President Trump Goes Round Two With China

Grind for February 24th
“An American monkey, after getting drunk on brandy, would never touch it again, and thus is much wiser than most men.”

– Charles Darwin

Another One

The Headline

Trump Administration considers more trade restrictions on China

The Grind

The Trump Administration is considering making changes to an export rule in order to make it more difficult for China to use American-made equipment to build microchips.

As it stands, the “direct product rule” limits foreign countries’ use of American-made tech for military or national security purposes.

Under the proposed changes, any factory that uses American equipment to build chips for Chinese tech company Huawei would need to obtain a license. A separate rule would block US companies from using their overseas facilities to supply Huawei.

Some American companies have evaded existing restrictions by selling components to Huawei that are less than 25% American-made. The Commerce Department wants to lower that figure to 10%.

The Details

The proposed restrictions are designed to slow China’s path towards global tech dominance and prevent spying, but critics worry they could drive customers away from US products.

Modern chip factories cost billions of dollars to build and American-made chip-manufacturing tools are among the most expensive machinery in the world.

If that machinery also requires a license to use, many companies will simply buy from another source.

The restrictions also threaten to disrupt established supply chains for semiconductors, creating a ripple effect that could harm countless companies in the US and elsewhere.

Officials will meet February 28th to discuss the proposed restrictions and their effects.

Dark Roast

The Headline

Home furnishings retailer Pier 1 Imports files for bankruptcy

The Grind

The latest in a series of brick-and-mortar giants to declare bankruptcy is Pier 1 Imports, a high-end home furnishings store founded in 1962.

On Monday, the company said it had secured $256 million from lenders as it attempts to find a buyer.

“Today’s actions are intended to provide Pier 1 with additional time and financial flexibility as we now work to unlock additional value for our stakeholders through a sale,” said Pier 1 CEO Robert Riesbeck.

The Details

Pier 1 has closed roughly 400 stores and all of its locations in Canada. Many of the 500 locations still open have started going-out-of-business sales.

The company lost $59 million during the final quarter of 2019 with sales down 11.4% YoY.

Overall, US retailers announced more than 9,000 store closings in 2019 (an increase of 59% from the previous year).

The home goods sector in particular has struggled to compete with the rise of online retailers like Amazon and Wayfair, which give consumers the freedom to browse furniture and other products online.

Ironically, some department stores struggling to compete with online retailers have installed Amazon kiosks inside their stores where consumers can drop off items they wish to return.

Did you know… According to the American Society for Microbiology, 90% of women and 75% of men wash their hands after using a public restroom.