The tit-for-tat trade war gets hotter

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The trade fight escalates

The U.S.-China trade war intensified yesterday as Beijing and Washington outlined plans to increase tariffs on each other’s goods in a tit-for-tat battle, Ana Swanson and Keith Bradsher of the NYT report.

• China is raising tariffs on $60 billion worth of American imports — including beer, wine, swimsuits and liquefied natural gas — to 20 percent or 25 percent from 10 percent.
• The Trump administration detailed plans to tax nearly every product that China sends to the U.S., from handbags to computers. The tariffs of up to 25 percent would apply to $300 billion worth of goods.

“I love the position we’re in,” President Trump said yesterday, adding that the U.S. was “taking in billions of dollars in tariffs.”

Others are unhappy. Critics have pointed out that the newly proposed U.S. tariffs would be likely to hit consumers directly. And the Federal Reserve Bank of Boston’s chief, Eric Rosengren, warned that the renewed trade fight could hurt the global economy. Economists expect things to get worse before they get better.

Financial markets tumbled on the news, with no sign that the skirmish will end soon. The S&P 500 index was down more than 2.4 percent for the day and 4.6 percent this month. Bonds and commodities also flashed warnings of a slowdown. (Not an apples-for-apples comparison, but an interesting observation: The dollar value lost on the S&P 500 yesterday was more than what the U.S. imports from China in an entire year.)

But there’s a window of opportunity of several weeks for trade talks to continue, before the latest round of higher tariffs goes into effect. The two countries have significant differences to settle, but they will press on with negotiations. Mr. Trump said that success will be determined within three or four weeks.

Apple faces a huge antitrust battle

The Supreme Court yesterday allowed a class-action lawsuit against Apple that accuses the iPhone maker of abusing its control of the App Store. Expect it to set similar cases in motion.

Apple is accused of raising prices in its App Store using monopoly power. The company takes up to 30 percent of every app purchase from the store, forbids developers from selling apps elsewhere and plays a role in setting prices.

The Supreme Court is letting the lawsuit proceed, despite Apple’s objections. The litigation is in the early stages, but shares in Apple fell 5 percent yesterday on the news.

This case will be closely watched as lawmakers and regulators around the world seek to rein in the power of tech companies. “In the United States, legal scholars have questioned whether antitrust arguments focused on price are enough to deal with the tech giants and whether antitrust law should take competitive process into account,” Adam Liptak and Jack Nicas of the NYT write.

And it could lead to more Big Tech antitrust action. The conservative Justice Brett Kavanaugh, who joined the Supreme Court in October, sided with the four liberal members of the court and wrote the majority opinion. That “signals that in potential future cases, he won’t reflexively go with the conservative impulse to make it harder to sue big companies over antitrust issues,” Noah Feldman of Bloomberg Opinion writes.

Uber keeps bombing

Shares in Uber tumbled nearly 11 percent yesterday, making the ride-hailing giant’s brief life on the public markets increasingly painful.

Uber’s shares are now down 18 percent from their I.P.O. price, making its debut one of the biggest busts in recent memory. It’s in good company: Shares of its archrival, Lyft, are now down 34 percent since its stock sale in March.

“Obviously our stock did not trade as well as we had hoped post-I.P.O.,” Dara Khosrowshahi, Uber’s C.E.O., told employees in a memo yesterday. “Today is another tough day in the market, and I expect the same as it relates to our stock.”

Private investors in Uber are feeling the pain. The WSJ notes that the company’s shares are now 28 percent below its most recent fund-raising round, leaving late-stage investors deeply underwater. The drop in Uber’s stock even weighed on shares in its biggest backer, SoftBank, which fell 5.5 percent.

The blood bath raises questions about other big I.P.O.s for private tech companies hoping to go public while losing big sums of money, Drew Singer of Bloomberg writes. Among them is WeWork, which lost $1.9 billion last year and which is weighing a stock sale. Analysts at Triton Research wrote yesterday, “We can now safely wonder if they will have the courage to go through with” an I.P.O.

WhatsApp confronts a spyware scandal

An Israeli company accused of supplying tools for spying on human-rights activists and journalists has been tied to a security hole in WhatsApp that allows access to the digital communications of iPhone and Android phone users, Nicole Perlroth and Ronen Bergman of the NYT report.

Security researchers found spyware that bears the characteristics of technology from the company, the NSO Group. The vulnerability enabled hackers to insert malicious code and steal data from an Android phone or an iPhone simply by placing a WhatsApp call, even if the victim did not pick up the call.

The flaw was used against a London lawyer involved in lawsuits that accuse NSO of hacking the phones of dissidents and journalists.

WhatsApp engineers repaired the vulnerability yesterday. The Facebook-owned company encouraged customers to update their apps as quickly as possible.

NSO said that its spyware is strictly licensed to government agencies, and that it would investigate any “credible allegations of misuse.”

Read more: The FT has a deep dive on NSO.

