May 9, 2019

Axios AM

By Mike Allen
Mike Allen

Good Thursday morning.

Breaking: North Korea fired at least one unidentified projectile, less than a week after it tested several short-range missiles. (BBC)

☕ If you're in D.C. tomorrow ... Please join me at 8 a.m. for a breakfast conversation with House Intelligence Chairman Adam Schiff; Cecile Richards, co-founder of Supermajority; and House Republican Whip Steve Scalise. RSVP here.

1 big thing: Tariffs on China could hit U.S. hard, too

Illustration: Sarah Grillo/Axios

Unless there's a breakthrough by 12:01 a.m. ET, U.S. tariffs on $200 billion in Chinese imports are set to rise from 10% to 25% — a trade war escalation that could hurt major importers and trigger retaliation by China.

  • Why it matters: The result would hurt China — but could backfire on the U.S. and global economies in a way that President Trump hasn't acknowledged.
  • "[E]verybody's going to be worse off," said Federico Kaune, head of emerging markets fixed income at UBS Global Asset Management. "There is no way around it. Protectionism … is bad for everybody."

Here's what Axios editors and reporters will be watching if this drags on, based on reporting by Courtenay Brown, Amy Harder, Joann Muller, Dion Rabouin, Scott Rosenberg and Felix Salmon:

Consumers: 25% tariffs will directly impact some consumer goods — baseball/softball gloves and handbags, for example.

  • But the impact would be even greater if Trump followed through on the other threat he tweeted: to put tariffs on basically everything else we import from China, which would hit products that have largely remained untouched, like clothing and footwear. 
  • The Trump administration has mostly stayed away from putting tariffs directly on items on store shelves.

Autos: The average price of a vehicle could go up $2,750 ($3,700 for imported cars and $1,900 for domestically built cars), according to the non-profit Center for Automotive Research in Ann Arbor, Mich.

Tech: A big question is whether Trump continues to give carveouts for products like the iPhone, as he did when he began announcing tariffs last year.

Keep in mind: The economy is so interdependent that many ramifications are effectively unforeseeable:

  • At first, tariff hikes will be felt by U.S. companies importing goods from China.
  • Next, U.S. companies will pass increased costs on to consumers.
  • Later effects might include U.S. companies relocating operations to Vietnam and other Asian countries if they think tariffs are here to stay.

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2. Backlash on Don Jr. subpoena

A Republican backlash has followed the decision by the Republican-led Senate Intelligence Committee, scooped yesterday by Axios' Jonathan Swan, to subpoena Donald Trump Jr. in relation to the Russia investigation.

  • It's the first known congressional subpoena of one of President Trump's children, and sets up a fight that's unprecedented in the Trump era: A Republican committee chair pit against the Republican president's eldest son.

A source close to Don Jr. tells Swan:

Don is a private citizen, who has already been cleared by Mueller after a two-year investigation. He has done 8-9 hours of testimony in front of Senate Intel already and 27 hours of testimony in front of various committees in total.
When he originally agreed to testify in front of the Senate Intel Committee in 2017, there was an agreement between Don and the Committee that he would only have to come in and testify a single time as long as he was willing to stay for as long as they’d like, which Don did.
Don continues to cooperate by producing documents and is willing to answer written questions, but no lawyer would ever agree to allow their client to participate in what is an obvious P.R. stunt.

Be smart: Senate Intel Chair Richard Burr (R-N.C.) may be more resilient to this kind of pressure than most Republicans would be.

  • He’s not running for re-election, and prides himself on running a committee that has remained largely bipartisan and resistant to outside pressures.
  • Still, he’ll likely face an onslaught from Don Jr.'s many allies that may rival the kind of attacks anti-Trump senators like Bob Corker and Jeff Flake endured before their retirements from politics.

What they're tweeting:

  • Sen. Rand Paul (R-Ky.): "Apparently the Republican chair of the Senate Intel Committee didn’t get the memo from the Majority Leader that this case was closed."
  • House Republican Leader Kevin McCarthy: "@DonaldJTrumpJr has already spent dozens of hours testifying in front of Congressional committees. Endless investigations—by either party—won't change the fact that there was NO collusion. It's time to move on. It’s time to focus on ISSUES, not investigations."
  • Rep. Lee Zeldin (R-N.Y.): "Weak & ridiculous for Senate to perpetuate the Russia Collusion Delusion by continuing to harass @DonaldJTrumpJr. They should NOT be taking orders from unhinged resistance Dems. Let's work together to help POTUS move US forward."
3. Living history: "Constitutional confrontation"
House Judiciary Chairman Jerrold Nadler reads news that President Trump will invoke executive privilege. Photo: Chip Somodevilla/Getty Images

President Trump asserted executive privilege over Robert Mueller's report, "his first use of the executive authority in the ongoing constitutional clash with Congress that the courts ultimately may resolve." (WashPost)

  • "The House Judiciary Committee voted ... to recommend that the House hold Attorney General William P. Barr in contempt of Congress for failing to turn over [Mueller's] unredacted report, hours after President Trump asserted executive privilege to shield the full report and underlying evidence from Congress." (N.Y. Times)

How it's playing: "Trump's feud with Congress puts American democracy on the brink." (CNN)

  • Bob Woodward on CNN, via Brian Stelter: "It's a constitutional confrontation. I don't think it's yet a 'crisis.'"
4. Hero students disarm gunman
Young women console each other during a community vigil in Highlands Ranch, Colo. Photo: David Zalubowski/AP

