Happy Friday and welcome back to On The Money, where we would also like to take a trip to the Moon by 2024. 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–House chairman issues subpoenas for Trump’s tax returns: House Ways and Means Committee Chairman Richard Neal (D-Mass.) on Friday announced that he has issued subpoenas for six years of President Trump’s tax returns, House Democrats’ latest effort to obtain the returns.
Neal said that he issued the subpoenas to Treasury Secretary Steven Mnuchin and IRS Commissioner Charles Rettig. The subpoenas direct the officials to send the information to the House panel by 5 p.m. on May 17.{mosads}
“After reviewing the options available to me, and upon the advice of counsel, I issued subpoenas today to the Secretary of the Treasury and the Commissioner of the IRS for six years of personal and business returns,” Neal said in a statement.
“While I do not take this step lightly, I believe this action gives us the best opportunity to succeed and obtain the requested material. I sincerely hope that the Treasury Department will furnish the requested material in the next week so the committee can quickly begin its work.”
The announcement comes days after Mnuchin rejected Neal’s request, first made April 3, for Trump’s personal and business tax returns from 2013 to 2018. The Hill’s Naomi Jagoda tells us how we got here.
LEADING THE DAY: Trump touts trade talks as China, US fail to reach deal: Trade talks between the U.S. and China ended Friday without a deal, as President Trump ratcheted up tensions with Beijing by increasing tariffs on $200 billion in imports and declining to set a date for future talks.
In a pair of tweets, Trump called the past two days of negotiations “candid and constructive” but stressed he is prepared to wait out Chinese President Xi Jinping until he delivers on key concessions.
“The relationship between President Xi and myself remains a very strong one, and conversations into the future will continue,” Trump said in the tweets. “In the meantime, the United States has imposed Tariffs on China, which may or may not be removed depending on what happens with respect to future negotiations!”
Trump’s tweets came soon after Treasury Secretary Steven Mnuchin said a U.S. delegation concluded “constructive discussions” with Chinese officials. But Mnuchin did not announce a deal.
- The Treasury chief, who has helped lead the months-long trade negotiations, spoke after Chinese Vice Premier Liu He and his team departed the offices after about two hours of meetings.
- Mnuchin and U.S. Trade Representative Robert Lighthizer were later seen walking into the West Wing of the White House.
So, what happens next? It’s hard to say. There are no further talks between the Trump administration and China scheduled right now, but that could change fairly soon if Friday’s negotiations were as “constructive” as Trump and Mnuchin said.
Even so, Trump is clearly projecting confidence that he doesn’t need to make a deal with China, arguing Friday that there is “no need to rush” an agreement.
“Tariffs will bring in FAR MORE wealth to our Country than even a phenomenal deal of the traditional kind. Also, much easier & quicker to do,” Trump tweeted, adding in a separate message that “China should not renegotiate deals with the U.S. at the last minute.”
The problem with Trump’s argument: Tariffs are merely taxes on foreign goods paid by U.S. importers and often passed down to consumers. Despite Trump’s claim, China isn’t actually paying tariffs on its own goods being imported to the U.S.
The main function of tariffs is to make foreign products relatively more expensive than domestic ones. The goal here is to incentivize consumers to purchase more domestic products and fewer foreign products.
Of course, this also means that consumers will end up paying more for basic products if they can’t find a suitable replacement made in the U.S. or elsewhere.
Higher taxes on a broader group of goods would likely raises prices on basic food products, household goods and apparel. American manufacturers, meanwhile, would find themselves in a position where they have to pay more for certain parts from China, adding to pressure for them to counter those costs by boosting prices for their products.
So, while Trump insists that the U.S. stands to make money from China, the tariffs really just make Americans spend more of their own money. I’ve got more on that and the five things you need to know about Trump’s trade war with China here.
Republicans split on Trump’s trade war: The president’s trade policy makes him an outlier among Republicans, who are typically averse to tariffs and in favor of free trade. While many members of his party share Trump’s concerns with China, Republicans say they are deeply worried about the domestic impact of tariffs.
Adding to the pressure is the mounting cost of Trump’s tariffs on steel and aluminum and retaliatory tariffs from allies like Canada, Mexico and the European Union.
GOP lawmakers from agricultural states have warned Trump about the heavy toll of his trade policy on farmers. Some senators are proposing limits on his tariff power, while others have implored him to quickly cement a deal with China.
“The way you deal with that is not using a tit-for-tat tariff war,” said Rep. Will Hurd (R-Texas) on CNN’s “New Day.”
“It’s going to be more expensive for Americans to buy products,” he said.
