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Trump’s tariffs spark national security concerns

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The U.S. is on shaky ground with its allies following President Donald Trump’s proposed tariffs on steel and aluminum.

While fears of a trade war ripple through the global economy, experts are assessing the potential impact on national security, private sector industry and America’s relationship with partners.

“We’ve seen that oftentimes trade is political and security cooperation is political and the two intertwine,” Remy Nathan, vice president for international affairs at the Aerospace Industries Association, told CNBC.

“When we are enjoying good trade relations with other countries we have positive foreign relations, positive security cooperations, and they are oftentimes more interested in purchasing U.S. defense equipment and working with our militaries,” Nathan said. “The opposite is also true, and so those are real concerns that we have.”

He added: “It all depends on how those countries evaluate the steps that we take and what measures they choose to retaliate in some fashion towards us.”

On Friday, Canada’s prime minister, Justin Trudeau, called U.S. tariffs on steel “unacceptable.”

The bilateral relationship between the U.S. and Canada has suffered from the bitter trade dispute between aircraft manufactures Boeing and Bombardier as well as NAFTA renegotiations.

“The U.S. and Canada are about as close partners on defense industrial activities as you can imagine,” Andrew Hunter, Director of the Defense-Industrial Initiatives Group at the Center for Strategic and International Studies, told CNBC.

“The U.S. law actually treats Canadian entities as being part of the national technology industrial base on equal footing with U.S. suppliers in many respects,” he said. “In the current situation, you already have these large pain points in the relationship and this decision is only going to exacerbate that.”

“This is clearly bad for our allies and partners,” Hunter added.

Speaking further to the international ramifications, Seth Cropsey, former Deputy Undersecretary of the Navy under the Reagan and Bush administrations, was concerned that the U.S. was moving toward a protectionist economy.

“If we head down the road of protectionism, then yes, this will certainly affect the cost of American defense goods and that’s a matter of concern,” said Cropsey, who is currently the Director of the Center for American Seapower at the Hudson Institute.

In a shock announcement Thursday, Trump said the U.S. will set a new tariff of 25 percent on steel and 10 percent on aluminum imports. The tariffs are slated to take effect as early as next week and will be applied broadly, which counters Secretary of Defense James Mattis’ recommendation of targeted tariffs.

In a Department of Defense memo related to the proposed tariffs, Mattis said that while the Pentagon “concurs with the Department of Commerce’s conclusion that imports of foreign steel and aluminum based on unfair trading practices impair the national security” the U.S. military requirements for steel and aluminum each only represent about 3 percent of U.S. production.

Mattis cited concerns about the “negative impact on our key allies” and said that therefore “targeted tariffs are more preferable than a global quota or global tariff.”

“While it is true what the DoD said about being able to rely on U.S. domestic sources of supply, I think the analysis didn’t get down to the supply-chain level,” Nathan noted.

“Throughout the supply chain you’ve got companies that make products for both the civil market and the military market. The contracts on the civil side tend to be higher volume and higher profit margin, and it helps them underwrite their investments, hiring and innovation on the military side of the market,” Nathan said. “So when you do things that impact the success of their commercial enterprise, and putting tariffs on steel and aluminum would certainly do that, then [there is] the big question mark about what pressure are you going to put on the defense side of their business.”

Echoing similar sentiments, Eric Fanning, CEO of the Aerospace Industries Association and former secretary of the Army in the Obama administration, told CNBC that the proposed tariff will “impact companies big and small in the aerospace and defense world.”

“The aerospace and defense industry generates the largest net surplus in the manufacturing sector at over $86 billion a year. We’ve got 2.4 million people who work in the aerospace and defense industry, they are paid almost double the national average, and these companies thrive on the exports of their products,” Fanning said.

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Crew cupola window view in orbit

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The first look at the crew in orbit, from left: Jared Isaacman, Hayley Arceneaux, Chris Sembroski, Sian Proctor.

