Welcome to Your Trade War, World

Today's Agenda

• Trump is overstating the threat China poses to fair trade.
• America's gun-tracing system is ridiculous.
• The First Amendment has been weaponized.
• Trump's NATO-Putin summit combo could be dangerous.
• David Einhorn has his clients' money to keep him warm at night.

Trade War Eve

(Bloomberg Opinion) -- Happy Trade War Eve, the night before the world's least-beloved holiday, Trade War-mas, when the Trade War Elf delivers tariffs to disappointed girls and boys all over the world.

Yes, the Trump administration plans to put tariffs on $34 billion worth of Chinese goods after midnight, and China has promised to retaliate, escalating a conflict that could harm economies and companies on both sides. Among those victims are U.S. industries the tariffs are ostensibly supposed to help.

American computer-chip makers, already bruised by China-U.S. squabbling, could get hit with tariffs intended for Chinese companies because they help build so much of the equipment that comes from China, writes Shira Ovide. Foreign cars threatened by tariffs – including some made in U.S. factories – accounted for much of a U.S. auto-sales boom in June, notes Anjani Trivedi. And U.S. automakers face higher costs from aluminum and steel tariffs and retaliatory duties in Europe; these already have General Motors Co. and Harley-Davidson Inc. warning of job cuts.

As with any war, it's important to understand why this one is happening. And as with many wars, the raison de guerre here is overstated by the aggressor, writes David Fickling. Yes, China has its thumb on the scale in favor of its own industries – but not so much that it merits going to war. As evidence, note how eager people still are to invest in China:

Cooler heads may still prevail to prevent a destructive full-scale conflict. The stock market (which rose today) seems to hope so; and negotiators on both sides occasionally make compromising noises. But damage has already been done to confidence and stock prices. 

America's Gun-Tracing Process Is Ridiculous

In 2018, you'd think running a trace on a gun would be almost too easy for law enforcement – get the gun's identifying details, bang them into a keyboard, and presto, you've got the owner. Instead, the system for keeping track of who bought what gun when and where is based on technology more appropriate to 1818 than 2018 – big stacks of boxes full of paper. This is dumb – and purposefully so. The National Rifle Association has for decades fought any effort to digitize the records, warning it will let the government take all your guns away. That has to end now, Bloomberg's editors write. 

Also by Bloomberg's editors: The European Union's deal on migration is “ a muddle that leaves important details blank.” 

The First Amendment Has Been Weaponized

Last week, a slim conservative majority on the Supreme Court shot down a California law requiring pregnancy clinics to make patients aware the state pays for abortions. The conservatives, led by Justice Clarence Thomas, used the First Amendment to justify this ruling; Noah Feldman warns there will be many more such decisions in the future, using free speech to roll back all sorts of regulations in all walks of life.

Liberals complaining about this are being accused of hypocrisy – but this free-speech fight is a very different one from those of past decades, writes Cass Sunstein. You can be for, say, the Pentagon Papers and against, say, Citizens United and still keep your Liberal Club membership card.

Trump and Putin Against the World

NATO meets next week in Brussels, after which President Donald Trump will meet Vladimir Putin in Helsinki. The timing is worrisomely reminiscent of Trump's G-7/Kim Jong Un summit combo, in which he dissed allies and then embraced North Korea's dictator, writes James Stavridis. “A second round of such behavior will solidify the view in Europe that the president is irredeemable as a reliable partner, leading to one of the deepest crises in the alliance's 70-year existence,” James writes.

One of Trump's stated big problems with NATO is that its members don't pay enough for U.S. military protection. But he should be careful – a world in which everybody pays in trade for military protection could end up benefiting China and Russia more than the U.S., warns Leonid Bershidsky.

Einhorn's Warm Comfort

David Einhorn was the subject of a brutal front-page Wall Street Journal story today, in which the famous hedge-fund manager's clients complain of his recent poor returns, day-time naps and their inability to take their money back. A bad day for Einhorn, right? Matt Levine argues that any day is a good day for Einhorn, as long as he still has all of his clients' money: “If your investors are complaining to the press about how onerous your liquidity terms are, you made the right call on the liquidity terms. If they were less onerous, your investors would be gone.”

Chart Attack

Maybe Einhorn's problem isn't napping (because naps are good?) but the fact that the contrarian investing many hedge funds practice has been disastrous this year, writes Stephen Gandel:

Trump celebrated the Fourth of July by tweeting his frustration with high oil prices. Liam Denning notes the real audience for this was not necessarily OPEC – which can't do all that much about it – but American drivers, who are starting to buckle under gas prices:

Speed Reading

A Brexit-agreement deadline extension could be good for the UK and the EU. – Therese Raphael 

Asset managers should get stress-tested just like banks. – Mark Gilbert

Roger Federer's Uniqlo deal is a good fit. – Alex Webb

Open-office plans were supposed to make workers collaborate more. They do the opposite. – Leonid Bershidsky 

“Creating unity from diversity is a constant uphill battle” – but it's also worth it, economically. – Noah Smith 

Why is recycling garbage so hard? Faye Flam and Adam Minter debate. 

ICYMI

The world is too hot. Elon Musk might help get those kids out of that cave. Amazon is releasing a holiday toy catalog. Scott Pruitt has more time to look for his own lotion.

Kickers

Who could have guessed an “orgasmic meditation” company would have a dark side?

Scott Pruitt must be kept moist.

Trump will be greeted in London next week by a giant floating baby version of himself.

The Earth's carrying capacity for human life is not fixed.

Vanity Fair's best TV shows of the year so far.

Vanity Fair's best movies of the year so far.

Note: Please send lotion, suggestions and kicker ideas to Mark Gongloff at mgongloff1@bloomberg.net.

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To contact the editor responsible for this story: Timothy L. O'Brien at tobrien46@bloomberg.net

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