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Key Dates to Watch in China-U.S. Trade Dispute: DealBook Briefing

Credit...Doug Mills/The New York Times

Good Tuesday. Here’s what we’re watching:

• Morgan Stanley reported a 42 percent jump in first-quarter profit.

• The will-he-or-won’t-he Trump trade policy

• Will Google become the next target of privacy inquiries?

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The world needs a way to tell whether President Trump wants to pursue his combative trade policies.

The Trump administration has in recent weeks announced a barrage of trade actions. First, Mr. Trump said he was imposing tariffs against steel and aluminum imports from a range of countries. Then came announcements of actions against China that included tariffs on a large number of products.

Very few restrictions have come into effect, though. President Trump has allowed temporary exemptions to the steel and aluminum tariffs. The moves against China have to go through a public comment process before they can take place.

Investors, executives and farmers who have concerns about the economic impact of the trade actions may like that little has so far happened. And they may hope that Mr. Trump uses the leeway he has under trade law to step back from his threats. But supporters of tougher trade policies will be watching closely to see if Mr. Trump actually carries them out.

In the coming months, there are a number of important dates at which the Trump administration has to decide whether it wants to retreat, delay, negotiate, fight on or escalate. To help assess the stance of the United State in this trade standoff, DealBook has compiled these dates.

Before looking ahead, it’s important to note that the Trump administration has imposed new restrictions on some countries.

On March 23, tariffs were applied to imports of steel and aluminum from countries that were not granted an exemption. Those currently enjoying the reprieve are Canada, Mexico, Australia, South Korea, Brazil and members of the European Union.

The next big deadline is May 1, which is when the exemptions on steel and aluminum tariffs expire. Between now and then, members of the Trump administration have to decide whether they want to take an action that could upset staunch allies of the United States. The United States may extend the exemptions if discussions occur or make them permanent if, say, countries agree to side with the United States in its trade offensive against China.

But holding off on the steel and aluminum tariffs for a long time might embolden China, which the United States has targeted with separate actions that focus on China alone. These include two sets of tariffs, one on $50 billion of goods and a threated second set on products worth $100 billion, as well as an action at the World Trade Organization.

The administration can’t announce a final list of goods for the $50 billion of tariffs until May 22. That is when the period for public responses to the tariffs ends. Trade law gives President Trump the power to then impose the tariffs quickly, but it also provides him significant flexibility on the timing.

The trade legislation states that the United States would have to act within 12 months of the date at which the United States trade representative initiated its investigation of Chinese trade practices. This implies the Trump administration has until August 18.

But the legislation suggests it has even more latitude. Once the administration has determined what actions it will take, it can in theory delay putting them into effect by 180 days. Hypothetically, President Trump could stretch things into early next year.

Much remains up in the air, though.

Mr. Trump has the power to pursue trade policy almost at whim. He could argue for extended exemptions for Canada and Mexico, which are also involved in negotiations over the North American Free Trade Agreement. South Korea may also end up with significant tariff exemptions as a result of a trade agreement that country is apparently close to forging with the United States. And that action against China at the World Trade Organization could take years.

— Peter Eavis

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The bank, not the trader.Credit...Mike Segar/Reuters

One of Wall Street’s biggest (and nerdiest) contests is between Goldman Sachs and Morgan Stanley. With each quarter’s earnings, the banks disclose their return on equity, a number that shows the profitability of the equity capital they have deployed in their businesses.

Goldman usually wins. From 2010 until 2017, Morgan Stanley’s annual return on equity was stronger in only two of those eight years, and those two years were not good ones for Wall Street overall.

A big test was going to be how these banks fared in unambiguously good conditions, like those that existed in the first quarter of this year, when trading activity was strong and the economic outlook bullish. Goldman’s return on equity in the first quarter was 15.4 percent, compared to 14.9 percent for Morgan Stanley.

In other words, Goldman clinched the bragging rights. But with some rounding, they both achieved a 15 percent return.

— Peter Eavis

The Wall Street firm reported record revenue and profit for the first quarter driven by a jump in trading and the new tax law.

• Morgan Stanley reported profits of $2.58 billion, up 40 percent from a year ago. That also topped analysts’ expectations of $2.2 billion in earnings, according to Thomson Reuters.

• Earnings per share came in at $1.45, beating the $1.25 analysts had expected.

• Revenues increased 13.7 percent to $11.08 billion. Analysts expected revenue of $10.36 billion.

• Total trading revenue rose 26 percent to $4.40 billion.

• Equity trading revenue increased to $2.6 billion, up 30 percent from a year ago

• Fixed-income trading revenue rose 9 percent to $1.8 billion.

• Fees from investment banking rose 7 percent to $1.51 billion.