Inspiration4

Inspiration4, which launched with Elon Musk’s SpaceX on Wednesday evening, shared the first photos from day one in orbit and gave an up-close look at the expansive views of Earth from the spacecraft’s “cupola” window.

The crew spent its first day in orbit floating in zero gravity inside the capsule, taking photos from the Crew Dragon window and spoke to patients of St. Jude Children’s Research Hospital, answering questions from space.

The historic private mission — which includes commander Jared Isaacman, pilot Sian Proctor, medical officer Hayley Arceneaux and mission specialist Chris Sembroski — is orbiting the planet at an altitude of 585 kilometers (363.5 miles), which is above the International Space Station and the highest altitude humans have traveled in years.

Inspiration4, which is expected to return to Earth and splash down this weekend, was paid for by Isaacman for an undisclosed amount, with the main goal of the spaceflight to raise $200 million for St. Jude.

Hayley Arceneaux takes in the view of Earth from the Crew Dragon cupola window.

Inspiration4

SpaceX modified the top of Crew Dragon capsule Resilience to add a massive window for the astronauts, replacing the docking hatch that is under the spacecraft’s nose cone with the cupola.

Spacecraft commander Jared Isaacman speaks into a microphone as he peers out the cupola window.

Inspiration4

The cupola is the largest window by surface area ever put in space.

Mission specialist Chris Sembroski is seen taking a photo through the cupola, from an exterior camera on Crew Dragon.

Inspiration4

Isaacman is the third billionaire to fly to space this year, following Sir Richard Branson and Jeff Bezos in July. But the latter two — flying with their respective companies, Virgin Galactic and Blue Origin — spent only a couple of minutes each in space, as those companies’ rockets fly on what are known as suborbital trips. In contrast, Inspiration4 is an orbital mission, with the crew spending multiple days in space and going around the Earth as many as 15 times in day.

Musk, among those who saw them off before launch, tweeted that he spoke to the Inspiration4 crew Thursday and that “all is well.”

“Missions like Inspiration4 help advance spaceflight to enable ultimately anyone to go to orbit & beyond,” Musk wrote in another tweet.

SpaceX CEO Elon Musk poses with the crew before launch on September 15, 2021.

John Kraus / Inspiration4

The Inspiration4 crew is making history in ways beyond becoming the first group of nonprofessional astronauts in orbit: Proctor is the first Black female to pilot a spacecraft, and Arceneaux is the youngest American and first person with a prosthesis to fly in space.

Check out more photos from launch day at NASA’s Kennedy Space Center in Florida:

Medical officer Hayley Arceneaux points to the camera as she and pilot Sian Proctor board the Tesla Model X after suiting up before the launch on September 15, 2021.

John Kraus / Inspiration4

SpaceX’s Falcon 9 rocket lifts off carrying Crew Dragon spacecraft Resilience on September 15, 2021.

John Kraus / Inspiration4

The view inside the Crew Dragon spacecraft about 30 seconds after liftoff as the Falcon 9 rocket accelerated away from Earth on September 15, 2021.

SpaceX

The shimmering exhaust plume of SpaceX’s Falcon 9 rocket launching into the dusk sky above Florida on September 15, 2021.

John Kraus / Inspiration4

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Tesla to reverse solar price hike for some customers: legal filing

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Smith Collection/Gado | Archive Photos | Getty Images

Tesla is trying to placate some solar customers who say they faced sudden price hikes earlier this year, according to new filings with the U.S. district court in San Jose, California.

In a Thursday filing, customers’ attorneys wrote, “Tesla informed counsel for Plaintiffs that Tesla had recently launched a program for customers who signed Solar Roof contracts before the April 2021 price changes to return those customers to their original pricing (if they were subject to a price increase in April 2021).”

As of Friday afternoon, further details of this program were not apparent on Tesla’s solar websites nor the Engage website for customers and advocates of the company. CNBC reached out to plaintiffs’ attorneys and Tesla to get further details about the program. They did not immediately respond.

This spring, frustrated Tesla solar customers sued the company after experiencing surprise price increases.

