Business & Economy

On The Money: New tariffs on China pose major risk for Trump | Senators sound alarm over looming budget battles | Ocasio-Cortez, Sanders team up against payday lenders

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

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THE BIG DEAL–New tariffs on China pose major risk for Trump: Punishing tariffs ordered by President Trump are set to go into place Friday on Chinese goods, escalating a high-stakes battle with major risks for the economy and his reelection.

GOP lawmakers have been pressuring Trump to get a deal with China that would lower tariffs hurting U.S. farmers and manufacturers, but their complaints have failed to move the president or yield progress in talks with Beijing.{mosads}

Republicans have been broadly in favor of Trump’s crackdown on China’s alleged theft of U.S. intellectual property, market manipulation and other trade barriers.

But some GOP lawmakers are growing impatient and frustrated by the steep toll of Trump’s trade war, more than a year after the president called such conflicts “good and easy to win.”

I explain why here.

“The president’s got the right fight going on,” said Rep. Mike Conaway (R-Texas), ranking member on the House Agriculture Committee.

“My only advice to the president and [U.S. Trade Representative Robert] Lighthizer and others is, get this done as quickly as you can because we’ve got real Americans suffering daily.”

 

The political gamble: Washington’s battle with Beijing is also more popular in industrial states like Ohio, Michigan, Pennsylvania and Wisconsin that swung the 2016 election to Trump. Those states are key to his reelection strategy.

Stephen Myrow, managing partner at Beacon Policy Advisors in Washington, said Thursday that Trump’s aggressive stance toward China reflects the split in Trump’s base between industrial states with Democratic roots and deep-red agricultural states.

“If you look at the states that he cares most about in the election, these are places where beating up on China plays well,” Myrow said.

“There’s a difference between the Farm Belt and the Rust Belt,” he said. “The Farm Belt ends up feeling the pain of the trade war the most because it’s easy for China to hit back against our commodities.”

 

LEADING THE DAY

Senators sound alarm over looming budget, shutdown battles: Alarm bells are starting to go off on Capitol Hill over a looming fight to fund the government and prevent a shutdown later this year.

Though Congress has until the end of September to pass legislation preventing another funding lapse, lawmakers are sending up warning signs to their colleagues and the White House that they are heading toward a fall train wreck, with deadlines for raising the debt ceiling and preventing across-the-board budget cuts and the second shutdown of the year all in the same month.

Senate Appropriations Committee Chairman Richard Shelby (R-Ala.) on Wednesday said he highlighted the deadlines, and the consequences for failing to get a budget deal, during a GOP lunch this week with Vice President Pence and in a phone call with acting White House chief of staff Mick Mulvaney.

“That’s what I told our caucus — that this will be draconian,” he said, referring to the looming cuts. “They probably haven’t thought about it much because they think we’ll take care of it.”

The Hill’s Jordain Carney explains why.

One bit of slightly optimistic news: The deadline for Congress to lift or suspend the debt limit will likely not hit until October or early November, according to a Bipartisan Policy Center (BPC) analysis, a timing tweak that could help ease along a deal.

 

Ocasio-Cortez says bill would ‘destroy’ payday loan industry: Rep. Alexandria Ocasio-Cortez’s (D-N.Y.) team said the Loan Shark Prevention Act she unveiled Thursday alongside Sen. Bernie Sanders (I-Vt.) would “destroy” the payday loan industry.

“The bill will officially cap all interest rates on consumer loans at 15% — lowering the credit card rates of millions of Americans, and functionally destroying the predatory ‘payday’ loan industry,” her team said in an email to supporters.

“Predatory lending and our credit rating system targets lower income Americans and people who are living paycheck to paycheck with manipulative practices and hidden fees — trapping millions in a cycle of systemic poverty as their hard-earned money is funneled into exorbitant bonuses for Wall Street executives,” the email also said.

The lawmakers on Thursday announced in a livestream video that they would introduce the legislation.

 

Dems highlight NYT article on Trump’s business losses in ‘tax gap’ hearing: Democrats at a hearing on Thursday raised questions about the fairness of the tax system by highlighting a recent New York Times article on President Trump’s business losses.

Democrats asked current and former IRS officials about the article, which said Trump’s tax papers show that he reported more than $1 billion in business losses from 1985 to 1994 and only paid income taxes in two of those years.

 

GOOD TO KNOW

 

ODDS AND ENDS