May 14, 2019

Axios AM

By Mike Allen
Mike Allen

🍳 Good Tuesday morning. Montana Gov. Steve Bullock has jumped into the 2020 Democratic field.

D.C. readers: You're invited to an Axios breakfast event, "Easing America's Pain," tomorrow at 8 a.m.

  • Join me for conversations on health care's biggest challenges, including the opioid crisis, and how to tackle them. We'll hear from Sen. Bill Cassidy (R-La.), Sen. Joe Manchin (D-W.Va.), HHS Chief Medical Officer Dr. Vanila Singh and Mayor Steve Williams of Huntington, W.Va. RSVP here.
1 big thing: Trump's long trade war
Expand chart
Data: Money.Net. Chart: Harry Stevens/Axios

Senior administration officials tell Axios' Jonathan Swan that a trade deal with China isn't close and that the U.S. could be in for a long trade war:

  • A senior administration official said the differences between the two sides are so profound that, based on his read of the situation, he can't see the fight getting resolved before the end of the year.
  • Trump yesterday held out the possibility of meeting Chinese President Xi Jinping at the G20 in Japan next month. That statement may have been made in part to calm the stock market, which yesterday had its worst day since January. (Lead Financial Times headline: Global markets reel.")

The bottom line: White House economic adviser Larry Kudlow was right when he said on Sunday that "both sides will suffer" in a U.S.-China trade war.

  • The Chinese economy will be harmed. But so, too, will America's. And so will American consumers, who will pay higher prices, and American farmers, who will be targeted for retaliation by China.
  • The question remains: Can Trump, facing a re-election race in 2020, outlast China's "president for life"?
  • Both Trump and Xi have to contend with hardliners in their parties. But only one of them can harness all the tools of authoritarianism.

Trump’s mindset on the Chinese is simple: They only respond to shows of brute force.

  • And he thinks they’ll suffer more than America will, because they buy more products.

Swan has asked several current and former administration officials whether Trump actually believes that China pays the tariffs — rather than the reality that U.S. consumers do.

  • The consensus is "yes": That's what he actually believes.
  • And as one former aide said: There’s little point trying to persuade Trump otherwise, because his belief in tariffs is "like theology."
2. Ominous signs around the world
Courtesy The Economist

"The drums of war are beating once again," The Economist writes in its cover story:

  • "The potential for miscalculation is large and growing. American troops are within miles of Iranian-backed forces in Iraq and Syria. Its warships are nose to nose with Iranian patrols in the Gulf."

Breaking ... "At a meeting of President Trump’s top national security aides last Thursday, Acting Defense Secretary Patrick Shanahan presented an updated military plan that envisions sending as many as 120,000 troops to the Middle East should Iran attack American forces or accelerate work on nuclear weapons," per the N.Y. Times.

  • Why it matters: "Some senior American officials said the plans, even at a very preliminary stage, show how dangerous the threat from Iran has become. Others, who are urging a diplomatic resolution to the current tensions, said it amounts to a scare tactic to warn Iran against new aggressions."
3. Secret Trump immigration plan

Before their ousters last month, "Homeland Security Secretary Kirstjen Nielsen and top immigration enforcement official Ronald Vitiello challenged a secret White House plan to arrest thousands of parents and children in a blitz operation against migrants in 10 major U.S. cities," report the Washington Post's Nick Miroff and Josh Dawsey.

  • "The ultimate purpose, the officials said, was a show of force to send the message that the United States was going to get tough by swiftly moving to detain and deport recent immigrants — including families with children."

Senior Trump adviser Stephen Miller "declined to comment through a White House spokesman."

4. Pic du jour
Photo: Chip Somodevilla/Getty Images

Thousands of law enforcement officers, families and supporters held the 31st annual National Police Week candlelight vigil on the Mall last night, honoring officers who died in the line of duty.

5. Investigating the investigators

Attorney General William Barr has assigned the top federal prosecutor in Connecticut, John Durham, to examine the origins of the Russia investigation, the N.Y. Times reports.

  • Why it matters: The move "could anger law enforcement officials who insist that scrutiny of the Trump campaign was lawful."

The context: This is the third known investigation focused on the opening of an FBI counterintelligence investigation — during the campaign — into possible ties between Russia and Trump associates, per the Times.

