We will find out. And some say just when you called into a netflix show, it is canceled. Why the ax falls so quickly. We explore. Our top story, the trade war between the u. S. And china, President Trumps decision to delay 10 tariffs on an additional 300 billion of chinese exports hasnt stopped beijing from hitting back. A report says china has no choice but to take necessary measures to retaliate. Apple shares have rebounded. According to bank of america, apple is facing a much lower impact from tariffs as a result, and the impact to Company Earnings could be minimal if products are exempt. To discuss the continued trade standoff we have eugene munster, and in los angeles, bloomberg trade reporter sarah mcgregor. Sarah phyllis and over the last 24 hours, still no sign of how china will tell will retaliate, right . Sarah we dont have a clear picture yet of how china will retaliate. The week is such a whirlwind, the trade war, so many ups and downs. Companies like you said, the apples of the world who have more time to get their holiday gear in, will be held, while not helping apparel makers or footwear makers who will still get those september 1 duties, and we are still no closer to a deal with china. Emily you concluded it is unlikely apple will be hittite hit by tariffs, but you still have the apple watch, still set for tariffs september 1, two weeks away. How likely is apple going to dodge this . Eugene a highbrow mobility that they will dodge it. That will not be in consensus, that thinking. That is more clearheaded thinking, i would suggest, in terms of how this plays out. I want to talk about that. There is a lot of misunderstanding of how these tariffs are ultimately implemented. There is discretion from the administration on which companies to implement against. But keep in mind, the goal of tariffs is not to hurt u. S. Companies. The goal is to hurt competitors coming into the u. S. Market. U. S. Domicile companies tend to get a reprieve from these tariffs. Im not saying that there is no probability, i think it is a very low probability that apple will face any tariffs, even after the reprieve this week. I think that it largely speaks to the misunderstanding of the markets. I have a strong feeling apple products will not be targeted. There is another piece to this story regarding apple. When you think about the symbol, apple is a global symbol in terms of the strength of a u. S. Company, and if the administration were to tariff those products, that would undoubtably undoubtedly be painful and have a negative impact on apple. The take away is that there is misunderstanding about the tariffs and apple wont the impacted. Emily apple is the Biggest Company in the world with most exposure to china. Sarah, would you agree . Sarah we know someone like steve jobs had access to somebody like president donald trump. Apple may be big enough to have enough sway with the administration and have the ear of the white house. We are really hearing where some of the pain is, smaller Tech Companies, people who make gadgets or apparel makers, footwear makers, and they havent been able to have the same influence to keep their items off the list or get those delays. At the end of the day, the Trump Administration, we heard from trump yesterday, saying tariffs are a Pressure Point for him that he is not afraid to use, but there is a lot more tools in his chest. A big issue for these Tech Companies is retaliation from china. They have fewer items to hit from the u. S. Because they import less with tariffs. Are they going to hit investment . Are they going to make it harder to do business in china . Are they going to make it harder for apple or other companies to sell products there . It is a big question. Emily tim cook had several meetings with the administration and the president himself and says apple asked for a tariff reprieve on the mac pro. The president said he would not grant that. Eugene, lets walk through scenario sprayed lets say apple products on the list for september 1, air pods, apple watches, et cetera are tariff. What is the impact on apple then . Eugene before i jump into that, i put this in the heavy speculation category. I want to remind people this will take a year to play out but it is important we go through that. Lets say the watch and air pods are the subject of tariffs. It increases costs 10 to 20 . What is the impact on apple . Those two segments are roughly 10 of revenue, just under 10 revenue. That would have a negative impact on that 10 . Every percentage of growth is important for investors. If that happened, it would have a negative impact on apple stock. But that would probably be the context. I could see that having potentially, taking out. 5 or 1 of apple revenue if that was implemented for a year. Keep in mind, this is just for the u. S. I misspoke, i said 10 of revenue, that the u. S. Portion of that is more like 3 of revenue. Emily lets take it a step further. December 15, the iphone is hit by tariffs. What then . Eugene iphone is a 60 of revenue in the u. S. , about a third of iphone revenue, so we are talking about 25 of the business. The question comes up, who is going to pay for that . I dont have a good answer whether that is going to be apple, or shared with the consumer. But that again would have a negative impact. What you would see in this case, a low, remote probability this happens, but if it did happen, you would see People Holding onto their phones longer. The upgrade cycles would be stretched out. It would not be a situation, it would be unlikely somebody would leave their iphone for a galaxy or samsung device, but it would have a negative impact. If you would ask me to put a percentage on that, that could have a 1 , 2 , 3 potential, albeit very unlikely. Emily sarah, as these companies try to maintain a relationship with china, how difficult is that at this time . Sarah i misspoke earlier, i mentioned steve jobs and it was tim cook, tim cook visited with trump. A lot of companies are shifting their supply chains, it is not an easy process, but we saw crate barrel say they are