From Steaks at Mar-a-Lago to the Cusp of a Trade War

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Chinese finance officials held high expectations as they entered their first major meeting with their new U.S. counterparts last summer.

President Donald Trump had feted Chinese leader Xi Jinping at his Mar-a-Lago resort a few months earlier, suggesting the two nations would enjoy warmer ties than his campaign-trail attacks had implied.

Those hopes were dashed by Trump's Treasury Secretary Steven Mnuchin and Commerce Secretary Wilbur Ross nearly as soon as the initial talks began. And it's been downhill from there.

Now Mnuchin and Ross are trying to head off an all-out trade war at meetings in Beijing today and tomorrow. The negotiations are made harder by the administration's failure to nurture ties with China, even as Trump proclaims a good personal relationship with Xi, and the warring factions in the White House on economic policy.

Saleha Mohsin and Andrew Mayeda have a detailed, insider account of how relations frayed between the world's two largest economies.

Global Headlines

May's dilemma| U.K. Prime Minister Theresa May is in more Brexit trouble after her “War Cabinet” rejected her plan for a future customs deal with the European Union. The man she just promoted to Home Secretary, Sajid Javid, helped tip the balance 6-5 against her. The defeat puts May in a bind because there's no majority in parliament for the Brexit camp's proposal. She may have as little as a week to work out her next move, as Tim Ross, Robert Hutton and Kitty Donaldson report exclusively.

Rudy's Stormy disclosure | Trump reimbursed his lawyer Michael Cohen for $130,000 in hush money paid to adult film actress Stormy Daniels, former New York Mayor Rudy Giuliani said, contradicting Trump's statements and providing the clearest link yet between the president and Daniels, who alleges they had an affair. Giuliani — who joined Trump's legal team last month — made the disclosure as Trump signals a more aggressive stance toward Special Counsel Robert Mueller's investigation into alleged Russian meddling in the 2016 election.

Chinese investment | Wary European nations are set to tighten controls over foreign investment in response to China's seemingly endless appetite for acquisitions on the continent, according to a Bloomberg survey. At least 15 governments support draft legislation to screen investments from outside the trade bloc. Europe's not alone. In Asia, many are looking at Sri Lanka's experience with Beijing's infrastructure-building initiative and wondering whether the benefits might not outweigh the costs.

Charm offensive | North Korean leader Kim Jong Un's turning on the charm ahead of a planned historic summit with Trump. After his successful meeting with South Korean counterpart Moon Jae-in, Kim's invited foreign media to witness the shutdown of North Korea's nuclear weapons test site this month, according to Moon's spokesman. Skeptics say Kim's simply buying time to try to ease sanctions on his regime.

Drums of war | There have been coups and revolutions, invasions and proxy conflicts, but the Middle East hasn't seen a head-to-head war between major regional powers since the 1980s. There's a growing risk that one is about to break out in Syria, where Iran is entrenched after propping up President Bashar al-Assad and Israel sees a direct threat on its border. As David Wainer, Donna Abu-Nasr and Henry Meyer report, the path to escalation is clear and the rhetoric is apocalyptic.

Wealth and austerity | To understand austerity's toll on voters in the age of Brexit, take an hour's drive out of London to Surrey, home to soccer stars, bankers and Chancellor of the Exchequer Philip Hammond. Jess Shankleman and Jill Ward find that even in England's richest region, the local government cannot balance its books and is stripping back vital public services.

And finally... Remember Muntazer al-Zaidi? He's the Iraqi journalist who threw his shoes (he missed) at then President George W. Bush (he ducked) during a 2008 press conference in Baghdad. This time al-Zaidi is hoping to hit his mark and join the more than 300 members of parliament in a May 12 election, the first since Iraqi troops defeated Islamic State and recaptured Mosul, its biggest northern city.

--With assistance from Ruth Pollard Flavia Krause-Jackson Marc Champion and Andrew J Barden

To contact the author of this story: Kathleen Hunter in London at khunter9@bloomberg.net.

To contact the editor responsible for this story: Anthony Halpin at thalpin5@bloomberg.net.

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