Happy Wednesday and welcome back to On The Money. 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 hints administration won’t comply with subpoena for Trump tax returns: Treasury Secretary Steven Mnuchin on Wednesday signaled that the administration would not provide President Trump’s tax returns that have been subpoenaed by House Democrats.
“We haven’t made a decision, but I think you can guess which way we’re leaning on our subpoena,” Mnuchin said at a Senate Appropriations subcommittee hearing.
Mnuchin also repeatedly said during the hearing that he thinks the fight between Congress and the executive branch over the issue is likely to end up in the courts.{mosads}
“This is why there are three branches of government, so if there is a difference of opinion, this will go to the third branch of government to be resolved,” he said. The Hill’s Naomi Jagoda takes us there.
The background:
- House Ways and Means Committee Chairman Richard Neal (D-Mass.) in April requested the tax returns from the IRS under a provision of the tax code that states that the Treasury secretary “shall furnish” tax returns requested by the chairmen of Congress’s tax-writing committees.
- Neal said that he wants the returns because his committee is interested in oversight and legislation relating to how the IRS audits and enforces tax laws against a president.
- Mnuchin rejected the request on May 6, saying the request doesn’t have a legitimate legislative purpose, prompting Neal to then issue subpoenas to Mnuchin and IRS Commissioner Charles Rettig for the documents. The deadline to produce the documents requested under the subpoenas is Friday at 5 p.m.
ON TAP TOMORROW
- 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 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.
LEADING THE DAY
Trump to delay tariffs on foreign autos: President Trump will likely hold off on imposing tariffs on imported automobiles for at least six months as trade talks continue with the European Union and Japan, according to multiple media reports.
Trump is expected to delay a May 18 deadline to decide whether to apply tariffs of up to 25 percent on foreign autos, Bloomberg and CNBC reported Wednesday, easing concerns about potential retaliation from crucial U.S. trading partners.
Spokesmen for Trump and the Office of the U.S. Trade Representative declined to comment.
Why it’s important:
- The president has frequently advocated for tariffs on foreign autos and has used the threat of import taxes as leverage in trade talks with the EU and Japan.
- Auto exports are a significant portion of both economies, and the EU and Japan have prepared to retaliate with tariffs on U.S. goods if Trump goes through with the import taxes.
- If Trump imposes tariffs on foreign autos, it would be considered a major escalation of his protectionist trade policy. Economists have warned that import taxes on foreign cars could severely hinder the U.S. and global economies.
We also saw a little more progress toward a trade resolution between the White House and our North American neighbors. The Trump administration is nearing a deal that would lift steel and aluminum tariffs on Mexico and Canada, Treasury Secretary Steven Mnuchin told a congressional panel at a hearing on Wednesday.
- Senate Finance Committee Chairman Chuck Grassley (R-Iowa) threatened last month to block passage of the United States-Mexico-Canada Agreement, a trade pact intended to replace the North American Free Trade Agreement (NAFTA) with Mexico and Canada, unless the administration lifts the steel and aluminum tariffs.
- Trump imposed the steel and aluminum tariffs against a slew of trading partners last year, including Canada, Mexico and the European Union. Those countries have hit the U.S. with retaliatory tariffs.
Reports of Trump’s delay helped reassure financial markets already rattled by rising trade tensions between the U.S. and China. The Dow Jones Industrial Average rebounded from a nearly 200-point drop to a 116-point gain on the news, while shares of U.S. auto companies also rose.
And the news of progress toward easing tariffs is likely welcome news for Republicans, who’ve grown more concerned about the impact of retaliation to Trump’s trade policy. China, along with the E.U., Canada and Mexico, have imposed tariffs primarily on U.S. agricultural goods, a significant blow to the ailing American farm sector.
Trump on Monday announced his administration will provide $15 billion in assistance to farmers hurt by the escalating trade war with China, which this week increased tariffs on $60 billion in American exports.
But Sen. Pat Toomey (R-Pa.), a fierce critic of tariffs, called Trump’s plan “very bad policy.”
“Think about what we’re doing,” Toomey said. “We’re inviting this retaliation that denies our farmers — the most productive farmers on the planet — the opportunity to sell their products overseas and then we say, ‘Don’t worry, we’ll have taxpayers send you some checks and make it OK.’ That’s a very bad approach.”
Trump signs order aimed at protecting US networks from Chinese tech: In another move sure to increase tensions with China, President Trump on Wednesday signed an executive order declaring a “national emergency” that would empower his administration to block foreign tech companies from doing business in the U.S. if they are deemed a national security threat.
The order does not name any countries or companies, but the administration has launched a global campaign to keep the Chinese telecom Huawei from helping U.S. allies develop next-generation wireless infrastructures.
U.S. officials have argued that Huawei is inextricably-linked to the governing Chinese Communist Party and could allow the country to spy on nations where its hardware is present.
The White House’s order targets transactions that pose a threat to national security or risk the potential for economic sabotage against U.S. companies and infrastructure. The Hill’s Harper Neidig, Maggie Miller and Brandon Conradis explain what the order means here.
GOOD TO KNOW
- Speaker Nancy Pelosi (D-Calif.) and Senate Minority Leader Charles Schumer (D-N.Y.) are expected to meet next week with President Trump for a second round of talks on an infrastructure package.
- IRS Commissioner Charles Rettig said Wednesday that the agency is engaging an outside contractor to review its “Free File” program, and that he hopes the review is completed in the next several months.
- A senior Consumer Financial Protection Bureau (CFPB) official under fire for his anonymous blog posts on racial discrimination will leave the agency by the end of the month, according to an internal email obtained by The Hill.
- Sen. Elizabeth Warren (D-Mass.) squared off with a top Trump administration bank regulator on Wednesday over his decision to keep parts of the agency’s oversight of Wells Fargo confidential.
- Senate Budget Committee Chairman Mike Enzi (R-Wyo.) intends to nominate Phillip Swagel, a University of Maryland economics professor and former Treasury official under President George W. Bush, to be the next director of the non-partisan Congressional Budget Office (CBO).
- President Trump plans to announce his new immigration proposal on Thursday during an event in the White House Rose Garden, returning the spotlight to his signature issue as the 2020 presidential campaign kicks into high gear.
ODDS AND ENDS
- Utility giant Pacific Gas & Electric (PG&E) allegedly caused the wildfire that left more than 80 dead in Northern California last fall, Cal Fire investigators announced Wednesday.
- Cybersecurity experts are worried about the fallout from a Supreme Court ruling allowing customers to sue Apple over the prices in its App Store, claiming it could eventually lead to more unsecured apps being sold to consumers.
- Op-Ed: Phillip Braun, associate chair of the Finance Department at the Kellogg School of Management at Northwestern University, argues that “the longer the trade war, the sooner the recession.”