On The Money: US-China trade talks to resume | Mnuchin warns of more Turkey sanctions | How Turkey’s financial crisis could roil the US | Senate GOP seeks tax law fixes
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THE BIG DEAL–US, China holding lower level trade talks later this month: A delegation of officials from China and the U.S. will meet later this month to discuss trade between the two countries as a round of additional tariffs from President Trump looms next week.
Reuters reported Thursday that representatives from the Treasury Department will meet with China’s Vice Minister of Commerce Wang Shouwen and other officials in Washington, D.C.
News of the meeting boosted the yuan and aided China’s stock market, Reuters reported. However, financial observers expressed skepticism that any tangible agreement will come from the meeting, citing that the U.S. Trade Representative was not involved and the talks will occur between lower-level officials.
It’s unclear if the meeting will take place before or after Aug. 23, which is when the Trump administration will impose 25 percent tariffs on $16 billion worth of Chinese imports.
LEADING THE DAY
Mnuchin: Turkey will face more sanctions if pastor not released ‘quickly.’ Treasury Secretary Steven Mnuchin said Thursday that his department is preparing to impose more financial sanctions on top Turkish officials as the White House pursues the release of a jailed American pastor.
Mnuchin said during a White House Cabinet meeting that the Treasury Department was preparing further penalties for Turkey in response to a question from President Trump on the status of sanctions, according to media reports.
Mnuchin said Thursday that Treasury would likely target more of Turkish President Recep Tayyip Erdoğan’s top officials if Ankara refused to let Brunson return to the U.S.
“We have put sanctions on several of their Cabinet members. We have more that we are planning to do if they don’t release him quickly,” Mnuchin said.
Trump has cranked up economic pressure on Erdoğan in an effort to free Andrew Brunson, an American pastor detained in Turkey since 2016. The White House last week doubled tariffs on Turkish steel and aluminum, and Treasury blocked Turkey’s interior and justice ministers from the U.S. financial system. I’ve got more on the feud here.
Why it matters: Rapid inflation, a tanking currency and political influence on fiscal policy has plunged Turkey’s economy into crisis.
While European leaders and analysts have called on Turkey to boost interest rates and cool down its overheating economy, President Recep Tayyip Erdoğan has defiantly panned western powers for waging “economic war” on his country.
The Hill’s Rebecca Kheel, Vicki Needham and I wrote up five ways the U.S. be impacted by the crisis both economically and geopolitically.
- Turmoil in emerging markets and tough losses for EU banks
- More trade tensions between the US and Turkey
- Fallout hindering the US, EU response to Russia
- Further unrest in the Middle East, complicating life for Trump
- New pressure to hand over Erdoğan foe Fethullah Gülen
Our bad, guys: Republicans on the Senate Finance Committee on Wednesday sought to tackle errors in their signature tax law through a letter meant to clarify Congress’s intent in passing the law.
The letter to the IRS and Treasury Secretary Steven Mnuchin was meant “to provide sufficient clarification” on three parts of the law, which was rushed through Congress on a relatively short timeline last year.
The GOP lawmakers hope the letter can be used by Treasury as the basis for writing rules clarifying mistakes in the law.
Republicans hope to pass legislation making technical corrections to the law before the end of the year, but will need to win some Democratic support to get the legislation through the Senate.
“After this review, we intend to introduce technical corrections legislation to address any items identified in the on-going review,” the letter said.
The Hill’s Niv Elis tells us what Republicans want to fix here.
Watchdog files criminal complaint against Ross over stock holdings: A liberal watchdog group filed a criminal complaint Thursday against Commerce Secretary Wilbur Ross over meetings he held with representatives from companies included in his financial holdings.
Citizens for Responsibility and Ethics in Washington (CREW) asked the Justice Department to probe whether Ross had violated criminal conflict of interest laws by meeting with firms lobbying the Commerce Department while the secretary had investments in them.