The 737 Max won’t fly again soon

Boeing’s 737 Max was expected to return to service before June. But now the plane may not be back in the air until August because of lengthy reviews by aviation regulators, the WSJ reports.

• “Federal regulators are targeting preliminary approval of a software fix for the aircraft by a May 23 safety summit with international aviation authorities, industry and government officials say.”
• “But the Federal Aviation Administration’s final approval is likely to take significantly longer and will depend partly on the reaction of foreign regulators who want to conduct their own reviews.”
• “The logistics of taking jetliners out of storage, which entails special inspections, engine checks and other preparations, also could add weeks of delay between an F.A.A. action lifting the flight ban and having the aircraft carry passengers.”
• “As a result, the bulk of Max jets in North America are unlikely to resume commercial service before mid-August at the earliest, well beyond the timelines the industry had earlier envisioned, officials say.”

Amazon wants its workers to quit …

… and then start their own delivery businesses to distribute its packages, Niraj Chokshi of the NYT writes.

Amazon will fund up to $10,000 in start-up costs and provide three months’ pay to any employee who decides to make the jump. They would also be guaranteed a consistent stream of packages to deliver, access to technology and training, and discounts on Amazon-branded vans and uniforms.

This is part of its new one-day delivery promise for Prime members, which is designed to entice subscribers via sheer convenience. But it’s a resource-intensive service, and this seed funding is a savvy way to extend its delivery network with little upfront cost (while staffing it with trustworthy workers).

The one downside for new delivery workers: “The company that puts you in business can put you out of business real fast,” Beth Davis-Sramek, a professor of supply chain management at Auburn University, told the NYT.

More: Walmart is expanding its next-day delivery services, too.

Revolving door

Steven Temares has stepped down as C.E.O. of Bed Bath & Beyond after facing pressure from three activist hedge funds.

Airbnb has hired Sean Joyce, a former deputy director of the F.B.I., as its first chief trust officer.

The speed read

Deals

• T-Mobile and Sprint are reportedly weighing moves like selling their prepaid mobile phone divisions to win regulatory approval of their proposed merger. (Bloomberg)
• The Chinese owner of Grindr said that it must sell the dating app by June 2020 to comply with an order by U.S. officials. (Bloomberg)
• The meat-alternatives producer Impossible Foods has raised $300 million in new financing at a $2 billion valuation. (FT)
• Slack expects to list its shares on the New York Stock Exchange on June 20. (FT)
• Bayer agreed to sell its Coppertone sun care brand to Beiersdorf for $550 million. (Bloomberg)
• Condé Nast agreed to sell Golf Digest to Discovery. (NYT)

Politics and policy

• The Republican chairman of the Senate Intelligence Committee, Richard Burr, told colleagues that he supported a subpoena of Donald Trump Jr. because he has refused to testify before the panel. (NYT)
• Even if a Democrat becomes president in 2020, the Republican-controlled Senate would pose a huge obstacle for passing liberal legislation. (WSJ)
• Senator Bernie Sanders has criticized the current campaign finance system as “corrupt,” but he has benefited from it as well. (WSJ)
• Governor Phil Murphy of New Jersey vetoed legislation that would increase disclosure for political advocacy groups, saying parts of it were too broad. (WSJ)
• Attorney General Bill Barr assigned the U.S. attorney in Connecticut to investigate the origins of the Russia investigation into Mr. Trump. (NYT)

Brexit

• Populist groups like Nigel Farage’s Brexit Party are expected to win big in the coming European parliamentary elections, but they may not be able to seize control. (Bloomberg)
• Pro-Brexit voters are expected to severely punish Britain’s Conservative Party in those elections for failing to arrange the country’s departure from the E.U. on schedule. (WSJ)

Tech

• Facebook’s settlement with the F.T.C. reportedly could include a 20-year oversight agreement. The company is also increasing pay for thousands of contract workers. (Reuters, Bloomberg)
• Bitcoin topped $8,000 as it hit its highest level since July 2018. (Forbes)
• How a team of data scientists uncovered sexual misconduct allegations against the C.E.O. of the start-up DataCamp. (BuzzFeed News)
• Forget folding-screen phones: Lenovo has plans for a folding-screen laptop. Also, here’s how such gadgets are tested in labs before you buy them. (Verge, WSJ)

Best of the rest

• How Evercore has beaten its competitors with the best returns on Wall Street over the past decade. (Business Insider)
• At this week’s TV upfronts, NBC reveled in nostalgia and Fox promoted a “Beverly Hills 90210” reboot. (NYT)
• The former C.F.O. of Autonomy, Sushovan Hussain, was sentenced to five years in prison for fraudulently inflating the tech company’s revenue ahead of its $11 billion sale to HP. (FT)
• A $2 billion verdict against Monsanto for damages is the third to find that its Roundup weedkiller caused cancer. (NYT)
• The actress Felicity Huffman pleaded guilty for her role in the college admissions scandal. (WSJ)
• Entrepreneurs are seeking investors willing to fund the long-shot bet against climate change that is fusion power. (NYT)

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