The daily business briefing: August 31, 2018

1. Trump moves to scrap federal pay raises

President Trump announced Thursday that he was canceling pay raises that were due in January for most federal employees. "I have determined that for 2019, both across‑the‑board pay increases and locality pay increases will be set at zero," Trump wrote in a letter to House and Senate leaders. Trump said federal agency "budgets cannot sustain such increases," adding that the decision "will not materially affect our ability to attract and retain a well‑qualified federal workforce." The move came nine months after Trump signed a $1.5 trillion tax cut bill. The House has passed legislation with no raise. The Senate approved a competing measure with a 1.9 percent increase. Trump's move effectively prevents a large increase from taking effect under a law triggering raises if lawmakers make no decision by the end of the year.

NBC News

2. Trump threatens to pull U.S. out of WTO

President Trump on Thursday threatened to pull the U.S. out of the World Trade Organization if it doesn't "shape up" and treat the U.S. better, Bloomberg reported. Trump frequently complains that trade partners impose policies that are unfair to U.S. companies, which he says costs American jobs and hurts U.S. corporations, even national security in the case of policies that hurt U.S. steel production. He blames the WTO for letting it happen. "If they don’t shape up, I would withdraw from the WTO," Trump said. Pulling out of the organization could undermine the foundation of the world's trading system.

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up

Bloomberg Reuters

3. Coca-Cola to buy U.K. chain Costa Coffee for $5.1 billion

Coca-Cola said Friday that it has agreed to buy U.K. Starbucks rival Costa Coffee from British drinks and hotels group Whitbread for $5.1 billion, a major step in Coke's ongoing move to diversify from its soft-drink roots. Costa has nearly 4,000 stores in 32 countries, so the purchase will give Coca-Cola "a strong coffee platform across parts of Europe, Asia Pacific, the Middle East, and Africa, with the opportunity for additional expansion," the company said in a statement. The deal is Coca-Cola's biggest brand acquisition ever. It will give the company a foundation for challenging Starbucks, which has 27,000 coffee outlets around the world. Whitbread said it would use the money from the sale to expand its Premier Inn hotel brand.

The Wall Street Journal CNN

4. Stocks weighed down by report that more China tariffs are coming soon

U.S. stocks dropped late Thursday on fresh trade-war fears after Bloomberg News reported that the Trump administration would impose tariffs on $200 billion in Chinese goods as early as next week. Stocks were already struggling earlier in the day, coming off a four-day rally fueled by optimism over easing trade tensions between the Trump administration and Mexico and Canada. Bloomberg said the administration could impose the 25 percent tariffs right after a public review period ends next week, although it could schedule a delay before they take effect. China has threatened to retaliate. "Markets have kind of gone to sleep on these things," said Sameer Samana, a strategist for the Wells Fargo Investment Institute. "We think this might take as long as a year or two to play out." U.S. stock-index futures were flat early Friday.

The Associated Press MarketWatch

5. U.S., Canada negotiators agree to keep pushing toward NAFTA deal

Negotiators from Canada and the U.S. wrapped up a third day of trade talks on Thursday and agreed to continue working to resolve final sticking points on revamping the North American Free Trade Agreement by President Trump's Friday deadline. "Canada's going to make a deal at some point. It may be by Friday or it may be within a period of time," Trump told Bloomberg Television. "I think we’re close to a deal." Canada rushed to rejoin the NAFTA negotiations after the U.S. reached a two-way deal with Mexico on Monday. Trump had harshly criticized Canada and threatened to leave it behind, but both he and Canadian leaders have struck a more positive tone as the talks progressed.

Reuters Bloomberg