doing less sourcing in china. Imports from vietnam into some of the ports here are up. So we do see signals that maritime trade ties are changing, but these are deep relationships built over time. Just to say companies can start changing productions lines production lines are sourcing from different places is too simplistic at this point. And also, the Trump Administration ultimate goal that companies are going to set up shop here and reshore all their production is also tough to imagine. Wages here are pretty high, there is a cost to setting up your production here as well. So we are still seeing how it plays out, but now it looks like there are shifts from china to lowercost places in southeast asia. Emily bloombergs sarah mcgregor, following the trade dispute with us, as well as gene munster. Gene, you are sticking with me. Staying on apple, 14 point 4 billion battle with the European Union reaches the blocks courts next month. They hearing puts a spotlight on a crackdown on tax deals doled out to big companies. The eu ordered ireland to recoup the record some plus interest, saying the worlds Richest Company was handed an unfair advantage. Coming up, continued anticipation for the release of new electric cars from the likes of jaguar and honda. But will anyone take on tesla . We discuss. Check us out on the radio, the bloomberg gap, bloomberg. Com and siriusxm in the u. S. This is bloomberg. Emily electric vehicles are poised to top 100 thousand registrations in california, a rising share of the car market in the state, counter to a downward trend in sales overall, annual deliveries expected to fall 4. 6 percent according to the california new car dealers association. Tesla registrations surged over 40,000 in the first half, four point 2 market share in the u. S. s most populous state. Bloomberg auto reporter Craig Trudell and eugene munster, jean, the electric car landscape has shifted in the last year dramatically, and will again this year. How do you think tesla will fare against new competition . Eugene they will fare exceptionally well. Some quick numbers here. 2 of cars sold year to date in the u. S. Has been electric. Tesla caught 75 market share. Call 865 of total u. S. Market share around the model three, rough numbers here, but getting perspective. And what we have looked at is how sustainable. Well they fair well . It comes down to alternatives for consumers. This year there are 17 electric cars on the market. More competition for model three and tesla. Take a closer look at the 17 number, and they break down into two camps. One camp of 70,000 and greater in price, not a massmarket car. The other is vehicles that have a range of 130 miles per day or less. That is another market that isnt feasible. The sweet spot is less than 40,000 and greater than 220 miles. That boils down to five vehicles. Let me finally get to the punch line. In that group of five, there is the chevy volt, and to hyundai cars most of your viewers i suspect have never heard of. Put those five cars together and the only car people are going to buy is the model three. Emily that said, bloomberg is reporting a fascinating story out of germany. The story of a rental car Company Called move that placed a big order for tesla, and there were problems. Moisture in the headlights, scratches, tell us what happened. This was an interesting story where you have a Company Called move that is trying to be called next move, trying to be the leading rental car company in germany. The model three is a very attractive package, it offers a range that is feasible for a daily driver, and at an attractive price point. There is a lot to like about tesla and terms of over the air updates, a cool brand elon musk has built, but the big criticism next move has leveled that the companies is that they dont have their their sales and Service Organization in that country in a position to be able to handle repairs in a smooth way. That was the big knock this company has leveled at tesla. So after those first 15 deliveries, next move was going to take delivery of another 85 model three cars, but that was called off, definitely signs of a lot of work to be done in some of these markets that we expect to be a key driver for tesla to be able to continue to expand. Emily meantime, craig, didnt tesla in this case try to deliver cars that had already been registered, therefore would not count toward new registrations . Craig there are concerns about whether that is an isolated incident. Tesla downplays it as that they describe it as an issue of matching vin numbers of vehicle identification numbers on two vehicles. But certainly if you are next move and making a bulk order, you want to take advantage of tax credits to help stop at us to help subsidize that purchase that was a major issue for next move. That combined with quality things he referred to and the delay on repair work that they described to us in frankfurt, combines to them being very disappointed in the experience of dealing with the company. Emily gene what is your reaction . Tesla is the leader in electric cars, but certainly not without problems that could prevent a new buyers from jumping on board. Eugene everything that craig outlined is negative, no doubt about it. My reaction is to take a step back and look at the bigger trend. Tesla has quality issues. There are quality issues around it. I think those are generally under the magnifying glass, because this is a company in the news, it comes under the magnifying glass. I do not own a tesla or shares in tesla, but i try to keep a clear view of what is going on. My response, emily, is that yes, there is negatives, but the Bigger Picture is that this is a compelling value and it is an undeniable truth that cars should be electric. If you put that together, the substance of this is going to seem very simple. What are the delivery numbers in the September Quarter . If they move up from 77,000, the surprise number in june, move up from that number in september, that will be a powerful sign that despite all of the problems that get reported around quality, there