“Secretary Ross continues to demonstrate a troubling disregard for his ethics obligations, and his systematic failures and omissions suggest that he may have knowingly and willfully violated the law,” said CREW executive director Noah Bookbinder.
“On several occasions, Secretary Ross has misled the American public about his financial interests, including failing to disclose holdings in companies directly lobbying the administration on issues he oversees.” I’ve got more on their claims here.
- The complaint focuses on four meetings Ross held with representatives of Boeing Company, Chevron Corp., Greenbrier Companies and International Automotive Components (IAC) Group before the secretary divested from those companies.
- Ross had pledged to pull his investments from Chevron and Boeing within 90 days and IAC-related investments within 180 days of his confirmation. But a Forbes analysis of Ross’s schedules found that the secretary met with all three companies before he divested from them.
- Ross didn’t unload his Chevron and Boeing shares until May, and held onto his IAC-related investments until October, according to federal records cited by CREW, meaning the secretary had financial stakes in companies seeking to influence his department.
MARKET CHECK: CNBC: “Stocks closed higher on Thursday on renewed hope that a resolution to a trade dispute with China could be on the horizon. Investors also cheered strong quarterly results from Walmart and Cisco Systems.
“The Dow Jones Industrial Average rose 396.32 points to 25,558.73 — its biggest one-day jump since April 10, when it surged 429 points — led by gains in Walmart, Cisco Systems, Boeing and Caterpillar. The S&P 500 gained 0.8 percent to 2,840.69 as consumer staples and telecom outperformed. The Nasdaq Composite advanced 0.4 percent to 7,806.52.
“The S&P 500 also closed 1.1 percent below its record high set on Jan. 26 while the Nasdaq finished the session 1.6 percent off its all-time high. The Dow, meanwhile, is about 4 percent removed from an all-time high.”
GOOD TO KNOW
- Employees at the Royal Bank of Scotland (RBS) joked about crippling the U.S. housing market before the 2008 financial crisis, according to transcripts released by the Department of Justice (DOJ) last week.
- California’s legal pot market has fallen around $100 million short so far this year in cultivation and excise tax collection, according to the Associated Press.
- Federal Communications Commission (FCC) Chairman Ajit Pai on Thursday revealed that White House counsel Don McGahn called him about the merger between Sinclair Broadcast Group and Tribune Media last month as the deal was imploding due to opposition from regulators.
- President Trump’s planned military parade in Washington, D.C., is reportedly estimated to cost $92 million, $80 million more than was initially thought.
- U.S. Trade Representative Robert Lighthizer on Thursday expressed hope a breakthrough could be made in the coming days in efforts to rework the NAFTA trade deal, though his Mexican counterpart said flexibility was needed to reach agreement, according to Reuters.
- Top executives of America’s biggest companies saw their average annual pay surge to $18.9 million in 2017, according to a report released Thursday, fueling concerns about the gulf between the nation’s richest and everyone else.
- Big banks are not happy with Trump-appointed regulators’ plans to roll back the Volcker Rule, according to The Wall Street Journal.
- President Recep Tayyip Erdogan moved to shore up alliances in Europe and the Middle East, easing pressure on the battered lira, as the standoff between Turkey and the U.S. deepened, according to Bloomberg.
ODDS AND ENDS:
From The Hill’s Jasper Goodman: Advocates and employees of the U.S. Department of Agriculture (USDA) are raising concerns over the agency’s surprise announcement last week that two departments are being moved out of Washington, D.C.
The USDA announced plans last Thursday to move the Economic Research Service (ERS) and the National Institute of Food and Agriculture (NIFA) away from the capital. The ERS will also be realigned under the Office of the Chief Economist (OCE), which operates at the direction of the Office of the Secretary.
ERS and NIFA staffers only found out about the changes shortly before they were announced in a press release.
“‘It’s taking a shot to the heart of the agency,’ said one ERS economist, who spoke with The Hill on the condition of anonymity. ‘They’re sending a very strong signal that they don’t value the research or the work, so a lot of people may not stick with the move.'”
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