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

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
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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.

See something I missed? Let me know at slane@thehill.com or tweet me @SylvanLane. And if you like your newsletter, you can subscribe to it here: http://bit.ly/1NxxW2N.

Write us with tips, suggestions and news: slane@thehill.com, njagoda@thehill.com  and nelis@thehill.com. Follow us on Twitter: @SylvanLane, @NJagoda and @NivElis.

 

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 TrumpDonald John TrumpHarris bashes Kavanaugh's 'sham' nomination process, calls for his impeachment after sexual misconduct allegation Celebrating 'Hispanic Heritage Month' in the Age of Trump Let's not play Charlie Brown to Iran's Lucy MORE 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.

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The sell-off started during the first hours of trading, following an announcement Monday evening by Treasury Secretary Steven MnuchinSteven Terner MnuchinBolton exit provokes questions about Trump shift on Iran Trump called out for 'my favorite dictator' while awaiting Egyptian leader at summit: report Romney opposes Trump taking executive action to reduce capital gains taxes MORE and U.S. Trade Representative Robert LighthizerRobert (Bob) Emmet LighthizerOn The Money: Economy adds 164K jobs in July | Trump signs two-year budget deal, but border showdown looms | US, EU strike deal on beef exports Chinese, US negotiators fine-tuning details of trade agreement: report The Trump economy keeps roaring ahead MORE 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 HeitkampMary (Heidi) Kathryn HeitkampThe Hill's Morning Report — Biden steadies in third debate as top tier remains the same Trump wins 60 percent approval in rural areas of key states Pence to push new NAFTA deal in visit to Iowa MORE (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 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 BrownSherrod Campbell BrownHillicon Valley: Google to promote original reporting | Senators demand answers from Amazon on worker treatment | Lawmakers weigh response to ransomware attacks Senate Democrats want answers on 'dangerous' Amazon delivery system Hillicon Valley: Uber vows to defy California labor bill | Facebook, Google, Twitter to testify on mass shootings | Facebook's Libra to pursue Swiss payments license MORE (D-Ohio) and Rob PortmanRobert (Rob) Jones Portman The 13 Republicans needed to pass gun-control legislation Hillicon Valley: Google to promote original reporting | Senators demand answers from Amazon on worker treatment | Lawmakers weigh response to ransomware attacks Lawmakers weigh responses to rash of ransomware attacks MORE (R-Ohio), Reps. Lisa Blunt Rochester (D-Del.) and Tim WalbergTimothy (Tim) Lee WalbergPro-trade group targets Democratic leadership in push for new NAFTA The Hill's Morning Report - Presented by Pass USMCA Coalition - Restrictive state abortion laws ignite fiery 2020 debate On The Money: Mnuchin signals officials won't release Trump tax returns | Trump to hold off on auto tariffs | WH nears deal with Mexico, Canada on metal tariffs | GOP fears trade war fallout for farmers | Warren, regulator spar over Wells Fargo MORE (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 WatersMaxine Moore WatersManufacturing group leads coalition to urge Congress to reauthorize Ex-Im Bank Democrats' impeachment message leads to plenty of head-scratching Trump officials vow to reform Fannie, Freddie if Congress doesn't act MORE (D-Calif.) and House Intelligence Committee Chairman Adam SchiffAdam Bennett SchiffSunday shows - Guns dominate after Democratic debate Schiff: Diplomacy with Iran 'only way out of this situation' Sunday shows preview: Democratic candidates make the rounds after debate MORE (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.