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DealBook Briefing: China vs. U.S. Could Be a Long, Slow Gri…

DealBook Briefing: China vs. U.S. Could Be a Long, Slow Gri…

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The latest tussles between Washington and Beijing over trade and currency appear to suggest one thing: China thinks the tensions will drag on.

China is digging in, Chao Deng and Chun Han Wong of the WSJ write, with President Xi Jinping “struggling to rejuvenate a sluggish economy.” He now “needs to appear strong, to preserve his firm grip on the political apparatus and public propaganda machine,” Jane Perlez and Alexandra Stevenson of the NYT write.

So China may try to inflict “maximum political damage,” according to Nathaniel Taplin of the WSJ. Officials appear to hope that a prolonged trade war would weaken the U.S. economy enough to derail President Trump’s re-election campaign.

The Trump administration sees things differently. “The reality is we would like to negotiate,” Larry Kudlow, the White House’s top economic adviser, told CNBC yesterday. “We’re planning for the Chinese team to come here in September. Things could change with respect to the tariffs.”

But this may now have grown beyond the U.S. and China. “Investors are coming to grips with the reality that the trade war is escalating and spreading into the global currency market,” Neil Irwin of the NYT writes.

• “Whatever happens next — and whether this turns out to be the beginning of a major turning point for the global economy or just one rough day on the markets — it is clear that the trade war is no longer confined to trade.”

More: The stock markets took a breather yesterday after it appeared that Beijing would not use the value of its currency as a continuing weapon in the trade war — at least, not immediately.


Today’s DealBook Briefing was written by Andrew Ross Sorkin in New York, and Michael J. de la Merced and Jamie Condliffe in London.


President Trump has made no secret of his frustration that the U.S. dollar has strengthened against other currencies. But whether he could really weaken it is an open question, writes Matt Phillips of the NYT.

Weaker currencies can look attractive, because they “make a country’s exports cheaper for buyers overseas, giving a country a competitive advantage.”

Governments have historically shied away from weakening their currencies, “in part because they were afraid it would also lead to an ugly bout of inflation, which was traditionally viewed as the big risk of a weak currency.”

This week, China showed that it was possible by letting the value of its renminbi slide past a symbolic 7 to the dollar mark. It’s not clear whether that was a deliberate response to the trade war.

But the U.S. doesn’t have the same levers to pull, Mr. Phillips explains:

• “It has some capacity to intervene in financial markets by using the Exchange Stabilization Fund, a vehicle under the control of the Treasury secretary, with about $100 billion of buying power.”

• “In the past, when American politicians wanted to change the value of the dollar, they had to coordinate efforts involving a number of countries.”

• “Persuading China to let its currency strengthen to help the United States is a different situation all together.”

The media giant is bigger than ever after its takeover of most of 21st Century Fox. But it still isn’t immune to the financial toll of competing against streaming services like Netflix.

The company reported a 51 percent drop in profits for its most recent quarter compared with the same period last year. That’s largely because of $553 million in losses in its streaming division, up from $168 million a year ago. And the company expects those losses to climb to $900 million in the current quarter.

Fox also weighed on its profits. Disney, which bought its rivals’ assets to bolster its own streaming services, disclosed that Fox’s business was in worse shape than expected. (It had to take a write-down on the X-Men movie “Dark Phoenix,” for example.)

But Disney hopes to compete with Netflix on price. It plans to price a bundle of streaming services — Disney Plus, ESPN Plus and Hulu — at $12.99 a month, matching what Netflix charges for its basic service. (One difference: ESPN and Hulu carry ads; Netflix doesn’t.)

Media companies have to pay big to compete in video. AT&T (which must still determine what its forthcoming HBO Max service will cost), Comcast’s NBCUniversal and others have to reckon with the costs of doing business against Netflix and Amazon.

President Trump and Republican Party officials sued the state yesterday over a new law that requires presidential candidates to release tax returns to qualify for the state’s primary ballot, Annie Karni of the NYT reports.

California’s law is meant to force Mr. Trump to disclose his tax returns, a decades-old precedent that he broke during the 2016 campaign and shows no sign of complying with now.

The Republican National Committee called it “a naked political attack” against the president in a lawsuit that it filed yesterday. Mr. Trump and his re-election campaign argued in a separate lawsuit that states don’t have the power to “supplement” constitutional requirements for the presidency.

A previous version of the law was vetoed by the last California governor, Jerry Brown, over questions about its constitutionality.

President Trump has called on social media companies to analyze what users do to help law enforcement prevent mass shootings. But that idea faces problems that have long bedeviled the tech industry.

• There’s the sheer volume of the data to sift through, the…

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