is something bigger going on. And that simply is that people want electric cars. Emily your answer begs the question, why dont you own a tesla . Eugene i dont own a tesla because luke is two and a half years old and i promised to turn money back over to investors before i get a new car. Emily good answer. Craig, what is next . Tesla has challenges and we have the second half of the are coming. What are you looking out for . Craig in addition to working through some of these service issues, a big secondhalf stories going to be how quickly they are able to finish up a plant in china. There is a major concern of the trade war flaring back up, being a major risk to this company. Because despite the fact china puts massive tariffs on imports of vehicles built in california, tesla has built a significant business in that market. And to the extent they are able to finish the gige factory in china and start spooling up production locally, there is a substantial opportunity there for them to keep expanding. They set this ambition to finish this plant later this year, and it really is an ambitious timeline they set. I would not be surprised to see that timeline flip. Often we see out of elon musk, he sets a goal that is really a stretch and tesla maybe hits it, may doesnt. But the Bigger Picture eugene is talking about is, can they get production started in china . Because once they do, that does unlock a significantly bigger market for them, a bigger segment of buyers for them in china. Emily Craig Trudell, thank you, Loup Ventures eugene munster, sticking with us. Prove cars are getting smarter. Eugene has results of a new test. This is bloomberg. Emily Digital Assistants are taking over. But does alexa, syria or google understand you best . Eugene munster of luke ventures conducted a digital assistant i q test. Eugene, who one . Google. 93 of the questions were answered. Second was a series with 83 percent, up from 77 a year ago. Alexa was third at 80 , a big jump from 61 accuracy one year ago. Altogether, google wins, an unprecedented number of correct answers. I think alexa made huge improvement. It is worth mentioning that the survey we do, we ask each device 800 questions in five different categories, everything from commerce, information, commands, and there is a bigger insight into the winter in that these devices across the board have had unprecedented improvement in their ability to answer questions. Over the past two years, since we have been doing this, on average each of them has increased accuracy by 30 . So they are getting much smarter. Emily do you think the lead google has, at least in your survey, is enough to impact sales and give it a boost . Eugene no, the category is so small. But where it matters is that the idea of voice and use of voice becomes a fabric of other products, your phone or other aspects, and that is something that allows people to rely more on google products. This is part of the idea that googles Business Needs to become the fabric of different products that we use. That is in particular to google. When we think of the functionality, especially google hitting 93 accuracy, what does that mean for the average person . The average person uses these for only three things, the music, the weather and a timer. But google is a great example of the information category, it does exceptionally well. If you ask, for example, what are the side effects of cough syrup . It will answer that. What starts to matter for google longterm is that people start to realize these devices avenue a more use case outside the three areas they use it today. That is where it becomes a bigger deal. Emily we will be watching as the market gets bigger. Loup ventures gene monster, good to have you on the show. Coming up, state and local governments will have to spend big ahead of the 2020 elections, that what they have the resources they need to do so . We discuss, next. This is bloomberg. At comcast, we didnt build the nations largest gigspeed network just to make businesses run faster. We built it to help them go beyond. Because beyond risk. Welcome to the neighborhood, guys. There is reward. Beyond work and life. Who else could he be . There is the moment. Beyond technology. There is human ingenuity. Every day, comcast business is helping businesses go beyond the expected, to do the extraordinary. Take your business beyond. Emily this is bloomberg technology. Im emily chang in san francisco. Now to a story we are continuing to follow safeguarding the 2020 u. S. Elections from interference. A your report estimates states will have to spend more than 2 billion to protect their election systems in the next five years. That means replacing outdated machines, purchasing software to protect existing equipment, training employees. The problem is they dont have enough money, so is 2020 at risk . To discuss, we are joined by maurice taylor. In ann arbor, michigan, alex haiderman, a professor of Computer Science with the university of michigan. Professor, is 2020 at risk . Alex unfortunately, yes. We know from the recent report of the Bipartisan SenateIntelligence Committee that in 2016, russian attackers probed election infrastructure in all 50 states. We have every reason to believe that they are going to be back again in 2020. Emily so, what are states to do . Maurice it starts with basic cybersecurity training for local election officials. Convincing statelevel legislators to look at longerterm funding solutions, and most importantly, advocating at the federal level for shortterm Election Security dollars to make sure that we can have an impact immediately and help defend 2020. Emily it does not seem like those dollars are coming through. We have had 380 Million Congress has distributed to states, but Mitch Mcconnell blocked a bill that would distribute an additional 600 million. States need far more than that, they say. Maurice they do. The report said we need at least 2 billion over the next five years to help secure elections. Congress seems to be interested. There are over 30 bills that have been introduced in