Overnight Finance: Trump trade agenda at crossroads | White House to request $11B in spending cuts | SEC subpoenas Jay-Z | Company drops legal challenge to consumer bureau

Happy Thursday and welcome back to Overnight Finance, with less controversy than the House chaplain.  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-stage.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: President Trump’s trade agenda is at a crossroads, with the White House facing a series of key decisions this month that could determine whether he can successfully map out a new course on one of his signature issues.

On at least three different fronts, Trump is likely to have big decisions to make in May.

U.S. Trade Representative Robert Lighthizer is scheduled to meet his counterparts in the North American Free Trade Agreement (NAFTA) on Monday, with the administration hoping to complete talks on a revised NAFTA this month. 

High-level talks will take place in China on Thursday and Friday between Washington and Beijing. 

The talks, where the U.S. delegation includes Lighthizer, Treasury Secretary Steven Mnuchin and National Economic Council Director Larry Kudlow, are centered on the escalating fight over intellectual property disputes and tit-for-tat tariffs between the world’s largest two economies.

A fight also is brewing with Europe and other U.S. allies over Trump’s proposed tariffs on steel and aluminum imports. The Hill’s Vicki Needham and Niv Elis tell us what’s at stake here.

Reactions:

• “It’s hard to know because Trump is so unpredictable, but I would expect that we would, at the end of the day, see big threats and very small results.” — Rob Scott, director of trade and manufacturing research at the left-leaning Economic Policy Institute.

• “What we haven’t seen so far is real strategic thinking from this administration.”–  Derek Scissors, a trade expert at the American Enterprise Institute.

• “The instability being injected into the U.S. economy is self-destructive.” — Bryan Riley, the free trade director at the National Taxpayers Union.

 

What comes next: It’s possible that by the end of May, Trump will have imposed steep tariffs on longstanding allies, withdrawn from NAFTA and escalated a trade war with China. 

Or, Trump’s trade team may have a negotiated a new NAFTA, worked out deals on the steel and aluminum tariffs and launched a new era of U.S.-China trade. We won’t know for a while.

 

LEADING THE DAY

White House to request $11 billion in spending cuts:  The White House plans to ask Congress for $11 billion in discretionary spending cuts, a GOP aide told The Hill, a significant decrease from earlier ambitions to cut as much as $60 billion.

The package of cuts, first reported by Politico, would come in the form of a rescissions request from the president as soon as Monday. Congress has 45 days to act on such requests.

An administration official emphasized that the package has yet to be finalized.

“While discussions are ongoing and the final number is still in flux, it’s important to note that this package will be the first in a series,” the official said.

Many congressional Republicans are wary of cutting back spending in the aftermath of the bipartisan spending deal in March, in which Democrats agreed to higher defense spending in exchange for higher levels of nondefense funding.

 

Soy long? Farewell. The head of top U.S. food company Bunge Ltd. revealed that China has essentially stopped purchasing soybeans from the U.S. and has instead turned to countries such as Canada and Brazil amid trade tensions.

“Whatever they’re buying is non-U.S.,” Bunge Ltd. CEO Soren Schroder told Bloomberg on Wednesday. “They’re buying beans in Canada, in Brazil, mostly Brazil, but very deliberately not buying anything from the U.S.”

Schroder’s comments come as trade tensions between the U.S. and China have ratcheted up over the past month. 

China responded to tariffs levied by President Trump last month through slapping their own tariffs on U.S. goods, including targeting American soybeans. 

Schroder told Bloomberg that it is “very clear” that the tensions between China and the U.S. have deterred the Chinese from buying U.S. goods.

“How long that will last, who knows? But so long as there is this big cloud of uncertainty, that’s likely to continue,” he said.

 

Company drops case against consumer bureau: A New Jersey-based mortgage company declined this week to appeal a federal ruling in its watershed suit against the Consumer Financial Protection Bureau (CFPB).

A spokesman for PHH Corp. on Thursday told The Hill that the mortgage firm did not appeal a January ruling in its suit against the CFPB to the Supreme Court by the May deadline to do so.

PHH had sued the CFPB over a $103 million fine issued by the bureau in 2015 over alleged violations of lending laws. The company disputed the CFPB’s defense for the fine and claimed the bureau had no authority to issue it because its structure was unconstitutional.

The U.S Court of Appeals for the District of Columbia Circuit ruled in January that the CFPB’s structure was constitutional, but reimbursed PHH for what it considered an inappropriate fine. I’ve got more here.

So what? PHH’s decision not to appeal the January ruling resolves one of several legal threats to the CFPB’s structure. The 5th District Court of Appeals will also hear a challenge to the CFPB’s constitutionality, and a ruling against the bureau could prompt the Supreme Court to resolve the issue itself.

MARKET CHECK: Stocks rallied late Thursday to erase most of the morning’s massive losses. The Dow Jones Industrial Average closed five points higher after losing as many as 400 points on the day. The Nasdaq and S&P 500 closed with losses around 0.20 percent after similar dives.

 

GOOD TO KNOW

• Goldman Sachs is moving ahead with plans to set up what appears to be the first Bitcoin trading operation at a Wall Street bank.
• The world economy showed signs of stabilizing as manufacturing activity strengthened for the first time this year.
• The difference between open and closed trade policies could cost the U.S. economy $2 trillion by 2022, according to a study by a consortium of analysts.
• Bank of America is being sued for allegedly refusing to hire a recipient of the Deferred Action for Childhood Arrivals (DACA) program.
• The Securities and Exchange Commission (SEC) is seeking an order forcing rapper and entrepreneur Jay-Z, whose real name is Shawn Carter, to comply with a subpoena for testimony, the agency announced Thursday.

 

ODDS AND ENDS

• Elon Musk‘s behavior on a Tesla conference call on Wednesday raised questions about his relationship with Wall Street and the company’s fiscal viability.