Overnight Finance: Trump to impose new steel, aluminum tariffs | GOP boos decision | Canada threatens payback | Markets drop on fears of trade war | Senate plows ahead with Dodd-Frank rollback

Happy Thursday and welcome back to Overnight Finance, the tariff-free newsletter. I’m Sylvan Lane, and here’s your nightly guide to everything affecting your bills, bank account and bottom line.

See something I missed? Let me know at slane@digital-release.thehill.com or tweet me @SylvanLane. And if you like your newsletter, you can subscribe to it here: http://bit.ly/1NxxW2N.

 

THE BIG DEAL: Remember that time the president turned U.S. trade policy on its head without giving anyone a heads-up?

President Trump said Thursday that he will impose steep tariffs on steel and aluminum imports from around the world next week, defying Republican lawmakers who have pushed back against the move.

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Trump said he will announce tariffs of 25 percent on imported steel and 10 percent on aluminum from all countries that send their metals to the United States, a decision sure to lead to retaliation from key trading partners.

 

Why? The Trump administration has framed its decision around China, though it accounts for only about 2 percent of all imported steel into the United States.

The decision, which could ensnare Mexico and Canada, comes amid the seventh round of North American Free Trade Agreement negotiations in Mexico City this week.

 

The Hill’s Vicki Needham explains it all: http://bit.ly/2FID56R.

 

GOP boos decision: GOP lawmakers joined business groups in declaring that slapping 25 percent tariffs on steel and 10 percent tariffs on aluminum will hurt consumers by raising prices and leading trading partners to retaliate against U.S. goods.

Opposition came from GOP leaders in the House and Senate, rising Republican stars and hardline conservatives.

“The speaker is hoping the president will consider the unintended consequences of this idea and look at other approaches before moving forward,” Doug Andres, a spokesman for Speaker Paul Ryan (R-Wis.), said in a statement.

The Hill’s Vicki Needham and Niv Elis on the GOP pushback: http://bit.ly/2Fg4fnD

 

More reactions 

• “Tariffs on steel and aluminum are a tax hike the American people don’t need and can’t afford.” — Senate Finance Committee Chairman Orrin Hatch (R-Utah).

• “Terribly counterproductive.” — Senate Agriculture Committee Chairman Pat Roberts (R-Kan.).

• “Protectionism is weak, not strong. You’d expect a policy this bad from a leftist administration, not a supposedly Republican one.” — Sen. Ben Sasse (R-Neb.).

• “These proposed tariffs on steel and aluminum imports couldn’t come at a worse time.” — Cody Lusk, president of the American International Automobile Dealers Association.

• “These tariffs are very likely to accelerate a tit-for-tat approach on trade, putting U.S. agricultural exports in the cross-hairs.” — Brian Kuehl, executive director of Farmers for Free Trade.

• “We’re on the brink of a potentially historic rebalance of America’s trade priorities.” — Alliance for American Manufacturing President Scott Paul.

• “American workers and American consumers will suffer as a result of
  this misguided tariff.” –MillerCoors.

 

But Trump also found support from unions and some Democrats.

• “I want the president to move… They’ve been talking about this and walked up to the edge for 10-and-a-half months now, causing more steel job losses, causing more U.S. companies hardship, lost revenues, lower sales, and look where we are.” — Sen. Sherrod Brown (D-Ohio).
• “For years, we have called attention to the predatory practices of some steel exporting countries. Such practices hurt working people and cheat companies that produce in the U.S. We applaud the administration’s efforts today to fix this problem,” AFL-CIO President Richard Trumka. More on the union’s response here.

 

Market melts down: U.S. stocks slid Thursday after Trump’s announcement. The Dow Jones industrial average lost 420 points on the day, a 1.7 percent decline, while the Nasdaq and Standard & Poor’s 500 indexes closed down roughly 1.3 percent each.

The Dow fell as much as 580 points following the announcement. The Nasdaq and the S&P also fell roughly 1.8 percent each.

The announcement tanked shares of car companies and airplane manufacturers that would spend much more on raw materials under the tariffs. I’ve got more on that here: http://bit.ly/2FGU5u4.

 

Canada threatens payback: Canadian Foreign Minister Chrystia Freeland said President Trump’s announcement that he plans to impose a 25 percent tariff on steel imports and a 10 percent tariff on aluminum imports is “absolutely unacceptable.”
“It is entirely inappropriate to view any trade with Canada as a national security threat to the United States,” she said in a statement.

“We will always stand up for Canadian workers and Canadian businesses. Should restrictions be imposed on Canadian steel and aluminum products, Canada will take responsive measures to defend its trade interests and workers.” http://bit.ly/2FMQ4Vj.

 

What comes next: Trump said he would sign the tariffs into law next week, and it would be foolish to assume its certain he will follow through quickly. He’s facing fierce resistance on the tariffs from dozens of GOP lawmakers and a group of aides, including Gary Cohn.

Republicans are deeply opposed to the tariff plan, and could ramp up their opposition if Trump refuses to retreat. Trump is already risking a clash with GOP lawmakers after threats to pull out of the North American Free Trade Agreement (NAFTA).

Two major protectionist moves on trade policy could pose serious problems for the president with his own party.