Filings in three separate lawsuits alleged that Tesla solar customers had already signed contracts with Elon Musk’s electric vehicle and renewable energy venture, and even prepared to have solar photovoltaics installed at their homes, when they were surprised by sudden price hikes that required additional payments to move ahead with their installations.

The price hikes were not trivial. For example, plaintiff Matthew Amans’ solar roof price shot up from around $72,000 per his original contract to around $146,000, according to lawsuit filings.

Those lawsuits were later consolidated into Amans v Tesla, Inc.

Tesla hiked prices for its solar installations at least twice early this year, and made it a requirement for customers ordering solar panels or roof tiles to order the Powerwall home energy storage system as well. Later, CEO Elon Musk revealed that the company would not be able to make enough Powerwalls to keep up with demand this year because of the ongoing microchip shortage.

Overall, solar remains a fairly small part of Tesla’s business. Tesla reported energy generation and storage revenue of $801 million in the second quarter of 2021, with a cost of revenue of $781 million for that division. The company does not break out revenue from solar on its own — the unit includes revenue from its lithium-ion battery energy storage systems, which range from home backup batteries to giant, utility-scale systems.

By way of comparison, Tesla booked $10.2 billion in automotive sales during the quarter.

Here’s the legal filing.

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Elizabeth Holmes pushed faster Theranos Walgreens rollout: Testimony

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Elizabeth Holmes, CEO of Theranos, attends a panel discussion during the Clinton Global Initiative’s annual meeting in New York, September 29, 2015.

Brendan McDermid | Reuters

SAN JOSE, CALIF. – A former Theranos scientist testified Friday that Elizabeth Holmes pressured her to validate blood test results from the company’s Edison machine to speed up a rollout in Walgreens despite problems with the device’s accuracy.

Surekha Gangakhedkar, a senior scientist at Theranos for eight years who reported directly to Holmes, testified that she returned from a vacation in August 2013 and discovered that Theranos was about to launch its Edison blood-testing devices in Walgreens stores.

“I was very stressed and unhappy and concerned with the way the launch was going” Gangakhedkar said. “I was not comfortable with the plans that they had in place so I made a decision to resign and not continue working there.”

Gangakhedkar recalled meeting with Holmes in September 2013 about the issues that prompted her resignation.

“At that time she mentioned that she has promised to deliver to the customers and didn’t have much of a choice then to go ahead with the launch,” Gangakhedkar said becoming emotional on the stand.

“Ms. Holmes said she didn’t have much of a choice?” asked Robert Leach, an assistant U.S. attorney.

“Yes,” she replied.

Despite signing a non-disclosure agreement, Gangakhedkar said she printed some documents and took them home when she quit because she was “worried about the launch, I was actually scared that if things do not go well I would be blamed.”

Gangakhedkar was granted immunity from criminal charges in exchange for her testimony.

She testified that in August 2013 she didn’t think the Edison 3.0 and 3.5 were ready to be used for patient testing, adding “there were problems with getting consistent results.” However, Gangakhedkar recalled that Holmes was pressuring the team to validate the tests even though “in my opinion she was aware,” of the accuracy issues.

Holmes is fighting 12 charges of wire fraud and conspiracy to commit wire fraud, and has pleaded not guilty. In opening statements, her defense attorney told jurors that Holmes was an ambitious young woman who made mistakes but didn’t commit a crime.

Earlier in the day, Erika Cheung, a former lab associated turned whistleblower, concluded her testimony after three days on the stand. Cheung recalled that frequent quality control failures in the lab created substantial delays in test results for patients.

“We had people sleeping in their cars because it was just taking too long,” Cheung testified. “Every few days we were having to run samples over and over again.”

Cheung, who quit Theranos six months after joining as a college graduate, said she “became concerned probably a month in with the Vitamin D samples.”

Gangakhedkar’s testimony continues on Tuesday. Among the insiders the government plans to call to testify next is Daniel Edlin, a project manager who reported directly to Holmes and worked on the Walgreens partnership. Edlin was also friends with Holmes’ brother, Christian.

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