• Fees from advising on mergers and acquisitions gained 16 percent to $574 million.

• Underwriting revenues rose 2 percent.

• Wealth management revenues increased 8 percent to $2.37 billion.

Bloomberg reports that the latest data from the International Monetary Fund projects U.S. debt-to-GDP ratio to “widen to 116.9 percent by 2023 while Italy’s is seen narrowing to 116.6 percent.”

The I.M.F. numbers are just the latest highlighting the negative impact the $1.5 trillion in tax cuts could have on the fiscal outlook of the United States.

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President Trump and the first lady, Melania Trump, with Prime Minister Shinzo Abe of Japan and his wife, Akie Abe, on Tuesday at the president’s Mar-a-Lago estate in Florida.Credit...Doug Mills/The New York Times

That seems out — for now, anyway, given President Trump’s tweet from Mar-a-Lago yesterday: “Too many contingencies and no way to get out if it doesn’t work.” Here are a few takeaways about the end of a public flirtation:

• Trade partners and allies are again left wondering about the White House’s trade policy. That’s especially pertinent as the U.S. continues to feud with China; yesterday the F.C.C. blocked wireless carriers from using federal subsidies to buy Chinese telecom equipment.

• The tweet put Prime Minister Shinzo Abe of Japan, who’s at Mar-a-Lago with Mr. Trump, in an awkward position. Japan has been leery of a bilateral trade pact with the U.S., since it risks having to make more concessions than in the TPP with little hope of much in return. Tokyo would like exemptions from potential U.S. tariffs, however.

Fact-check: Despite Mr. Trump’s tweet, South Korea isn’t in the TPP.

Elsewhere in trade: China’s plans to relax foreign ownership rules for carmakers could be great for Elon Musk and bad for Warren Buffett. Or, in Mr. Musk’s case, maybe not.

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Credit...Daniel Mihailescu/Agence France-Presse — Getty Images

Facebook has born the brunt of fury over the tech industry’s practices, particularly after the Cambridge Analytica scandal shed light on how user data is shared. But another behemoth’s practices could come under scrutiny, particularly if Democrats take back Congress in the midterm elections.

More from Mark Bergen and Ben Brody of Bloomberg:

Two years ago, Google altered its offerings in a way that makes it more vulnerable to data-sharing scrutiny. Advertisers using its DoubleClick system to target and measure ads could start anonymously combining web-tracking data (from “cookies” that follow users online) with potent Google information including search queries, location history, phone numbers and credit card information. Until then, Google had steadfastly kept that data separate.

Another thought on Google’s weaknesses, from our colleague Mike Isaac:

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Elsewhere in privacy: Facebook has previewed how its privacy policies are changing to comply with European regulations. Those same rules have emboldened the company to resume face-scanning photographs in Europe — if consumers opt in. Eduardo Porter argues that Facebook is creepy, but still potentially good for you.

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Credit...John Taggart for The New York Times

Justices appeared split yesterday over whether U.S. states could force online retailers to collect sales tax somewhere they had no physical presence.

Justice Sonia Sotomayor said that Congress, rather than the Supreme Court, should settle the matter. But Chief Justice John Roberts said “it would be very strange for us to tell Congress it ought to do something in any particular area.”

The stakes: The case in question, South Dakota v. Wayfair, could upend a decades-old status quo in online retail — and bring states some much-needed revenue.

Elsewhere in taxes: Morgan Stanley analysts say they are uncertain whether the Republican tax overhaul will extend the boom in U.S. business. The chairman of the Council of Economic Advisers asserts that the changes will benefit American workers the most. President Trump filed for a six-month extension for preparing his income taxes. And if you think your taxes are complicated, be glad (on one level) that you’re not Meghan Markle.

• Starbucks will close its more than 8,000 U.S. stores for a day of anti-bias training on May 29, after outrage over the arrest of two African-American men at a Philadelphia store. It’s a positive example for corporate America, Breakingviews says.

• David Hogg, a survivor of the Parkland, Fla. school shooting, called for a boycott of BlackRock and Vanguard because of their holdings in gun makers like Sturm Ruger. (Yahoo Finance)

• How President Trump decided to overrule Nikki Haley on additional sanctions on Russia over Syria. (NYT)

• The C.I.A.’s chief, Mike Pompeo, secretly visited Kim Jong-un a week ago to help prepare for a meeting with Mr. Trump. (WaPo)

• Mitch McConnell said he wouldn’t let a bill meant to protect Robert Mueller go to the Senate floor. (CNN)

• Fox News admitted that it was surprised by Sean Hannity’s having been a client of Michael Cohen, but gave him “full support.” Here’s what Mr. Hannity has said about Mr. Cohen since the April 9 F.B.I. raids on the lawyer’s office and hotel room.