 

LEADING THE DAY

When rolling back Dodd-Frank is the less controversial option: Senate Majority Leader Mitch McConnell (R-Ky.) is moving to banking reform legislation — not gun control or other responses to the high school shooting in Florida — next week in the Senate.

McConnell has filed a motion to have a procedural vote Tuesday on legislation sponsored by Senate Banking Committee Chairman Mike Crapo (R-Idaho). After that, McConnell hopes to move to legislation addressing sex trafficking, according to GOP sources.

Legislation addressing the Florida high school shooting, the subject of contentious conversations between President Trump and GOP lawmakers at a White House meeting televised live on cable news Wednesday, will wait. The Hill’s Alexander Bolton digs into that dynamic, with a quick assist from me on the Crapo bill.

 

Senators push Fed chair on banking bill: Members of the Senate Banking Committee sought confirmation from Fed Chairman Jerome Powell that the bipartisan bill to roll back parts of the Dodd-Frank Act would benefit the economy.

Powell, a Republican who has previously supported several provisions of the bill, signaled support for much of the measure without explicitly endorsing it. He backed efforts to lower the threshold at which a bank becomes systemically important, along with other measures meant to relieve regulatory burdens on community banks.

Senators supporting the bill were elated, while its liberal critics challenged Powell on his analysis of the bill. Here’s how it all went down: http://bit.ly/2FGNZdf.

 

So what? Powell’s comments give the bill’s supporters more ammo in the spin war with progressive groups over the size and scope of the legislation. With 12 Democrats backing it, the bill is almost certain to pass the Senate. But getting the bill through the House with enough changes to appease conservatives without losing Dems will be tough. Senators were able to get Powell on-the-record today supporting specific provisions they’re seeking, a useful tool in a messaging war.

 

Warren vs. Wells Fargo… Sen. Elizabeth Warren (D-Mass.) insisted Thursday that the Fed board, not just staff, must approve Wells Fargo’s progress as mandated by a January consent order.

Wells Fargo is banned from doing anything that would increase its total consolidated assets past their December 2017 levels while it takes measures to bolster its compliance with federal banking laws. The bank will still be able to issue loans and take deposits. 

Wells Fargo has 60 days to send the Fed thorough action plans on how it would revamp the board’s oversight of the bank and its risk management system. The bank is also required to commission two third-party reviews of its reform efforts. All are subject to the Fed’s approval. 

Warren insisted during today’s Banking Committee hearing the full Fed board vote on approving the plans, not just Fed supervision staff. She also asked Powell to make public whatever he could of the third-party review.

“I hope you wouldn’t consider lifting it because Wells made marginal progress,” Warren said. “That message will be lost if the Fed does not enforce the order strictly and show the public and the banking industry that they mean business.”

Powell agreed to review her concerns with the Fed board.

 

And Wells Fargo lands in more trouble: From the Charlotte Observer: “Federal authorities are looking into Wells Fargo’s wealth and investment management business, the bank disclosed Thursday, the latest sales practices problem to emerge at the beleaguered company.

“The bank’s board is reviewing activities within the business unit in response to inquiries from federal government agencies, Wells said in its annual 10-K filing.”

 

Mick’s signals: Mick Mulvaney, the acting director of the Consumer Financial Protection Bureau (CFPB) said Thursday he thinks he could remain in charge of the agency for as long as another six months while waiting for President Trump to nominate and the Senate to confirm a new director.

“The statute allows me to stay until the end of June, but if the president nominates someone before then, the statute allows me to stay until they’re confirmed.”

Mulvaney doesn’t seem to mind sticking around the CFPB, though the same can’t be said for Democrats about his tenure. Despite Mulvaney’s qualms with the CFPB’s old leadership, he had high praise for career bureau staffers and said that “most of the folks I work with are extraordinarily talented.”

Mulvaney, a former attorney and congressman, said that the bureau has produced “some of the best legal work” he’s seen.

He said the agency was mainly staffed by “technocrats … there to execute the law,” but argued “we’d be kidding ourselves” without noting the proportionally higher level of “activists” employed by the bureau.

“I was expecting it to be much worse than it is,” Mulvaney said. “I was very worried that it would be me versus 1,700 people.” http://bit.ly/2FJcsie.

 

GOOD TO KNOW

• IMF Director Christine Lagarde said the recent U.S. tax cuts and budget deal could “have an overheating impact on the economy.”

• Hatch says he’s looking to get the IRS more money to implement the new tax law.

• The Center for Responsible Lending and the National Urban League released a report on the Corker-Warner housing finance reform plan, insisting it “would impose great harm on affordable housing efforts and the overall housing market.”

• Treasury and IRS issued guidance on the carried interest provision in tax law.

• A group of female Democratic senators is demanding details on the prevalence of sexual harassment in the financial sector.

• Barney Frank shares his perspective on why bipartisan Dodd-Frank reform never happened before.

• The U.S. government is hammering home the message to Wall Street banks that it’s okay to dial up the risk when lending to companies, according to Bloomberg.

 

ODDS AND ENDS

• Harvard blew $1 billion in bet on tomatoes, sugar, and eucalyptus

• Amazon’s HQ2 could bring local economy as much as $17 billion a year, new study says.