Sunday will mark the next escalation in the trade war between washington and beijing. 15 import taxes on about 120 billion of chinese imports. Whether either side might be getting ready to blank. My discussions with chinese and american friends and china is looking more and more alike we are not any closer. It seems that china has begun to hunker down. China has waited this out, and china thinks that they can weather the storm more easily than President Trump or americans think they might. China is beginning to look for other markets for their exports and they are doing a pretty good job doing that, so it is the longer haul. There is also a sense that it is becoming more political than economic. President trump might be timing potential deals closer to the election rather than earlier. That is the next couple of three weeks. People are starting to adjust to all of the changes. The trouble is there is still in immense uncertainty. With the inability of putting a deal together is creating uncertainty. My friends, chineseamericans, tell me in my judgment, we are in this for a few more months. Hopefully it will break it, but i do not see any action yet. One of them is china of course, but the other is u. S. Politics. You have one quite a few elections in your day. This President Trump need to have some progress, tangible progress, relief and the situation before november 2020 in order to make sure he will be reelected . Max there is no question in my mind that a lot of American Farmers and producers certainly of soybeans and other agriculture products, a lot of American Companies feel the pain. The tariffs are adding additional cost to American Business and consumers. I think President Trump clearly understands that and that is frankly why he is putting so much pressure on the fed chairman. He wants the fed chairman to lower rates more to offset some of the pain that American Businesses are facing. I do think he very much has his eye on november 2020. From the chinese side, they are beginning to think they can weather much more of this. China can endure pain. If you look at chinese history, there is a phrase eat bitter which basically means, toughen up. Back in the old days of the cultural revolution and the great leap forward, when people died of starvation, they ate bitter. The culture is to toughen up, and i think xi will try to weather out President Trump as long as he can. Both sides want a deal. President trump is trying to get china to push for structural changes, and we all know what the list is, forced transfer, technology transfer, et cetera. I think it will be difficult for trump to get that result. Therell be a rollback of tariffs on both sides, and a fig leaf on china with the victory of the stock market going up, and i think that will happen. David we know on sunday, there will be tariffs put on chinese imports, specifically consumer goods. How concerned would you be with the effect on consumers could it drive us into recession . Max clearly, consumers will pay more and they will not have the products that they otherwise would. I do not think it is going to push us into recession. But the funny thing about recession, we all know that there will be one at some time, but we do not know what the day is going to be, but i dont think it is around the corner. Emily that was former u. S. Ambassador to china max baucus speaking to bloombergs david westin. We will now look at two Companies Impacted by the trade war. Tesla, elon musks carmaker just won an important tax break it the rising trade tensions. Google, and the process of moving manufacturing of its pixel smartphones from china to vietnam. To discuss in new york, we have our bloomberg autos reporter and here in the studio, tom giles. Craig, i have to start with this exemption for tesla from a very significant tax, and this after elon musk was in china this week meeting with local authorities and praiseworthy statements about the building of the tesla factory outside of shanghai. How did this happen . Craig i guess it was a Charm Offensive on the part of elon musk. It is the case that they have this factory coming on the outskirts of the city. This has been long in the works and was something that was planned before this trade war really started to intensify. It is something that tesla really needed to because if you want to sell in china and be competitive, you must make there. This is a nice little sweetener to the idea that they are going to be able to make their cars more affordable in that market by building locally and it is already the case that electric vehicles are exempt from this purchase tax if you make that electrical vehicle in the market, and china is getting a jump on that by enabling tesla to get this break before they even start production, and a break for the model s and model x which they will not be making in china anytime soon. Emily this means that tesla could be up to 14,000 cheaper if you are buying in china thanks to the exemption. China has threatened to put a 50 tariff on u. S. Made cars in retaliation, but thatw has not happened yet. Would tesla be exempt . Craig that is still to be determined. It is hard to imagine that china would offer an exemption to tesla specifically on import taxes because they have not carved out anyone american carmaker up to this point. They have also not carved out any exemption for the job and automakers that make suvs down in the south and and are exporting vehicles china. They have been an unfortunate casualty with the trade war between u. S. And china, and you have german Car Companies that are getting significantly hit as a result of the escalating tariffs. In this risk, it is really with tesla resulting in having to increase prices, this may be take some of the pressure off of them. Emily has you mentioned, teslas long had a plan to build cars in china to avoid situations like this. Tom, you have google moving pixel production to