Sep 18, 2018

Axios Future

By Bryan Walsh
Bryan Walsh

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1 big thing: The forever trade war

Photo: Justin Sullivan/Getty

Historians say President Trump is a symptom of the anti-establishment turn in global politics, not its cause. Therefore, the populism that has erupted across the U.S. and Europe will go on or die — independent of what happens to him.

But what about the global trade war, which seems to be wholly Trump-driven? Experts tell Axios that it only appears that way: Protectionism, they say, is now part of the populist zeitgeist — and will outlast Trump.

Driving the news: The U.S.-China trade war is now up to $360 billion in goods between the two countries. Beijing today retaliated against Trump with tariffs on an additional $60 billion in U.S. trade, bringing the total to $110 billion. Yesterday, Trump said he would impose tariffs on another $200 billion in Chinese imports, bringing the total from the U.S. side to $250 billion.

We previously reported that the trade war with China could last a year or longer. Now experts say the war will be larger and endure for an unknown period of time.

  • "My view is that Trump has accelerated and amplified latent anti-trade and anti-globalization populist forces. And I think this represents a systemic break with the past 75 years," says Gary Hufbauer of the Peterson Institute for International Economics. 
  • "Trump’s successor is unlikely to go back to the postwar model of American leadership of the world economic system along liberal free trade and investment lines," says Hufbauer.
  • Edward Alden of the Council on Foreign Relations agrees: "It’s clear we are never going back to the status quo pre-Trump. Congress and the administration are going to need to fundamentally rewrite their relationship on trade, not try to revive the old rules. And the WTO will either need to be refashioned or it will die."

If there’s any chance for a return to the pre-Trump system, it’s this: "[T]he polls suggest that younger American voters are generally quite pro-free trade and see the benefits of globalization," says Alden. "So I think the protectionist moment we are seeing will be shorter rather than longer. But a lot of damage could be done in that short time."

Go deeper: A new era of global trade wars

2. Surviving Amazon

In Seattle. Photo: George Rose/Getty

In the last year, Amazon earned 50 cents of every dollar spent online in the U.S. At nearly $1 trillion, its market cap grew to triple the combined value of Sears, JCPenney, Best Buy, Macy's, Target, Kohl's, Nordstrom and Walmart.

Axios' Erica Pandey reports: I learned at a conference in New York yesterday, Jeff Bezos' tech giant has quickly become the existential crisis in front of almost every e-commerce and brick-and-mortar firm, whose CEOs are faced with a singular question: How do I beat — or even survive — Amazon?

Three top retail and e-commerce CEOs — Tobi Lütke of Shopify, Binny Bansal of Flipkart and Jeff Gennette of Macy's — fielded that same question at Recode's Code Commerce conference. Amazon seemed to be mentioned every few minutes even though the company sent no speakers to the event.

  • Venture capitalists and other conference participants seemed less interested in what retailers were working on than in how they were responding to Amazon.

What they're saying: It's "impossible" to beat Amazon at its own game, says Scott Galloway, a professor at NYU's Stern School of Business and author of "The Four," a critique of Big Tech, including Amazon. But each of the CEOs argued that there are chinks in the e-commerce king's armor. Here is how they are attacking the threat:

1. Be friendly. Lütke says that Shopify champions its business clients while Amazon thinks "merchants don't matter."

  • Shopify's model is to provide small businesses the tech to sell online. It relies on the success of these brands — large and small — to succeed itself.
  • According to Lütke, Amazon conversely terrifies brands, who worry it will wipe them out with super-low prices, selection and convenience.

2. Know your (foreign) market. Amazon and Flipkart, its homegrown rival in India, are locked in a fight for the world's fastest-growing e-commerce market. But Bansal thinks he can win, relying on intimate knowledge of the country.

  • "We had to build out our own last-mile delivery system. The kind of logistics reach we have in the country is almost unfathomable," he says.
  • To defend against Amazon, Flipkart has teamed up with Walmart, which owns 77% of the Indian company.

3. Play to your (physical) strengths. Macy's physical presence gives it deceptive power, Gennette says. To put this in context, about 90% of U.S. retail sales still take place in physical stores, not online.

  • "All retailers, even Amazon, are going to need an omnichannel presence," Gennette says. "A lot of customers still want a guide that will help them on their way to their purchase."
3. The dying humanities degree
Expand chart
Data: National Center for Education Statistics; Chart: Harry Stevens/Axios

Amid uncertainty for how to best navigate the profoundly changing job future, students in U.S. colleges are turning away from the humanities and toward STEM subjects, according to data from the National Center for Education Statistics.

The big picture: The number of students earning degrees in subjects such as art, history and language has dropped each year since 2012 — around the time undergraduates who enrolled during or right after the financial crash were graduating. As is clear in the chart above, their share of the total has shrunk as well, Axios' Stef Kight reports.

Among other possible factors in the shift are the Obama administration's investment in and promotion of STEM education, the shrinkage of lucrative Wall Street jobs and a surge in STEM salaries, especially in artificial intelligence and blockchain.

4. Worthy of your time

Illustration: Lazaro Gamio/Axios

AI and keeping marketing human (David Weinberger — DMEXCO) (video)

Sizing up Teddy versus Trump (Doris Kearns Goodwin — Vanity Fair)

EU crackdown misses Big Tech targets (Sara Fischer, David McCabe — Axios)

How US banks took over the financial world (Martin Arnold — FT)

Found: The universe's missing matter (Katia Moskvitch — Wired)

5. 1 fit thing: Wearable yoga

Yogis in Hoboken, New Jersey. Photo: Gary Hershorn/Getty

For those who lurk in the back of their yoga class, insecure about their skills, your latest nightmare is a pair of pants that know when you're making a mistake.

How it works: Three sensors made by Wearable X — one at your ankle, another behind your knee and a third at your hip — can tell whether you're correctly doing downward dog, or any other yoga pose. If you've got it, the sensors vibrate to congratulate you. If you're not quite there, the app tells you how to adjust, reports Erica.

  • Billie Whitehouse, Wearable X's CEO, said yesterday at the Code Commerce conference in New York that she's betting on the market for athleisure — athletic clothing that you can wear all the time.
  • Yoga pants outsold jeans last year in the U.S., U.K. and Australia, she said.
  • Wearable X's latest innovation: A link from your pants to your iPhone health app. The technology can tell if you went for a run (or if you didn't) and recommend post-workout yoga poses to keep you nimble.
Bryan Walsh