On The Money: 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

Happy Monday and welcome back to On The Money, also boasting its highest approval rating yet. 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–Mnuchin formally rejects Dem request for Trump’s tax returns: Treasury Secretary Steven Mnuchin on Monday formally rejected Democrats’ request for President Trump’s tax returns, saying it “lacks a legitimate legislative purpose.”

“I am informing you now that the Department may not lawfully fulfill the Committee’s request,” Mnuchin said in a letter to House Ways and Means Committee Chairman Richard Neal (D-Mass.).{mosads}

The response, while widely expected, sets the stage for a likely court battle, as Democrats are expected to continue their push for the returns. Some lawmakers and experts have said that they expect Neal to issue a subpoena for the documents. Democrats may also vote to hold Trump administration officials in contempt. The Hill’s Naomi Jagoda tells us what to expect.

LEADING THE DAY

Trump trade chief says US will boost tariffs on Chinese goods: President Trump’s top trade negotiator said Monday that the White House will raise tariffs on $200 billion in Chinese goods after a setback in trade talks between the U.S. and Beijing.

U.S. Trade Representative Robert Lighthizer said Monday that Trump will raise tariffs from 10 to 25 percent on $200 billion worth of Chinese imports, according to multiple media reports.

The president announced Sunday on Twitter that he had planned to go through with the tariff hike, which had been indefinitely delayed as the U.S. and China sought to finalize a deal to reduce trade barriers.

“The United States has been losing, for many years, 600 to 800 Billion Dollars a year on Trade. With China we lose 500 Billion Dollars,” Trump tweeted Monday, renewing his pledge. “Sorry, we’re not going to be doing that anymore!” I explain what went wrong here.

The background:

• Trump and his top aides have said for months that the U.S. was close to finishing a deal with Beijing to reduce trade barriers and ramp up purchases of American crops by the Chinese government.
• Chinese Vice Premier Liu He, Beijing’s lead on trade negotiations, was scheduled to visit Washington, D.C. this week after Lighthizer and Treasury Secretary Steven Mnuchin met with officials in China last week.
• But several outlets reported Monday that talks between the Trump administration and China hit a roadblock after Beijing refused to agree to measures to halt intellectual property transfers that would require a change to Chinese law.

The breakdown:

• Trump on Sunday also threatened to impose new import taxes on more than $300 billion in Chinese goods, which would like subject all imports from China to tariffs.
• “We felt we were on track to get somewhere. Over the course of last week we have seen an erosion of commitments by China,” Lighthizer said Monday, according to Bloomberg News. He added there were still significant issues to be hammered out in talks.

The meltdown: Trump’s decision to boost tariffs on Chinese goods spurred fears that the U.S and China could fail to reach a deal, sending Wall Street into a frenzy Monday morning.

The Dow Jones Industrial Average plunged more than 400 points, or 1.6 percent, while the S&P 500 dropped nearly 45 points, or 1.5 percent, and the Nasdaq composite fell 145 points, or 1.8 percent. But the major indexes made a massive comeback, recovering almost all of their losses from earlier in the day.

New York attorney general sues Treasury, IRS: New York Attorney General Letitia James (D) on Monday filed a lawsuit against the Treasury Department and IRS, arguing that the agencies have failed to respond to information requests about their guidance reducing donor disclosure requirements for certain tax-exempt groups.

“My office depends on these critical donor disclosure forms to be able to adequately oversee non-profit organizations in New York,” said James, who filed the suit alongside New Jersey Attorney General Gurbir Grewal (D).

“Not only was this policy change made without notice, the Treasury and the IRS are now refusing to comply with the law to release information about the rationale for these changes. No one is above the law — not even the federal government — and we will use every tool to ensure they comply with these regulations to provide transparency and accountability.” Naomi Jagoda breaks it down.

GOOD TO KNOW

• The IRS said it’s reviewing concerns about its “free file” program after Democratic lawmakers have pressed the agency about the program following reports that tax preparation companies have taken steps to hide their free options.
• A raft of surprisingly strong recent economic data is likely to bolster President Trump’s case as he heads into the 2020 election.
• President Trump and Democrats are in a crunch as they try to pursue a $2 trillion infrastructure package amid rising concerns in some quarters about the deficit and national debt.
• Sen. Kirsten Gillibrand (D-N.Y.) announced Monday that she will introduce a bill to require broader data collection on thousands of loan and credit applications in a bid to crack down on lending discrimination.
• The top Republican on the House Financial Services Committee on Friday pressed federal regulators for updates on their efforts to finalize rule rollbacks signed by President Trump in 2018.
• A dozen groups from across the ideological spectrum are stepping up their efforts to urge congressional leaders not to renew a host of expired tax breaks known as “tax extenders.”

ODDS AND ENDS

• Former Colorado Gov. John Hickenlooper (D) declared on Sunday that he is running for president to “save capitalism,” writing in a Wall Street Journal op-ed that the economic system needs fixing if it hopes to survive.