vietnam out of china. We do not know necessarily how large pixel production is in china, it is certainly not the iphone. What do we know about the plans . Tom not everybody is getting the exemption that tesla did, right . Google has been over the last several months shifting production. We broke the news in june that they were taking production of the server hard war, motherboards out of china into places like taiwan. We knew they were looking for it. We have talked to people close to them who told us, it is upon us to find alternatives. Now we see from the other reports that now the pixel will move into vietnam. It makes total sense. This trade war is causing everyone who manufactures in china to fundamentally rethink their supply chain and think about, is this the best place, is this going to remain low cost. Even if this trade war gets resolved, longerterm, you have to have a really hard questions about whether this is the smartest place to be making your goods. Emily and President Trumps tweets where he ordered American Companies to find alternatives to china and yet, the companies that are a member of the council, most of them are committed to china and have no longterm plans to do what google is doing here. And yet, apple doing some extra mentoring with production in india, apples Manufacturing Company foxconn making some iphone xs in india. Tom does this lay the foundation for production in india . One of our reporters saw as they were experimenting with iphone productions there, and eventually, beyond there. Apple is in a difficult place. They have demonstrated publicly, we are committed to china. We want to move more production of certain things to china. They have a very delicate balancing act to do. On the other hand, you have foxconn saying if apple needed to a could move everything out of china. Not exactly a statement we are hearing from tim cook. It is a very delicate dance. Emily much to continue to follow, especially to the next few days ahead of the tariffs a potentially going into effect. Bloombergs tom giles, and craig trudell, thank you. Coming up, the u. S. Unleashes a cyber attack on iran, that is next. If you like bloomberg news, you can listen on bloomberg. Com and bloomberg app. This is bloomberg. Emily it looks like even the man who created twitter is not immune to hackers. Twitter Ceo Jack Dorsey own twitter account sent out a string of offensive two weeks and retweets containing swearwords, racist comments posted over the afternoon. Twitter confirmed the hack and said, we are aware that jack was compromised. They started deleting the tweets after the messages went viral for more than 20 minutes. Speaking of embarrassing hacks, for the second time in under a month, google hacking and Research Teams have revealed that what happens on your iphone does not always stay on your iphone. They did it thursday. Basically, simply visiting a small number of websites could have left iphone user susceptible to the breach. That could possibly have affected thousands of users a week. Google let apple know of this vulnerability months ago, apple updated its operating system less than a week later. Apparently, it has been patched. But google has only now revealed the vulnerability existed at all. To discuss this and plenty more and cyber threats, we have chief Strategy Officer here in studio, and are bloomberg cybersecurity reporter. So give me your take on this apple versus google situation. What exactly happened . What happened here is what we call a day vulnerability. Vulnerability exists and hackers are aware of that vulnerability before any patch exists to close it. That vulnerability opened up with the iphone platform for any attacks. It could gain access which could be escalated to have full access to the whole device. Malware like this could then get access to imessages, photos, locations, and can do all sorts of damage, all the way from deleting data, extortion of the user, as well as running a full espionage attack similar to what we saw about a month ago coming from the telco side, we now see the possibility going from the device itself. Emily it is interesting that google told apple about this privately and they had time to patch it, but still made it public. And embarrass them. Which does not seem so white hat. What is your take . What is interesting about this one and what we ask is, is there anything that can be left behind . In this attacker, it seems the possibility exists which is concerning for users and for users to understand, no matter which device they are using, there are going to be vulnerabilities, there are going to be places where they may not be necessarily safe going into and to be smarter about where they are using their devices and how they are getting access. Emily do you believe there is something disingenuous about apples privacy marketing and the billboard saying what happens on your iphone stays on your iphone when they cannot guarantee that . Rol as an approach, apple has taken an approach of keeping a close and fully integrated Technology Stack which did help them to improve the platform, but it is fair to say that no platform is fully safe. We need to assume that if it exists, it is hackable, it can be breached, and has one abilities. Emily i want to get your take on another cyber story percolating today. News about a secret cyber attack by the United States on iran in june to prevent them from targeting oil tankers and ships going through the persian gulf. Tell us a little more about what happened here. Rol i think, when we look at this type of attack, going back to the event that led to that, we had a drone that was shot down by iran, and an airstrike that was about to be launched by the u. S. Which was turned down by trump. Instead of that, a full cyber attack took place and that cyberattack actually attacked the Critical Infrastructure of iran that holds information about routing, routes for tankers