On The Money: 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

Happy Tuesday and welcome back to On The Money, where we’re dubious of the full economic benefit of melting Arctic ice. 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–Dow falls more than 400 points after Trump’s latest tariff threat: Stocks fell sharply Tuesday as Wall Street braced for President Trump to impose higher tariffs on Chinese imports after a breakdown in trade negotiations with Beijing.

The Dow Jones Industrial Average closed with a loss of 473 points, a 1.8-percent drop. The S&P 500 index closed down 1.7 percent, while the Nasdaq composite sank by 2 percent.{mosads}

The sell-off started during the first hours of trading, following an announcement Monday evening by Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer that Trump would raise tariffs on $200 billion worth of Chinese goods, from 10 percent to 25 percent, on Friday. I’ve got more on Wall Street’s brutal day here.

GOP senators frustrated as Trump doubles down: Senate Republicans feel that Trump has once again pulled the rug out from under them on trade, leaving GOP lawmakers frustrated over their inability to influence the White House’s policy on an issue that could have major economic and electoral ramifications.

Days after a group of Republican senators relayed to Trump at a White House meeting their concerns about trade tensions with Canada, Mexico, Europe and China, Trump over the weekend threatened new tariffs on China. The Hill’s Alexander Bolton tells us how that’s roiling the GOP conference.

And while Trump faces new obstacles with China on trade, he’s also facing challenges getting his NAFTA update approved by Congress. Outside groups are boosting efforts to encourage lawmakers to pass President Trump’s revised North American trade deal ahead of a critical stretch this summer.

Getting approval for the United States-Mexico-Canada Agreement (USMCA) has been a top priority for K Street, and publicly those groups are expressing optimism.

Business groups have ramped up their lobbying, formed new coalitions and enlisted a number of prominent former lawmakers, including ex-Rep. Joseph Crowley (D-N.Y.) and former Sen. Heidi Heitkamp (D-N.D.), to push for passage.

But those efforts will be put to the test in the coming months, with advocates urging Congress to approve the deal by August in the face of strong doubts from both parties. The Hill’s Alex Gangitano tells us why.

ON TAP TOMORROW:

• The Senate Finance Committee holds a hearing on the nominations of David Fabian Black to be deputy commissioner of Social Security and Emin Toro to be a judge of the United States Tax Court, 9:30 a.m.
• The House Ways and Means Committee holds a hearing entitled “Understanding the Tax Gap and Taxpayer Noncompliance,” 10 a.m.
• A House Agriculture subcommittee holds a hearing entitled “Reviewing the State of the Farm Economy,” 10 a.m.

The Hill Event: Workers and The Innovation Age

The future of work is no longer something that stands in the distance, but something that must be planned for now. On Thursday, May 16th at the Newseum, 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.  

LEADING THE DAY

Federal deficit grew 38 percent in first 7 months of fiscal year: CBO: The federal deficit in the first seven months of the 2019 fiscal year jumped 38 percent compared to the same period last year, the nonpartisan Congressional Budget Office (CBO) said Tuesday.

The deficit ballooned to $531 billion from the beginning of October to the end of April, well above the previous year’s $385 billion mark.

But the comparison with 2018 was somewhat inflated, CBO said, due to differences in payments and outlays; without them the deficit would have been $486 billion.

Expenditures rose by $178 billion during the first seven months of the fiscal year, driven by both increased mandatory spending and a bipartisan agreement to increase discretionary spending. Higher interest rates also contributed.

TurboTax, H&R Block sued for allegedly hiding free filing service from low-income taxpayers: Tax filing services H&R Block and Intuit, the maker of TurboTax, are being sued by the Los Angeles city attorney for allegedly making it difficult for low-income taxpayers to find the free filing service provided by the IRS.

The lawsuits against the two companies filed Monday allege they “intentionally obscure[ed] and fail[ed] to disclose” the difference between products that costs money to file taxes and the Free File program, according to NBC News.

H&R Block and Intuit have faced scrutiny from lawmakers and now Los Angeles officials after a report from investigative nonprofit news outlet ProPublica found the companies allegedly intentionally made the free service on its platforms hard to find.

Banks taking no position in lawsuit over subpoenas: Deutsche Bank and Capital One said in letters filed in court on Tuesday that the banks do not want to take a position in the legal fight between President Trump and House Democrats seeking to obtain financial records from the banks.

Each bank made the assertion in separate letters, filed in response to a request from Trump’s lawyers seeking copies of the congressional subpoenas issued to the banks.

Deutsche Bank wrote in a brief letter that the “underlying controversy” in the lawsuit — which initially targeted Deutsche Bank and Capital One — is between House Democrats and the president, his family and private businesses.

An attorney for Capital One said as much in a similar letter, writing that it “takes no position with respect to Plaintiffs’ request for an order” requiring the committees to hand over copies of the subpoenas.

Attorneys for the president have stated in previous filings that the banks and lawmakers have both declined to provide them with the actual subpoenas but that Deutsche Bank did give them a summary of the documents request.

The subpoenas, issued by House Financial Services Committee Chairwoman Maxine Waters (D-Calif.) and House Intelligence Committee Chairman Adam Schiff (D-Calif.), seek years of financial records pertaining to Trump, his family and his businesses.

The Hill’s Jacqueline Thomsen has more on the legal fight here.

GOOD TO KNOW

• Tomato prices could see a major hike starting Tuesday, as the Mexican government says the U.S. Commerce Department has imposed a new 17.5 percent tariff on Mexican tomato imports.
• The Treasury Department on Tuesday announced it had lifted sanctions on a member of Venezuela’s military who broke ranks with President Nicolás Maduro, the latest sign of the Trump administration hoping to build up opposition to the leader.
• The Consumer Financial Protection Bureau (CFPB) on Tuesday proposed a rule meant to curb harassment by debt collectors with hard limits on how and when debtors can be contacted by collection agencies.
• The Federal Reserve has taken steps to ensure that banks and other financial institutions affected by a changing global climate will be protected from financial burden, Chairman Jerome Powell says.
• Congressional Democrats on Tuesday reintroduced legislation which would impose fines on credit reporting agencies for compromising customer data, a response to the massive Equifax breach.
• House Democrats on Tuesday introduced their plan for allocating $1.3 trillion in spending for 2020, an amount that’s about $51 billion above current levels.

ODDS AND ENDS

• Apple and Google this week removed a trio of dating apps after the Federal Trade Commission (FTC) said they could put children at risk of exposure to predators.