6. Critics target iPhone App Store

Illustration: Rebecca Zisser/Axios

Apple’s very successful iPhone App Store is under attack from multiple directions in the U.S. and Europe, Axios' David McCabe writes.

  • Some customers and developers take issue with the portion of some for-profit App Store transactions that Apple takes for itself.
  • App creators also have no choice but to use Apple's store to get to its customers — unlike on Google's Android.

Driving the news: The Supreme Court ruled 5-4 yesterday that users can sue Apple for allegedly exercising monopoly power over the market for third-party apps and driving up prices.

  • What's next: The Supreme Court didn’t rule on the actual monopoly question.
  • "That matter is left for a lower federal district court to determine, a process that could take years and result in Apple paying monetary damages, and making changes to its business practices, if it loses," per the WashPost.
  • An Apple spokesperson said: "We’re confident we will prevail when the facts are presented and that the App Store is not a monopoly by any metric."

The bigger picture: Apple is rolling out its own services, like Apple News+ and its forthcoming streaming offering, that will compete with third-party apps.

7. Delivery wars

Video: Erica Pandey/Axios

Walmart "is rolling out a next-day delivery service to counter Amazon’s recent move to speed shipment times for top customers to just one day from two," writes Bloomberg's Matthew Boyle.

  • "The offer .... will extend [from Phoenix and Las Vegas at launch] to Southern California in the coming days and will reach about three-quarters of the U.S. by the end of the year."
  • Why it matters: "The company wants to convince more of its in-store shoppers to buy online, because when they do they spend more than twice as much with the retailer."

Bricks and mortar ... "Over the past two years, major U.S. retailers … have spent billions of dollars to overhaul existing programs or launch new loyalty schemes" to fend off the allure of Amazon, per Reuters.

  • Nordstrom's "Nordy Club" members "can save items in an app that will send push notifications to remind them of their wish list once they get close enough to a store."
8. Trump Tower sours

Photo: Epics/Getty Images

"Trump Tower, once the crown jewel in Donald Trump’s property empire, now ranks as one of the least desirable luxury properties in Manhattan," writes Bloomberg's Shahien Nasiripour.

  • "Most condo sales [in the past two years] have led to a loss after adjusting for inflation ... Several sold at more than a 20% loss."
  • "The commercial portion of the building has been struggling for months to find tenants ... despite advertising rents well below the area’s average."
9. Enter here: Real-life U.S. spy challenge

A U.S. intelligence agency is offering cash for predicting threats, Axios Future editor Steve LeVine reports:

  • IARPA, the research arm for the U.S. director of national intelligence, is offering $250,000 in prize money in a contest to forecast geopolitical events such as elections, disease outbreaks and economic indicators.
  • The contestants can do anything they want — use a computer, or no computer, and any methodology.
  • Over the coming eight or so months, players will be asked hundreds of closed-ended questions, such as: "How many missile test events will North Korea conduct in August 2019?" and "What will be the daily closing price of gold on June 2019 in USD?"

Seth Goldstein, an IARPA program manager who is running the contest, on his dream outcome: "I am hoping to find the next Swiss patent clerk doing forecasting in his spare time," he says.

10. 1 food thing
Photo: Benjamin C. Tankersle for The Washington Post via Getty Images

"Inside the Pampered and Personalized World of DC’s VIP Diners," by The Washingtonian's Jessica Sidman:

All VIPs of Le Diplomate, the French brasserie in Logan Circle, are dubbed "PPX" — personnes particulièrement extraordinaires — and tracked in real time on a kitchen whiteboard as they dine. But some, such as a neighborhood regular, are classified as "TTA," for Try to Accommodate. Others are "MA," for Must Accommodate, including Jill Biden ...
At Rare Steakhouse in downtown DC, former managing director Justin Abad categorized semiregular VIPs as "soigné," French for "handled with care," and those who came in three to five times a week or held multiple functions at the restaurant throughout the year as "super soigné."  The lower tier would often be treated to a complimentary Prosecco, while those handled with extra care — select media figures and lawyers, for instance — might be given a free shellfish platter on occasion.
José Andrés's restaurants deploy a simple color-coded system for its "PGs," or preferred guests. Your hue gets you one of five levels of perks, from a free round of drinks (for Reds), to a full comp and maybe a black-car ride home from Minibar (for "José Golds," or special friends of the owner).

Dig in.

Mike Allen

📱Thanks for reading Axios AM. Invite your friends, relatives, co-workers to sign up here.