Good morning. Companies are worried that President Trump’s trade policies will force them to increase prices, angering consumers. But pointing that out could draw his ire. What should they do? (Was this newsletter forwarded to you? Sign up here.)
Trump’s price warAt a rally in Michigan last night, President Trump declared that “we’re ending the inflation nightmare.” But corporate chiefs are bracing for the opposite, revealing a split-screen view of the future that has sharpened as trade uncertainty grows. Companies have warned for weeks that tariffs could scramble supply chains, force them to tear up their financial outlooks and raise prices. (More on that below.) Yet they now face a new dilemma: Should they be transparent with shoppers about why prices are increasing, or — as Amazon learned yesterday — risk drawing Trump’s fury? A recap: Trump called Jeff Bezos yesterday to fume over a report by Punchbowl News that the retailing giant had planned to detail how tariffs contribute to price increases. The purported move, which Amazon has denied, would have illustrated the real-world effects of the president’s trade policy, which is already hitting the Chinese e-commerce giants Temu and Shein. Karoline Leavitt, the White House press secretary, delivered an extraordinary rebuke of Amazon during yesterday’s news briefing, accusing the retailer of being “hostile and political.” Amazon said it had weighed such a move for Amazon Haul, its Temu competitor, but decided not to — and had never considered it for its main site. Still, the conundrum companies face seems clear. Do they eat tariff-related cost increases and hurt their bottom line, and investors? Do they pass the higher costs onto shoppers, potentially drawing their ire? Or do they level with consumers, and dare angering Trump? Stifling price transparency could backfire on Trump, Paul Donovan, the chief economist for UBS Global Wealth Management, told DealBook. Without clear pricing information, Democrats and independents could argue that all price hikes — including non-tariff ones — were Trump’s fault, he said. More important economically, levies could also give companies cover to raise prices above and beyond what new duties cost them. “If there is going to be administration hostility to identifying the price impact of trade tariffs,” Donovan added, “then we do run the risk of second-round inflation effects coming through.” Ironically, the Trump administration has attacked what it calls price gouging. The Justice Department is investigating egg producers over rapidly rising prices, which have become a potent political symbol for inflation. And last month, Trump invited Kid Rock to the Oval Office as he signed an executive order aimed at protecting “fans from exploitative ticket scalping.” The order calls for price transparency for live events.
DEALBOOK WANTS TO HEAR FROM YOU We’d like to know how the tariffs are affecting your business. Have you changed suppliers? Negotiated lower prices? Paused investments or hiring? Made plans to move manufacturing to the U.S.? Or have the tariffs helped your business? Please let us know what you’re doing.
Paramount’s board sets a possible path for a settlement with President Trump. Lawyers for both sides are set to begin mediation today over the president’s $20 billion lawsuit against CBS News, related to its “60 Minutes” program. But the media company’s board has outlined financial terms for a potential accord with Trump, The Times reports. Paramount’s controlling shareholder, Shari Redstone, favors a settlement, but has said she’s recusing herself from board deliberations over such a move. The conservative activist Robby Starbuck sues Meta over A.I. answers about him. Starbuck said that the tech giant’s artificial intelligence software falsely asserted that he participated in the Jan. 6, 2021, Capitol attack. He joins a small group of plaintiffs suing Big Tech over accusations of incorrect information provided by error-prone A.I. systems. Harvard promises changes after reports about antisemitism and Islamophobia. The university’s president, Alan Garber, listed actions the school would take to curb bigotry after long-awaited inquiries into discrimination. Many of them parallel demands by the Trump administration’s antisemitism task force. Harvard is fighting efforts by the White House to freeze billions in funding. Seen and heard, corporate outlook editionIt’s the middle of earnings season, and companies are grappling with the uncertainty and volatility that President Trump’s trade policies have ushered in. That has led more businesses to pull their financial guidance or report hits to their operations. Here’s what a selection of companies have been saying:
Vietnam may no longer be a safe haven for tradeDuring President Trump’s first U.S.-China trade war in 2018, American companies flocked to Vietnam to sidestep escalating tariffs, and the country became increasingly critical to their bottom lines. But in Trump’s escalating trade fight across the globe, Vietnam has become a new target, Grady McGregor reports for DealBook. Tensions were so high there were doubts about whether American diplomats would attend today’s events commemorating the 50th anniversary of the end of the Vietnam War. Here’s how some U.S. businesses have come to rely on the country:
That changed in April when Trump declared a 46 percent tariff on goods coming from Vietnam, some of the harshest duties imposed on any country. Trump administration hard-liners like Peter Navarro, his top trade adviser, have made Vietnam into a punching bag. They have complained about the United States’ $124 billion trade deficit with Vietnam and accused the country of being little more than a waypoint for Chinese-made goods as a way to avoid the steep tariffs. American firms aren’t fleeing Vietnam just yet, experts say, given Trump’s whipsawing policies. Some Vietnamese manufacturers are even ramping up production to take advantage of a short-term arbitrage opportunity. But for the most part, American firms are in wait-and-see mode. “It’s absolutely impossible to make any decisions right now,” John Goyer of the U.S. Chamber of Commerce, said in an interview. But experts see major shortcomings in the Trump administration’s strategy. Trump wants to crack down on Vietnam to block shipments from China, as goods are often rerouted through Vietnam to avoid higher tariffs, known as transshipping. Trump sees it as a form of “non-tariff cheating.” If the administration aims to cut Chinese imports, a country-by-country approach is shortsighted, according to Inu Manak, a trade policy fellow at the Council on Foreign Relations. Cracking down on transshipping, for example, could lead tariff evaders to divert goods through countries like Cambodia, Thailand or Indonesia. “It just moves the problem elsewhere,” Manak said. Multilateral negotiations would be more effective in creating rules to curb the practice, she added, “but that’s just not the approach in this administration.” China is taking advantage. President Xi Jinping of China promoted Beijing as a stable trading partner when he met Vietnam’s top leader, To Lam, in Hanoi a few weeks ago. The two sides signed 45 deals to deepen economic ties, and Xi pledged to give Vietnam greater access to its market. Xi urged Vietnam to oppose unilateral “bullying” tactics. Trump responded that To and Xi were out to “screw” America. But Vietnam is happy to play both sides against one another. The country’s talks with China won’t stop it from cutting a deal with the U.S. “They’re amongst the most practical and strategic partners I’ve ever met, and they’re used to dealing in a transactional way,” said Daniel Kritenbrink, who previously served as U.S. ambassador to Vietnam. Mubadala Capital strikes a multibillion-dollar allianceFor most of its existence, the alternative asset manager Mubadala Capital has had just one major shareholder: Mubadala Investment Company, a $302 billion Abu Dhabi sovereign wealth fund. That changed in December as Mubadala Capital began to strike deals to bring on external backers. The firm is expected to announce another today: a multibillion-dollar partnership with TWG Global, the conglomerate that is affiliated with the investment giant Guggenheim, Michael de la Merced is first to report. The news: Mubadala Capital is arranging a $10 billion investment in TWG Global that includes other investors. That represents about two-thirds of the $15 billion that TWG Global’s leadership, including the billionaires Mark Walter and Thomas Tull, has hoped to raise. At the same time, TWG Global is committing to put $2.5 billion into Mubadala Capital’s investments. It’s also buying a stake in the asset manager, with an eye to increase that backing to up to $20 billion in Mubadala Capital’s products. The backstory: The two sides had worked together for years. When TWG Global sought to raise $15 billion to fund new initiatives — including buying out some longtime Guggenheim shareholders — it met with a small group of potential investors before deciding to go with Mubadala Capital, Walter told DealBook. For Mubadala Capital, committing money to TWG Global opened up a variety of investment opportunities, according to Hani Barhoush, the firm’s C.E.O. TWG Global is affiliated with financial services businesses, including Guggenheim; technology, including an artificial intelligence joint venture with the data consulting giant Palantir; and sports, including the Los Angeles Dodgers, Los Angeles Lakers and the English soccer club Chelsea F.C. It also gives Mubadala Capital more investment capital to pursue private equity, credit and venture capital opportunities. (Worth noting: Mubadala Capital led a group that owns a 68 percent stake in Fortress, the big investment firm.) Mubadala Capital is also gaining a new minority shareholder, adding to a group that includes the C.E.O. of Silver Rock Financial, a private credit investment firm that it bought a piece of in December, and the family office of the veteran financier Michael Milken. Bringing on external backers is meant to underscore Mubadala Capital’s business of managing money apart from its sovereign wealth fund parent. It now oversees about $30 billion in such money, much of that raised over the past seven years, Barhoush said. “We’re making a significant bet on TWG Global,” said Oscar Fahlgren, Mubadala Capital’s chief investment officer, “and they’re making a significant bet on us.” We hope you’ve enjoyed this newsletter, which is made possible through subscriber support. Subscribe to The New York Times.
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