THE TICKER

Apple debuted the first major redesign of its smartwatch Wednesday to a lot of fanfare over its new, FDA-approved heart monitor. But even before the rollout, the company began signaling the device’s $399 price tag could get even steeper if the Trump administration moves forward with its next round of tariffs on Chinese imports. 

“Our concern with these tariffs is that the U.S. will be hardest hit, and that will result in lower U.S. growth and competitiveness and higher prices for U.S. consumers,” the tech giant wrote this month in a letter to U.S. Trade Representative Robert E. Lighthizer. 

The revamped Apple watch is one of a long list of goods that could cost American shoppers more if the U.S. trade war with China continues to escalate. The administration is weighing whether to announce levies on another $200 billion of imported Chinese goods, a move those close to the process say could come any day. And unlike Trump’s first round of tariffs on $50 billion of Chinese goods — designed to minimize the pain for consumers at home — the next salvo would tax everything from electronics to furniture and toys. 

That raises the political stakes for a White House already facing intense pressure from business groups and Republican lawmakers to back off, especially as the GOP steers into dicey midterms. Investors cheered the news this week that Treasury Secretary Steven Mnuchin had contacted Beijing to restart talks. But all signs point to Trump continuing to dial up the hostilities. 

The president’s own recent trade pronouncements suggest as much. Over the weekend, he waved off Apple’s warning of higher prices, arguing the company should use the tariffs as an occasion to shift production to the United States:

And he said Thursday that the pressure is squarely on Beijing to make a deal, not the other way around: 

Trump is correct that Chinese stocks have tanked this year — though domestic disruptions have contributed. And The Washington Post’s David Lynch writes that the Chinese economy could prove more durable than Trump expects: “Unlike in the United States, the ups and downs of the Chinese stock market affect relatively few people, meaning sell-offs are unlikely to translate into pressure on Chinese leaders … Likewise, any wobble in the Chinese economy thus far has been modest. Though China has slowed from the double-digit growth rates it recorded earlier this decade, its economy grew by an annual rate of 6.7 percent in the second quarter.”

Bloomberg News’s Shawn Donnan writes that Chinese officials are settling in for the possibility of an extended conflict, “which is how hawks in the Trump administration such as [Lighthizer] and trade adviser Peter Navarro see it as well, arguing for tariffs as just one tool to engineer a long-term decoupling of the world’s two largest economies.”

Fully imposing the next round of tariffs would advance that project — while ensuring that about half of all Chinese imports to the United States are subject to duties. “Consumers are going to start feeling the impact on products they use and see on a regular basis. These are not obscure tech products. They’re widely used,” says Naomi Wilson of the Information Technology Industry Council, a tech industry group. “But it’s not just consumer prices. Entire supply chains companies have worked years to establish are at risk.”

MARKET MOVERS

— Uncertainty over Fed's 2019 plans. The Wall Street Journal's Kate Davidson: “Most private economists continue to expect Federal Reserve officials will raise short-term interest rates two more times this year, but are split over the path of rates in 2019, according to The Wall Street Journal’s monthly survey of forecasters. Of the 59 economists surveyed this month, 88% expected the Fed to raise its benchmark federal-funds rate two more times this year, in September and December. That is unchanged from last month’s survey. There is no clear consensus, however, over how many times officials will raise rates next year.”

Atlanta Fed's Bostic supports hiking. Reuters: “The Federal Reserve can continue raising interest rates for at least the next several quarters amid low unemployment and no sign inflation is about to take off, Atlanta Federal Reserve bank president Raphael Bostic said on Thursday. Bostic, a current voter on economic policy who has been wavering on whether the Fed should raise interest rates one or two more times this year, did not lay out an explicit expectation for the Fed’s remaining policy meetings in 2018. ... ‘When the economy is doing well and standing on its own, as it is now, I think monetary policy ought to be moving toward a neutral stance,’ versus rates low enough to still be deemed ‘accommodative,’  Bostic said. ‘For me, this means a gradual increase in nominal interest rates over the next handful of quarters.’ ”

— Initial jobless claims drop. WSJ's Sharon Nunn and Eric Morath: “The number of Americans filing applications for new unemployment benefits fell last week, remaining at a half-century low for the second-straight week. Initial jobless claims, a proxy for layoffs across the U.S., fell by 1,000 to a seasonally adjusted 204,000 in the week ended Sept. 8, the Labor Department said Thursday. This is the lowest level since December 1969. Unemployment benefit applications were near this level last week too.”