The three students who disarmed a gunman in a Colorado school shooting leapt up from their desks without a word and with no thought for their own safety when they spotted the gun, one of the young men recounted to AP:

  • They slammed the teenager, a classmate of theirs, against the wall and struggled with him when shots rang out. Kendrick Castillo, who led the charge, slumped to the ground.
  • His close friend, Brendan Bialy, wrestled the gun away and called out to Castillo. There was no response, Bialy told a roomful of reporters on Wednesday as he recalled what happened the previous day at STEM School Highlands Ranch.
  • "Kendrick went out as a hero," Bialy said. "He was a foot away from the shooter and instead of running the opposite direction he ran toward it."
5. Magic mushrooms go street legal
A vendor bags psilocybin mushrooms at a pop-up cannabis market in L.A. Photo: Richard Vogel/AP

Voters narrowly made Denver the first U.S. city to decriminalize psilocybin, the psychoactive ingredient in magic mushrooms, per AP:

  • Decriminalization led by a slim 51%, according to preliminary figures on Tuesday's election.

Why it matters, from Denver Post: "While efforts are afoot to get psilocybin-related measures on the ballot in Oregon and California in 2020, Denver hosted the first-ever U.S. popular vote."

  • Denver's Initiative 301 attracted no organized opposition.
6. Privacy is in the eye of the platform

Illustration: Aïda Amer/Axios

Apple, Facebook, and Google are all firmly on the record now: They agree that privacy is a good thing, that government should protect it, and that you can trust them to respect it, Axios tech editor Scott Rosenberg writes from S.F.

  • All three companies view some kind of privacy regulation as inevitable.

The catch: Each company defines privacy differently and emphasizes different trade-offs.

  • For Apple, privacy is primarily about keeping your personal data between you and your device.
  • For Facebook, privacy chiefly means limiting who can see what you post or send.
  • For Google, privacy is emphasized as an option that you can invoke.

Why it matters: As we enter the voice-assistant era, these companies, along with Amazon, will end up with an even higher footprint in our homes and lives.

7. "It is time to break up Facebook"

Mark Zuckerberg and Chris Hughes at Harvard, less than a year after launching Facebook from their dorm room in 2004. Photo: Rick Friedman/Corbis via Getty Images

Facebook cofounder Chris Hughes calls for the tech giant's breakup in a N.Y. Times op-ed, saying that CEO Mark Zuckerberg is "human. But it’s his very humanity that makes his unchecked power so problematic."

  • "Mark’s influence is staggering, far beyond that of anyone else in the private sector or in government. He controls three core communications platforms — Facebook, Instagram and WhatsApp — that billions of people use every day."
  • "I’m disappointed in myself and the early Facebook team for not thinking more about how the News Feed algorithm could change our culture, influence elections and empower nationalist leaders."
  • "We are a nation with a tradition of reining in monopolies, no matter how well intentioned the leaders of these companies may be. Mark’s power is unprecedented and un-American."
8. "A populist campaign built on dramatic ideas"
Courtesy TIME

Elizabeth Warren to TIME, on her proposed "ultra-millionaire" tax that would affect roughly the top one-tenth of the richest 1% of Americans:

"You built a great business? You earned or inherited a lot of money? Great, keep most of it! But by golly, you’ve got pitch something back in."
9. Divided America: Red Sox at White House
Photo: Omar Rawlings/Getty Images

Red Sox manager Alex Cora and nearly a dozen players say they'll skip this afternoon's visit to the White House to celebrate the team's World Series championship, AP's Jonathan Lemire writes:

  • All those bypassing the ceremony with President Trump, including American League MVP Mookie Betts, are players of color.
  • Every white player on the team — as well as J.D. Martinez, who is of Cuban descent — is expected to attend.

Those around the Red Sox locker room stressed that a player's decision to attend was a personal choice and not, in many cases, political.

  • The racial disparity received attention after pitcher David Price, an African American who said he would not attend, retweeted longtime Boston sports columnist Steve Buckley: "Basically, it's the white Sox who'll be going."

The context: A championship team's coach rarely, if ever, misses the White House visit.

  • But the events have taken on sharp political overtones since Trump took office.
  • Cora has cited his frustration with the administration’s handling of hurricane recovery in his native Puerto Rico.

The big picture ... The split reflects a larger trend across baseball: A number of players hail from Trump-friendly states like Texas and Florida, while the sport has also seen a surge in Latino players and a decline in African Americans.

10. 1 food thing
An Original Impossible Burger (left) and a Cali Burger, from Umami Burger. Photo: Richard Drew/AP

The hamburger, America's very-nearly patriotic staple of every childhood and backyard barbecue, is under threat, writes Axios Future editor Steve LeVine.

  • Last week, McDonald's became the latest major fast-food chain to serve plant-based burgers, saying it will test the "Big Vegan TS" in Germany. By the end of the year, such non-meat burgers will be in 7,200 Burger Kings, 1,000 Carl's Jrs., and hundreds of other fast-food joints.
  • The somewhat jarring arrival of faux beef burgers is part of an unlikely shakeup of the country's cultural bedrock.

"Americans are intensely proud of their hamburger heritage. It's one of the only American food inventions in the last 100 years," hamburger expert George Motz tells Axios. "Now we have invented the fake hamburger."

Mike Allen

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