On The Money: Trump sues to block release of NY state tax returns | Conservatives erupt in outrage against budget deal | White House defends deal amid backlash from allies | Deal's winners, losers
On The Money: Trump warns China tariffs could stay for 'substantial period of time' | Fed keeps rates steady amid global slowdown | Trump faces political risks in fight over GM plant
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.
THE BIG DEAL--Trump warns China tariffs will remain for 'substantial period of time' even with deal: President Trump said Wednesday that he will maintain tariffs on Chinese imports even if he strikes a trade deal with Beijing.
Trump told reporters Wednesday that he will keep import taxes on billions in Chinese goods to make sure China complies with a potential agreement to reduce trade barriers.
"We're not talking about removing them," Trump said at the White House. "We're talking about leaving them for a substantial period of time because we have to make sure that if we do the deal with China, that China lives by the deal.
"They've had a lot of problems living by certain deals and we have to make sure," Trump continued. I break down the situation here.
- The Trump administration is seeking pledges from Beijing to increase purchases of U.S. crops, halt alleged theft and forced transfers of American intellectual property, and expand foreign access to Chinese financial markets.
- Trump has imposed 25 percent tariffs on $50 billion in Chinese imports and a 10 percent tax on $200 billion in goods from the country to increase leverage over Beijing in trade talks.
- China is seeking the removal of both sets of tariffs, and Trump did not specify whether he'd keep both sets or just one of them.
What happens next:
- Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer will travel to China this weekend in hopes of finalizing a tentative deal.
- The president has signaled optimism about a trade deal with China for several months and has repeatedly said an agreement would be finalized "soon."
- It's unclear how close the U.S. and China truly are to striking a deal, and some of Trump's top aides have warned lawmakers that holding Beijing to the pact could be lengthy and difficult.
LEADING THE DAY
Fed keeps rates unchanged as global economy slows: The Federal Reserve on Wednesday held interest rates steady for the second consecutive month as the central bank seeks clarity on the future of the global economy.
The Federal Open Market Committee (FOMC), the Fed's policymaking arm, maintained the federal funds rate at 2.25 to 2.5 percent and signaled that the bank is unlikely to hike at all in 2019.
Federal Reserve Chairman Jerome Powell told reporters Wednesday that while the bank has a "positive" outlook for the U.S. economy, persistently low inflation and slowness in the global economy warrant patience with further rate adjustments.
"Patient means that we see no need to rush to judgement," Powell said. "It may be some time before the outlook for jobs and inflation calls for adjustments to policy." I explain what that means here.
The factors behind the Fed's decision:
Slowing US growth:
- Powell said the U.S. economy "is in a good place," citing low unemployment, higher wage growth, strong consumer confidence levels and supportive financial conditions.
- Even so, the Fed downgraded its projections of U.S. gross domestic product (GDP) growth in 2019 to 2.1 percent from its December estimate of 2.3 percent.
A major global slowdown:
- Powell said severe economic turmoil in Europe and China could hinder the U.S. economy, also singling out Brexit and trade negotiations as "risks to the outlook."
- "The global economy started to gradually slow and now we see a situation where the European economy has slowed substantially," Powell said. "It is an integrated global economy and financial markets are integrated as well."
- Inflation has remained just below the Fed's 2 percent target for several years despite near-record low unemployment and a sharp uptick in U.S. economic growth. Top Fed officials have said in recent months that interest rates could now be close to a neutral level, one that neither stimulates nor slows the economy.
- "Inflation is not clearly meeting our target, so that's one of the reasons we're being patient," Powell said.
Trump faces political risks in fight over GM plant: President Trump is facing a politically risky fight as he looks to keep a General Motors factory in Ohio open and fulfill his promises of reviving the U.S. auto industry.
Trump in recent days has stepped up pressure on GM and United Auto Workers to reach a deal to reopen the company's assembly plant in Lordstown, Ohio, and safeguard its 1,636 jobs.
But it poses a tough challenge for the president in a battleground state he won in 2016 and which will be crucial to his reelection hopes.
Auto industry watchers say it will be a daunting task.
"I honestly don't know if the plant can be reopened," said David Whiston, an analyst at Morningstar research firm. Whiston said that the impact of the Lordstown closure "would likely be severe to catastrophic." I'll fill you in here on the challenges for Trump.
GOOD TO KNOW
- Ford is moving ahead with plans to invest in facilities to build driverless cars and electric vehicles in Michigan, the auto company announced Wednesday.
- Economic confidence among the nation's top CEOs fell for a fourth consecutive quarter and slid to its lowest level since 2017, according to a new survey by the Business Roundtable.
- President Trump "is targeting a windfall from an international banking scandal to help pay for the border wall," according to CNBC.
- Sen. Ted Cruz (R-Texas), chairman of the Senate Commerce Subcommittee on Aviation and Space, announced a hearing on airline safety in the wake of the deadly crashes of two Boeing 737 Max aircrafts.
- Meanwhile, the Seattle Times reports that the FBI is joining a criminal probe into the certification of Boeing's troubled 737 Max planes.
- And more Boeing: The Pentagon's watchdog is opening an investigation into whether acting Defense Secretary Patrick Shanahan violated ethics rules and promoted his former employer Boeing while in office.
ODDS AND ENDS
- The CEO of AT&T said Wednesday that he got a robocall while speaking onstage at an event at the Economic Club of Washington.