— Draghi worries about trade wars. The Associated Press's David McHugh: “The European Central Bank pushed forward Thursday with its plan to gradually phase out its monetary stimulus, saying it is confident in the region’s growth. But its president, Mario Draghi, warned that the United States’ trade dispute with several major powers has become a key economic concern . . . The key threat to the global economy right now, Draghi said, is ‘uncertainties related to rising protectionism.’ ”

Not only did U.S. inflation cool in August, but Americans paid less for some goods and services -- much less in several cases.
Bloomberg News
TRUMP TRACKER

TRADE FLY-AROUND:

— Trump considers renaming NAFTA. The Wall Street Journal's Michael C. Bender: “Trump revealed plans to rebrand the North American Free Trade Agreement as the ‘USMC’ pact — for the U.S., Mexico and Canada — telling Republican donors at a private fundraiser Wednesday that he will drop the ‘C’ if Canada doesn’t agree to changes he is seeking... Mr. Trump groused about Canada during a private meeting with about a dozen supporters, complaining that officials from the U.S.’s northern neighbor describe themselves as good friends to America while imposing tariffs of more than 200% on some American dairy exports.”

— Tariffs' impact subdued so far. WSJ's Harriet Torry: “Tariffs have yet to meaningfully affect the U.S. economy because of the relatively small amounts imposed so far, but trade tensions remain the biggest risk to the economic outlook, according to forecasters surveyed by The Wall Street Journal. More than three-quarters of economists surveyed between Friday and Tuesday, 78.4%, said the reason why tariffs on U.S. imports and exports so far don’t seem to be having much of an effect on the strength of the U.S. economy was because the amount hasn’t been significant. ... Still, nearly 70% of economists said there was a risk that economic growth would come in short of their forecasts in the next 12 months, compared with 22.6% who said growth might outperform their expectations and 7.5% who thought the risks to growth were evenly balanced.”

Inside Mnuchin's “resistance” strategy on Iran.  The Post's Josh Rogin: "Stealing documents off [Trump’s] desk isn’t the only way his top aides are trying to prevent him from taking action on foreign policy. Several administration officials claim that [Mnuchin] has found another way to 'resist' the president’s maximum-pressure strategy on Iran: simply neglect to give the president a document he requested several weeks ago.  The Trump administration is drastically increasing pressure on Iran, including by tightening the financial noose on the regime and banks it uses to fund malign activities across the Middle East. One key tool Trump is considering is to force Iranian banks off SWIFT, the international system that clears trans-border financial transactions...

"Iran rejoined SWIFT in 2016 as part of the nuclear deal that Trump withdrew from this year. Now, other top Trump administration officials and lawmakers want SWIFT to banish Iran again, but Mnuchin and his department are internally opposed to using pressure to force SWIFT to take action... Mnuchin has been slow-rolling the decision-making process to delay final consideration by the president."

Canadian Prime Minister Justin Trudeau said on Thursday he wanted a good NAFTA deal as soon as possible, but did not answer directly when asked if he agreed with Washington that Sept. 30 was the final deadline for talks.
Reuters
U.S. Energy Secretary Rick Perry told his Russian counterpart Alexander Novak in Moscow on Thursday that Washington and Moscow could work together as leading energy producers to ensure global market stability, in remarks made in front of reporters.
Reuters

MELTDOWN WATCH:

— Trump in Scotland. Bloomberg News's Neil Callanan: “Homes earmarked for [Trump’s] golf resort in northeastern Scotland are already attracting interest from property buyers, even before plans to construct them have been approved. . . . The U.S. president’s real estate company said in July that it plans to spend about 150 million pounds ($197 million) building homes, vacation cottages and sports facilities adjacent to the golf resort Trump owns near Aberdeen. As many as 500 homes could be built at the links course if the application is approved.”