• What Elon Musk (who, granted, can’t run for president) can tell us about future presidential candidates. (WaPo)

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Alexander NixCredit...Pedro Nunes/Reuters

Even before it emerged as a target of international scorn, the consulting firm sought to develop a virtual currency and raise money through an initial coin offering, the NYT reports. (The project, which was led by the former C.E.O. Alexander Nix, appears to be on hold.)

More from Nathaniel Popper and Nicholas Confessore of the NYT:

The goal of Cambridge Analytica’s own coin offering? Raise money that would pay for the creation of a system to help people store and sell their online personal data to advertisers, Brittany Kaiser, a former Cambridge Analytica employee, said in an interview. The idea was to protect information from more or less what the firm did when it obtained the personal data of up to 87 million Facebook users.

Extra credit: Cambridge Analytica helped Dragon Coin, a virtual currency for gamblers linked to a notorious Macau gangster whose street name was “Broken Tooth.”

The tech flyaround

• The Supreme Court will not decide whether federal prosecutors can force Microsoft to turn over digital data stored outside the U.S. (NYT)

• Harbor, a blockchain platform for creating securities based on real-world assets, raised $28 million in a round led by Founders Fund. AppOnboard, which helps design interactive demos, has raised $15 million.

• Some 50 of Kickstarter’s 120 staff members have left since its co-founder Perry Chen returned as C.E.O. in July, including seven of his predecessor’s eight executives. (BuzzFeed)

• IBM posted a second consecutive quarter of higher revenue after nearly six years of decline, an indication that Ginni Rometty’s turnaround may be taking hold. (WSJ)

• The cryptocurrency exchange Kraken has stopped trading services for Japanese residents after regulators there stepped up oversight. (WSJ)

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Credit...Thos Robinson/Getty Images For New York Times

The Wall Street firm’s first-quarter earnings raise a familiar dilemma. As Goldman moves to diversify its operations beyond high-risk trading — one notable example is its Marcus online bank — the strength of its trading shop in the first quarter threatens to overshadow those efforts, Peter Eavis writes.

Stock and bond markets are unpredictable, even in good times, so the helpful trading conditions this quarter may not last. What can Goldman’s senior executives offer to persuade investors that the bank far more than a trading house? More explanations, perhaps — and time.

In tax-related news: The U.S.’s four biggest banks benefited from the Republican tax cuts — to the tune of $2.5 billion.

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Bill Ackman, left, and Carl IcahnCredit...Hiroko Masuike/The New York Times, Heidi Gutman/CNBC

Bill Ackman said that Newell Brands had “made a deal with the devil,” after it agreed terms with Carl Icahn to avoid a proxy fight with Starboard Value. Meanwhile, Mr. Icahn is said to have taken a stake in VMware.

• Toys “R” Us rejected a bid for some of its U.S. and Canadian stores by the C.E.O. of MGA Entertainment. (FT)

• G.E. is said to be working on selling its industrial gas engine business for more than $3 billion. (Bloomberg)

• Martin Sorrell’s departure from WPP will make it harder for creative entrepreneurs to sell out and get rich, John Gapper writes. (FT)

• Steven Cohen has backed a start-up that defends stock-pickers (like him) from high-frequency traders. (WSJ)

• How the funded equity collar, a complex financial product, has grown in popularity with acquisitive groups like SoftBank and HNA Group. (FT)

• Morgan Stanley — well, Morgan Adam Stanley — has left Morgan Stanley. (Bloomberg)

Mignon Clyburn, an outspoken longtime Democratic commissioner on the F.C.C., will step down. (Axios)

• Two more Nike executives, Vikrant Singh and Daniel Tawiah, have been forced out as it overhauls its management ranks after a workplace misconduct review. (WSJ)

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Credit...Matt Edge for The New York Times

“I’m proud of what we achieved at Yahoo. That said, we had a quickly decaying legacy business. All we really managed to do was offset the declines.”

— Marissa Mayer, in the latest Corner Office column

• Merchandise, a traditional way to express fandom, has been amped up for the social media age. (NYT)

• The chairman of the state-controlled China Huarong Asset Management is facing a graft investigation. (Bloomberg)

• KPMG South Africa is flying in troubleshooters and hurriedly meeting with clients after becoming embroiled in three scandals. (Bloomberg)

• Elaine Wynn, the largest shareholder in Wynn Resorts, has demanded that the company restructure its board and improve oversight while regulators investigate how it handled misconduct allegations against Steve Wynn, its ex-C.E.O. and her ex-husband. (WSJ)

We’d love your feedback. Please email thoughts and suggestions to bizday@nytimes.com.

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