A.I. firms from downloading open-source A.I. models such as Meta’s Llama, said Martin Chorzempa, a senior fellow at the Peterson Institute for International Economics.
“The Trump administration thinks that tariffs can literally solve every problem,” Chorzempa told DealBook. “But will tariffs actually change what DeepSeek would do? I really doubt it.”
Trump suggests a new TikTok strategy
President Trump signed an executive order calling for the creation of a U.S. sovereign wealth fund on Monday that among other things could be used in a deal for TikTok. (Remember TikTok?)
The president said the sovereign wealth fund might become part of a consortium play, a route that may be more palatable for U.S. technology companies that would only have to contribute some cash and not have to lever up to the gills. (That said, details behind the mechanics of the fund — including where its money would come from — remain murky.)
Here, we weigh the potential suitors and their chances of getting something done. All with the caveat, of course, that Trumpian deal-making is typically subject to a high degree of uncertainty.
Microsoft. We’re not sure about this one. Would Microsoft want to put itself through the agony of putting together a full-blown acquisition again given how arduous it was the last time it tried? Microsoft has committed $80 billion of spending on artificial intelligence this year alone. That might be a better use of capital than a consumer platform that doesn’t complement its core business.
Oracle. This one seems a little more likely. Larry Ellison, its co-founder and chairman, is close with Trump. Oracle got the go-ahead to buy TikTok once before and already houses all of its U.S. consumer data. But Oracle isn’t a consumer-focused business, and it’s unclear that it has the skills to rebuild a social media application if China refuses to include TikTok’s algorithm in any potential sale.
Elon Musk. Musk may well be China’s preferred buyer since Tesla makes half its cars in the country, tying much of his fortune to the policies of Beijing. But those ties may draw scrutiny from U.S. lawmakers worried about national security. And does Musk really want to buy another social media company?
Other tech giants. The leaders of Amazon, Apple, Google and Meta were prominently seated at Trump’s inauguration, and even though it’s highly unlikely, an enigmatic Trump might prevail upon Mark Zuckerberg or Jeff Bezos to join a consortium deal.
Other considerations. TikTok’s investors would prefer an option that may not involve a full sale. There’s also a chance it would mean taking a haircut on the value of their stakes.
One path some bankers are pondering: swapping shares in ByteDance for shares in TikTok. This kind of cashless deal sounds appealing. But it’s also complicated. Namely, how do you place a value on TikTok relative to ByteDance, given that it has not operated as a stand-alone company — and it’s not even entirely clear that it can?
“Apparently we’re running a surplus now as a country right? I mean no sane country would raise taxes or borrow money just to speculate on stuff right?”
— Clifford Asness, a founder of AQR Capital Management, on President Trump’s executive order directing his administration to explore the creation of a sovereign wealth fund.
Goldman’s banker boomerang
The revolving doors among Wall Street’s top technology bankers continue to spin.
Goldman Sachs has rehired Nick Giovanni, one of its top bankers, after his three-year stint as C.F.O. of Instacart, DealBook’s Lauren Hirsch is first to report.
Giovanni, who had spent more than two decades at Goldman, will become a partner in its Technology, Media and Telecommunications group, advising on everything from fund-raising to deals to I.P.O.s. He is set to start on Feb. 24.
Giovanni was a big name in tech deals. Deals he advised include Airbnb’s I.P.O. in 2020 and Slack’s nearly $30 billion sale to Salesforce in 2021.
He left in 2021 to help Instacart gear up for its public offering, which happened in 2023. He left last year, but had stayed in close touch with his Goldman colleagues, including David Solomon, the bank’s C.E.O.
His return to Goldman comes during a shake-up at Goldman’s rival Morgan Stanley, where Michael Grimes, a star banker, is expected to join the Commerce Department.
The big hire comes as banks are preparing for a deal rebound. In December, Solomon said that deal-making could surpass the 10-year average, given President Trump’s pro-business agenda. Giovanni, for his part, told DealBook he thought that his work at a client would help him bring “a new level of insight” to the role.
THE SPEED READ
Deals
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Airbus and two other European aviation giants are said to have hired advisers to explore creating a space venture to compete against Elon Musk’s SpaceX. (Bloomberg)
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Citigroup will let most employees work remotely at least two days a week, a sharp contrast to the approaches of top rivals like Goldman Sachs and JPMorgan Chase. (FT)
Politics and policy
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Whether Robert F. Kennedy Jr. is confirmed as President Trump’s health secretary may come down to Senator Bill Cassidy, Republican of Louisiana and a doctor. (NYT)
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Adam Candeub, who was recently named as the F.C.C.’s new general counsel, once represented an anti-trans feminist in a suit against Twitter that was later dismissed. (Semafor)
Best of the rest
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Former President Joe Biden signed with the Creative Artists Agency, which also represents Barack Obama. (THR)
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“Inside the top-secret trade negotiations that made Luka Doncic a Laker” (The Athletic)
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