But others have rallied behind Trump, arguing that the fight he’s waging is important and worth the cost.
- “I have some sympathy for Trump’s lack of patience with the Chinese. Enough is enough,” said Sen. Chuck Grassley (R-Iowa), the Senate Finance Committee chairman.
- “I hear from my farmers and those that are impacted by it in hopes that it comes to a close very soon, but I also hear from them that they’re willing to support the president because the current model is not sustainable in the long term,” said Rep. Mark Meadows (R-N.C.), chairman of the conservative House Freedom Caucus.
- “Obviously it’s hurting folks, but the greater issue is, do we bring China to the table and force them to act like a responsible citizen of the world, or do they continue their quest to be a big bully across the spectrum?” said Rep. Mike Conaway (R-Texas), ranking member of the House Agriculture Committee.
- “We obviously need more leverage in these negotiations,” said Rep. Andy Barr (R-Ky.) “If we did get a good deal with China, it would be huge for Kentucky agriculture, huge for Kentucky bourbon.”
ON TAP NEXT WEEK
Monday:
- The Bipartisan Policy Center holds an event with former Small Business Administration Administrator Karen Mills entitled “A Conversation with Karen Mills: Fintech, Small Business, and the American Dream,” 5:30 p.m.
Tuesday:
- The Senate Judiciary Committee holds a hearing entitled “5G: National Security Concerns, Intellectual Property Issues, and the Impact on Competition and Innovation.”
- The Senate Finance Committee holds a hearing on challenges in the retirement system, 10:15 a.m.
- The Senate Budget Committee hosts two former chairmen of the panel for a hearing on fixing the budget process, 2:30 p.m.
Wednesday:
- The Hill hosts a conversation on what employers and policymakers can do to support the workers of today, while preparing the workforce of tomorrow. Featuring: Sens. Sherrod Brown (D-Ohio) and Rob Portman (R-Ohio), Reps. Lisa Blunt Rochester (D-Del.) and Tim Walberg (R-Mich.) and Megan J. Smith, founder and CEO of shift7 and former U.S. chief technology officer. RSVP here.
- The Senate Banking Committee hosts the leaders of the Office of the Comptroller of the Currency, Federal Deposit Insurance Corp., National Credit Union Administration, and Federal Reserve Vice Chair of Supervision for a hearing on financial regulator oversight, 10 a.m.
- The House Budget Committee holds a hearing entitled “Keeping Our Promise to America’s Seniors: Retirement Security in the 21st Century,” 10 a.m.
- A House Financial Services subcommittee holds a hearing on workers’ rights and protections, 10 a.m.
- A House Financial Services subcommittee holds a hearing on the use of financial sanctions in national security and foreign policy, 2:30 p.m.
Thursday:
- The House Financial Services Committee holds a hearing entitled “Oversight of Prudential Regulators: Ensuring the Safety, Soundness and Accountability of Megabanks and other Depository Institutions,” 10 a.m.
- The House Oversight and Reform Committee holds a hearing entitled “CFPB’s Role in Empowering Predatory Lenders: Examining the Proposed Repeal of the Payday Lending Rule,” 2 p.m.
GOOD TO KNOW
- Agriculture Secretary Sonny Perdue said Friday that President Trump has asked the Department of Agriculture (USDA) for a plan to help farmers harmed by new tariffs in the trade war against China.
- President Trump on Friday hailed the release of federal data showing low inflation as he presses the Federal Reserve to cut interest rates.
- A House subcommittee on Friday advanced a $56.4 billion spending bill for the State Department and foreign operations, rejecting President Trump’s proposed $11.5 billion in budget cuts.
- Business groups are praising the return of the Export-Import Bank to full strength after a contentious four-year battle, even as they prepare for the next fight over the future of the credit export agency.
RECAP THE WEEK WITH ON THE MONEY
- Monday: Mnuchin formally rejects Dem request for Trump’s tax returns | Trump to boost tariffs on Chinese goods | Trade worries lead to wild day on Wall Street | NY attorney general sues Treasury, IRS
- Tuesday: Stocks sink on Trump tariff threat | GOP caught off guard by new trade turmoil | Federal deficit grew 38 percent this fiscal year | Banks avoid taking position in Trump, Dem subpoena fight
- Wednesday: White House files notice of China tariff hikes | Dems cite NYT report in push for Trump tax returns | Trump hits Iran with new sanctions | Trump praises GM for selling shuttered Ohio factory | Ex-Im Bank back at full strength
- Thursday: New tariffs on China pose major risk for Trump | Senators sound alarm over looming budget battles | Ocasio-Cortez, Sanders team up against payday lenders