as well as Financial Information for those tankers. Iran used at this information to be able to target and plan attacks on tankers. What they actually did is completely erase and wipe that infrastructure. Those devices are still trying to reboot themselves and not getting back to full functionality. But what we are seeing is a turning point in 2019 in warfare where cyberattacks are taking the center stage and fully integrating into how nationstates are looking at driving an attack campaign. We have not seen this before the same way we are seeing it now. What we will see as more and more of that. Emily rol carmel, and our other guests, thank you. Coming up, the pentagon awards another billion dollar contract without much controversy or it so it seems. We will discuss. This is bloomberg. Emily the secondbiggest emily the secondbiggest pentagon cloud deal has been awarded and so far, it is free from the controversy surrounding the biggest such a deal. Vendors from General Dynamics to provide microsoft cloudbased software. Office software. Microsoft itself did not bid on this contract. Naomi, you have been closely following the controversial jedi contract which microsoft and amazon are still in contention for. Tell us how this additional contract fits in. Naomi this is a separate deal that was a lot less controversial than the jedi cloud contract. In this deal, the pentagon was looking for things like a word processor and spreadsheets. And microsoft was widely seen as the frontrunner and perhaps the only contender to offer those kinds of tools for that project and like you said, it was vendors pitching microsoft product tools to sell to the government. Emily talk to us about whether or not this then affects the award of jedi. Does this make microsoft a more or less likely pick or is it truly separate . Naomi it is completely separate. This particular procurement was run separately by a Different Group of people with the Defense Department and the gsa. What it does do is it helps the pentagon politically. The Defense Department has been accused by company like oracle which was eliminated from the jedi bidding competition that they design a contract was overly favorable for amazon. This is a way for the pentagon to say, we always said we would use multiple cloud vendors for multiple projects. Look at this project, we are planning to use microsoft. It is really in limbo right now. President trump has questioned whether the contract was competitively bid. The new defense secretary has said he is ordering a review of the procurement process because he has heard so many complaints. Meanwhile the Defense DepartmentInspector General is investigating potential conflicts of interest surrounding forward Defense Department employees that have relationships with amazon. Oracle just said they were claiming to appeal their lawsuit, challenging the contract terms. And of course President Trump could always weigh in at any moment. We dont quite know how this will shake out. All right, well, i know you will continue to follow the trail and bring us any news as you have it. Naomi nexen washington, thank you. A Data Storage Company surged on betterthanexpected earnings results. How the company is faring in that crowded cloud market with the ceo as enterprise m a keeps up. This is bloomberg. From the couldnt be prouders to the wait did we just winners. Everyone uses their phone differently. Thats why Xfinity Mobile lets you design your own data. Now you can share it between lines. Mix with unlimited, and switch it up at anytime so you only pay for what you need. Its a different kind of Wireless Network designed to save you money. Save up to 400 a year on your wireless bill. Plus get 250 back when you buy a new samsung note. Click, call or visit a store today. Emily this is bloomberg technology. Im emily chang in san francisco. Shares of Enterprise CloudComputing Company nutanix rose as much as 29 after posting thirdquarter results that beat expectations. The biggest oneday gain since going public in 2016. Nutanix helps businesses modernize their data center by combining their needs into a single package. The company gave its first forecast for the full fiscal year, projecting 19 growth. It transitions to a subscription model. Joining us to discuss is nutanix ceo dheeraj pandey. So, shares are way down from their high a year ago but you had a big pop after these results. What is it do you think investors are not getting about the longterm story . Dheeraj the first 10 years were about delivering innovation where customers were. We are doing infrastructure. The next 10 years is to take the customers where they need to be which is cloud. In the last two years, we want to prepare for the era of cloud to rearchitect the Business Model. Customers applauded. From software to prescription which is even more bitesize infrastructure than ever before. We are asking, what is going on . I think it is the transition of the better job cleaning. Emily that might involve some pain internally. How are you navigating that transition . Dheeraj a big part of this is looking at the history of other companies that went through the transition. I learned a lot about transitions. Microsoft is another, ptc. So Many Companies have gone through it. Now what makes it harder for us, we had to go from hardware to software and software to subscription. Never before in the history of i. T. Has any company done this transition. Emily how long will it take . Dheeraj a couple of years, i would say. Typically, it takes four years. Once you get out of it, you are ready for the future which is cloud. Emily vmware did two huge deals. It certainly feels like whenever that kind of dealmaking happens, a chain of deals follows. What is your strategy . Dheeraj our strategy is the focus on ourselves and customers. At the end of the day, they have done some chunky deals. We think we can do a lot of that with open source and do