POCKET CHANGE

— Goldman names new president. CNBC's Hugh Son: “Goldman Sachs' incoming Chief Executive Officer David Solomon has another big change in store. Solomon has named Stephen Scherr as chief financial officer, replacing Martin Chavez, the firm said Thursday . . . Solomon also named John Waldron as the bank's president and chief operating officer, a move that had been widely expected within the New York-based bank's ranks . . . The moves are Solomon's biggest since being formally named as CEO Lloyd Blankfein's successor earlier this year. He is putting his imprint on his direct reports ahead of taking over from Blankfein on Oct. 1.”

Wall Street of the South braces for Florence. Bloomberg's Christopher Flavelle and Jennifer Surane: "Charlotte built everything it needed to become banking capital of the South: gleaming office towers on a hill surrounded by parking lots, freeways and the assorted concrete markers of rapid development. Hurricane Florence and its floods may reveal the cost of the North Carolina city’s rush to build. After the storm makes landfall Friday morning, it is expected to push monumental amounts of rain on Charlotte and its 860,000 residents. The impact will be worsened by this city’s 'growth is good' philosophy, according to Mary Newsom, director of urban policy initiatives at the University of North Carolina-Charlotte’s Urban Institute. Over decades, the business-dominated establishment tried to draw bankers from the Northeast’s urban centers. They created a dense, Manhattanesque central district dubbed Uptown and invested in a single light-rail line to bring people to buildings inhabited by Bank of America Corp., BB&T Corp. and Wachovia."

— Bezos announces philanthropic initiatives. The Post's Abha Bhattarai and Christian Davenport: “Jeffrey P. Bezos, the world’s richest man, on Thursday announced he was starting up philanthropic organizations focused on providing help to homeless families and preschools for low-income communities, a later start on charitable giving than many of his fellow billionaires. Bezos, the founder of Amazon.com, said he would begin with an initial commitment of $2 billion to create what he called the Day One Fund. It was the result, he said in a statement posted on Twitter, of a months-long campaign to solicit philanthropic ideas from the public. ... Bezos, whose net worth is estimated at about $164 billion, has been criticized for not doing more to support charities, as other billionaires have, including Gates, Warren Buffett and Mark Zuckerberg. And Sen. Bernie Sanders (I-Vt.) has held Bezos up as an example of a leader of a company that does not pay its workers enough.” (Bezos owns The Post.)

— Bezos warns Trump on press attacks. Later Thursday, in an on-stage interview hosted by the Economic Club of Washington, he criticized the president's attacks on the press. "It is a mistake for any elected official in my opinion ... to attack media and journalists. I believe that it's an essential component of our democracy," Bezos said, per Politico. "What the president should say is, 'This is right. This is good. I am glad I am getting scrutinized.' But it's really dangerous to demonize the media. It's dangerous to call the media lowlifes. It's dangerous to say they're the 'enemy of the people.'"

— Apple eyes Chinese consumers. WSJ's Yoko Kubota and Tripp Mickle: “The signature features of Apple Inc.’s new iPhones — bigger screens and dual-SIM support — speak directly to demands in the all-important China market. Chinese rivals already offer similar features for less money. That means the improvements may help Apple retain its market share in China, but may not be able to win new converts to Apple’s ecosystem — and that could keep sales flat, analysts say. . . . After back-to-back years of steep sales declines, Apple’s China business has bounced back recently, helping the company hit record profits. Revenue in the region has risen 16% to $40.53 billion in the three fiscal quarters ended in June. Greater China accounts for about a fifth of its total revenue.”

