The daily business briefing: June 8, 2018

Harold Maass
President Trump travels to Quebec for the G7 summit Friday.
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Allies rebuke Trump over tariffs ahead of G7 summit

President Trump travels to Quebec on Friday for a Group of Seven or G7 summit, where he is expected to face angry push-back over tariffs he is imposing on America's closest allies. Canadian Prime Minister Justin Trudeau said it was "insulting and totally unacceptable" to say the tariffs against America's most staunch allies were necessary for national security, as Trump did. French President Emmanuel Macron warned via Twitter that the other six countries could exclude the U.S. from the traditional end-of-meeting joint statement. Trump said Canada and France already charged "massive" tariffs on U.S. goods. The White House said Trump would skip most of the summit's second day, leaving before sessions on climate change and clean energy, as well as the release of the joint statement. [The New York Times, The Washington Post]


Trump administration reaches deal with China's ZTE

The Trump administration on Thursday reached a deal with Chinese telecom company ZTE, ending devastating U.S. sanctions but requiring the firm to pay a $1 billion penalty for violating U.S. rules on trading with Iran and North Korea. The deal also requires ZTE to pay for a U.S. compliance team that the U.S. is "literally embedding" in ZTE, Commerce Secretary Wilbur Ross told CNBC on Thursday. The sanctions barred the smartphone maker from buying parts from U.S. companies, essentially shutting it down. Chinese President Xi Jinping, who helped pave the way for next week's North Korea summit, personally asked President Trump to save ZTE. Lawmakers in both parties threatened to block the deal over concerns the company's equipment could be used to help China spy on Americans. [CNBC, The New York Times]


IMF agrees to lend Argentina $50 billion after currency plunges

The International Monetary Fund on Thursday agreed to extend $50 billion in credit over three years to Argentina as it struggles with a financial crisis. Argentina requested an IMF bailout a month ago as its currency, the peso, hit an all-time low. The peso's plunge threatened its ability to pay off its debt. The deal amounts to a major shift for Argentina, which long shunned the IMF after a devastating economic crisis in 2001 and 2002 that many blamed on IMF-imposed austerity measures. Argentine President Mauricio Macri's appeal for IMF help prompted national protests. [BBC News, The Guardian]


Spirits council says retaliatory tariffs could hurt liquor exports

The U.S. Distilled Spirits Council said Thursday that 46 percent of U.S. spirits exports could face retaliatory tariffs due to President Trump's levies on imported steel and aluminum. "The imposition of tariffs on these products by our major trading partners threatens to seriously impede the export progress that has benefited our sector and created jobs across the country," said the council's interim president, Clarkson Hine, in a letter to Commerce Secretary Wilbur Ross. The trade group said 65 percent of U.S. whiskey exports could suffer if the European Union, Canada, Turkey, and China respond to the U.S. tariffs with levies against imported U.S. goods. [Reuters]


Stock futures fall ahead of tense G7 summit

U.S. stock futures lost ground early Friday as trade tensions flared between the U.S. and key allies ahead of the Group of Seven summit in Canada. Futures for the Dow Jones Industrial Average dropped by 0.4 percent, while those of the S&P 500 and the Nasdaq-100 fell by 0.4 percent and 0.8 percent, respectively. U.S. stocks were mixed Thursday, with the Dow closing up by 0.4 percent while the S&P 500 closed down by less than 0.1 percent and the Nasdaq fell by 0.7 percent. "This G7 meeting does not follow the historical template," said Quincy Krosby, the chief market strategist at Prudential Financial. "The market is concerned about tariffs, negative trade dialogue coming from that meeting." [MarketWatch, The Associated Press]