Who fizzled most this week from the news that a trade war looms, courtesy of the Donald Trump administration?
There was the continued drain of the Trumpian brain trust. Gary Cohn, economic adviser at large, former Goldman executive and widely liked by Wall Street, is out the door.
There was the fizzle of the stock market – measured by volatility and whipsaws, which nobody liked or likes. The Dow, for a brief time at least, erased its year-to-date gains. At this writing, the Dow was up triple digits, then down again on the heels of perception that the tariff war may be more tempest in a teapot than raging battle – or maybe a raging battle that fizzles, but not after leaving a lot of fizzles in its wake.
Trump appeared to back off at least some of the initial actions that made investors swoon the last several sessions.
As The New York Times reported Thursday, some exemptions would be in the works. Among them: Mexico and Canada would be exempt – thus removing at least some allies from the trade war equation.
That exclusion was telegraphed by Peter Navarro, a White House trade advisor. It may be a temporary exclusion or a permanent one, he said on Fox News. The driving factor: whether there would be a “great” trade deal, as the North American Free Trade Agreement (NAFTA) is being reshaped. While the debate now opens up over whether exclusions should be meted out for certain countries and not others, a few other points need mulling. The larger issues remain, and boy, are they large.
Trump held the signing ceremony in the Oval Office on Thursday. And as the ink dries, questions arise.
The tariffs will take effect over the next few weeks. So, call at least some of the measures official policy, for now. In the economy, 10 percent tariffs on aluminum and 25 percent on steel add up.
The chorus of those saying that back-and-forth retaliation is never sound economic policy has been growing. Along with 100 Republican lawmakers who asked that the president walk away from the steel and aluminum tariffs, a few other voices chimed in – and chimed loudly.
By the way, those 107 Republican lawmakers spoke with one voice, via letter, with a statement that said, explicitly, “we are committed to acting with you and our trading partners on meaningful and effective action. But we urge you to reconsider the idea of broad tariffs to avoid unintended negative consequences.”
The administration backtracked a bit further, and The New York Times stated that other factors would be taken into consideration, as noted by Wilbur Ross, commerce secretary. Said Ross of trade considerations: “It’s defined to include effect on employment. It’s defined to include effect on individual industries. It’s not the conventional definition of national security.”
National security here is the lever to the trade war, as the Trump administration has said that the decline of domestic manufacturing means we cannot make the weaponry we need to provide, well, security.
National security might, we think, also include things like job security and wages and, of course, the stability of the consumer’s pocketbook. Oh, and we’ve managed to peeve any number of folks in the European Union, which has a list of goods, from whiskey to blue jeans (as has been noted time and again in the press) that will be slapped with retaliation. China has signaled retaliation, too.
In the meantime, steel producers are already raising prices, which means a gain of input costs for firms of all stripes, and which means that everything, as the Federal Reserve Bank of Cleveland implied in a report, is seeing a ripple effect – as, for example, food packaging firms have seen higher prices in purchased steel supplies. The net result is that those costs get passed on somehow and somewhere. We’ll leave you to guess how and where, but check your wallet after you’re done shopping in the coming months – we’ll bet it is lighter.
One voice that gains our notice belongs to Jamie Dimon, the CEO of JPMorgan Chase, who said this past week on Bloomberg TV that “we don’t believe these tariffs. … There are serious issues around trade. The WTO needs to get its act together and get a little more ambitious in terms of fixing some of these problems, but I think tariffs is the wrong way to go about it.”
“There may be retaliation. It kind of opens up a whole Pandora’s box of additional problems,” Dimon said in the TV interview. “It could escalate. It could hurt growth. I don’t know. I’m not predicting it, but I think you should expect more.” That “more” might be a pause point here. More retaliation? More from the administration in terms of foresight?
The backdrop is one where higher costs hurt consumers – and they hurt business, too. It’s a backdrop where economic growth slows, banks slow lending, everyone pulls in their plans to expand and no one really gets a jump start anywhere. It’s a stretch to think we’ll get that far, given some disastrous lessons of the past, but it’s possible.
And it made for one fizzly week.
Sizzles:
Dinner at home: Why settle for having meals in a box shipped to your home when you can order one ahead and pick it up at the local grocery store on the way home? As part of their mission to save families time and money, Walmart has rolled out meal kits and “one-step meals” to more than 250 of its brick-and-mortar stores. By the end of 2018, the retailer plans to have the meals in 2,000 of its locations. Unlike Blue Apron and HelloFresh, Walmart does not require customers to purchase subscriptions, but does enable them to reinvent eating a healthy dinner at home.
Acquisitions: Alibaba already owns part of a food delivery startup in China – and now it is hungry for another portion. The Chinese eCommerce company plans to buy out Baidu and other investors in in Ele.me. If the potential deal goes through, Alibaba would control a large slice of the online food delivery business in China.
And Coinbase’s COO, Asiff Hirji, told Fortune that the exchange is considering “quite a number” of acquisitions. To help make those happen, Coinbase has hired Emilie Choi, LinkedIn’s former VP of corporate development.
Patients: Rides to the doctor’s office can now be easily hailed by health care workers on behalf of patients with Uber Health. Through one dashboard, health care organizations can schedule multiple rides for patients immediately, within a few hours or up to 30 days in advance.
Beyond Uber Health, Hitch Health is another option for medical offices. The company uses patent-pending technology that automatically interfaces with patient medical records to grab data – such as appointments and street addresses – and schedules patients’ rides to medical appointments with Lyft as needed.
And through new TSYS technology combined with Walmart’s point-of-sale decision capabilities, consumers will be able to access incentive dollars through their health care plans at Walmart and Sam’s Club.
Fizzles:
Bitcoin prices: Between regulatory scrutiny in the U.S. and Japan, bitcoin is having another bad week. The popular virtual currency was trading at $9,351.90 as of 6:31 p.m., according to CoinDesk, down from a weekly high of $11,624 on Monday (March 5). And on Wednesday (March 7), the currency fell below the $10,000 level.
iTunes gift cards. More than 10,000 victims have paid “taxes” to scammers in excess of $54 million via phone scams perpetrated since October 2013. The payment of choice? iTunes gifts cards. Apparently, the scammers have been so successful that the Treasury Department had to issue an alert: “Any caller requesting taxpayers place funds on iTunes gift cards or other prepaid cards to pay taxes or fees is an indicator or fraudulent activity.”
Voice assistants: Even cool tech has bad days. Earlier this week, Alexa appeared to, well, have suffered a case of laryngitis when a regional outage that affected Amazon Web Services (AWS) caused the voice assistant to go temporarily silent. The irony was not lost on the media, which was quick to point out that Amazon had just run a Super Bowl ad in which Alexa lost her voice. And there is an issue with unprompted laughter from Alexa, too. “We’re aware of this and working to fix it,” Amazon said in a statement to The Verge.
Then, it was discovered that Cortana can be hacked, and used to direct computers to different websites – and not just any websites. Hackers could send unlocked computers to malicious websites by voice commands, TheNextWeb reported.