— Men talk a lot. Bloomberg News's Felice Maranz and Rebecca Greenfield: “Corporate America’s most important publicly-conducted discussions — the quarterly earnings calls held by almost all listed companies — are dominated by men, who talk more often and speak longer than women, according to research done at Bloomberg’s request by Prattle, a company that provides automated research by parsing central bank and corporate communications. In a study of more than 155,000 company conference calls over the past 19 years, Prattle found that men spoke 92 percent of the time. That’s partly because male executives and analysts far outnumber women in those roles. It’s also because men just talk more. ‘Male executives provide significantly more verbose answers to analyst questions than their female counterparts,’ Prattle Chief Executive Officer Evan Schnidman said. ‘One could surmise that male executives are more prone to speaking simply to hear themselves speak.’ ”

The Switch
The crash is an embarrassing incident for a self-driving technology unveiled in 2016 to great fanfare.
Drew Harwell
Business
Americans spent a record $2 billion online during Labor Day, giving retailers new hope ahead of the closely watched holiday season.
Abha Bhattarai
MONEY ON THE HILL

Congress moves to avert shutdown. The Post's Erica Werner: "Congressional leaders from both parties have finalized a plan to avert a government shutdown at month’s end over President Trump’s demands to fund a border wall. Instead they will aim to postpone that fight until after the November midterm elections. The bipartisan pact, announced on Thursday by Appropriations Committee Chairman Rodney Frelinghuysen (R-NJ), reflects the desire of Republican leaders to avoid a nasty shutdown fight weeks before the midterm elections — even if it means sacrificing, at least for now, one of Trump’s most prominent policy goals. House GOP leadership aides say they believe the White House is on board with their approach, but no one can be sure what Trump ultimately will do."

Tax Cuts 2.0 could cost $3.8 trillion. The Post's Jeff Stein: "A second round of Republican tax cuts would add an additional $3.2 trillion to the federal deficit over a decade, according to a new report released by a centrist think-tank. The package was taken up by a House committee on Thursday and is expected to head to a vote on the floor later this month... The second round of cuts would cost $631 billion before 2028 and an additional $3.15 trillion in the decade after that, according to the Tax Policy Center. The finding was somewhat larger than the $2.4 trillion cost over 10 years projected by the Tax Foundation, a conservative think-tank.

And here's the distribution of the tax cut by income group, according to TPC's analysis: 

THE REGULATORS

SEC weakens shareholder advisory firms.  Reuters's Pete Schroeder: "The U.S. Securities and Exchange Commission handed public companies a procedural victory on Thursday in their efforts to reduce the influence of proxy advisory firms, rescinding a pair of staff letters that critics said encouraged mutual funds to rely on their recommendations. The move by the SEC to scrap the 14-year-old staff letters could be an indication the agency is considering a broader overhaul of corporate governance rules... The role of proxy advisers is part of a broader debate over how to improve governance at U.S. companies, which since the financial crisis have faced growing pressure from investors to consider issues like climate change and employee diversity. Proxy advisers often support shareholder proposals in those areas or can go against corporate leaders in other ways."

U.S. Chamber praises. From David Hirschmann, president of the group's Center for Capital Markets Competitiveness: "Reform of the broken proxy advisory system in the United States has for years been one of the top priorities of the U.S. Chamber… We are pleased that the SEC has taken this necessary action, and look forward to working with the SEC in providing additional clarity for market participants moving forward."

FTC eyes tougher anti-trust enforcement. Reuters's  Diane Barz: "The chairman of the Federal Trade Commission, which stops mergers it believes will push up prices, signaled Thursday he was willing to consider tougher enforcement, a move that could affect high profile big tech companies but also energy producers, drug makers and a big swath of the U.S. economy.  Joseph Simons, who was nominated by President Donald Trump to head the FTC in October 2017 and began work in May, noted in a brief speech that during two previous stints at the FTC, most recently as head of the Bureau of Competition, there had been a tendency to take a relatively hands off approach to antitrust enforcement. 'But now at the beginning of my third stint at the commission, things have shifted. The broad antitrust consensus that has existed within the antitrust community in a relatively stable form for about 25 years is being challenged,' he said at a conference organized by the FTC."

The U.S. Treasury and Internal Revenue Service on Thursday proposed new regulations on the treatment of global intangible low-taxed income, or GILTI, a provision of President Donald Trump’s tax overhaul that has stirred concern among U.S. corporations.
Reuters
DAYBOOK

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THE FUNNIES

From  The Post's Tom Toles: “What is this new, alien weather?”

BULL SESSION

Outer bands of Florence lash into N.C. coastline:

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Russians charged in Novichok attack say in Britain on holiday: