On The Money: What's next after Trump, Xi trade truce | Trump says new talks have 'already begun' | US breaks record for longest economic expansion | Trump signs bipartisan IRS reform bill

On The Money: What's next after Trump, Xi trade truce | Trump says new talks have 'already begun' | US breaks record for longest economic expansion | Trump signs bipartisan IRS reform bill
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THE BIG DEAL--Trade truce puts focus on next steps in US-China talks: President TrumpDonald John TrumpFive takeaways from the Democratic debate As Buttigieg rises, Biden is still the target Leading Democrats largely pull punches at debate MORE's trade truce with Chinese President Xi Jinping over the weekend brought a temporary pause to dueling tariffs between the world's largest economies, but the two leaders will soon need to forge a path toward a final deal to ensure the economic gains aren't short-lived. 

  • Trump and Xi did not set a timeline for further trade talks, nor did they appear to make significant progress over the stickier points of a broader agreement. 
  • And while Xi reportedly agreed to boost purchases of U.S. agricultural goods, Beijing has not committed to a host of economic reforms Washington has demanded in exchange for tariff relief.

The latest: Trump told reporters at the White House on Monday evening that trade talks with China had "already begun," explaining that U.S. and Chinese officials "are speaking very much on the phone but they're also meeting."

"We're going to work with China on where we left off, to see if we can make a deal," Trump also said Saturday after meeting with Xi.

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For some economists, that message wasn't strong enough. "We see little evidence that any substantive progress has been made in bridging the gap on key, long-standing issues," said Lewis Alexander, chief economist at investment firm Nomura, in a Monday research note. "Thus, we continue to believe that the US will move forward with additional tariffs on the remainder of US imports from China at some point in the near future."

I'll tell you why here.

The pressure: Trump faced immense pressure heading into Saturday's meeting with Xi at the Group of 20 summit in Japan. For months, lawmakers and industry have been anxious for progress toward a deal to end the U.S-China trade war, which began its second year Monday.

  • Failing to clinch a trade deal with China poses its own political challenges for Trump as he seeks reelection in 2020. Trump's pledge to restore industrial jobs through new trade terms with China was crucial to his appeal in the Midwest states that paved his road to the White House.
  • Without progress on his trade agenda, Trump may be vulnerable to losing the support of blue-collar workers in Ohio, Michigan, Pennsylvania and Wisconsin -- all states that he won in 2016.

The road ahead: Trump's tariffs have been successful in forcing China to the negotiating table. But the import taxes have failed to yield commitments from Beijing to halt alleged intellectual property theft, forced technology transfers and other anti-competitive practices Trump has pushed for in trade talks.

"They've got a fair amount of work ahead of them if this is going to lead to some sort of negotiated deal," said Warren Maruyama, a partner at the law firm Hogan Lovells who served as U.S. Trade Representative general counsel from 2007 to 2009.

"It could end up in a long-term stalemate. I don't think either one of them benefits from that, but again, they both have political constraints and no one commits to trade deals if it means you're committing political suicide," he added.

 

LEADING THE DAY

US breaks record for longest economic expansion: The U.S. broke its record for time without an economic recession Monday as it began the 121st consecutive month of gross domestic product (GDP) growth since the 2008 recession.

The recovery, which began in July 2009, turned 10 years old Monday, marking the longest stretch of economic expansion in modern U.S. history.

After unemployment peaked at 10 percent in October 2009, the decade-long recovery drove the unemployment rate down to near record lows -- 3.6 percent as of June. The economy has added jobs in every month since October 2010, while GDP growth has stayed solid, if not always remarkable, throughout the past 10 years.

But even though the U.S. boasts strong top-line numbers after 10 years of expansion, millions of workers in hundreds of communities across the country have failed to feel the full benefits. I explain why here.

  • The Fed's efforts are widely praised by left-leaning economists for stabilizing and rebooting the U.S. economy. But the Fed's cheap money policies may have also driven income inequality to record levels.
  • Low interest rates helped fuel a stock market rally and spikes in home prices that provided little income for those who lost their homes and savings in 2008, analysts say, but a boon for those who weathered the recession without dire costs. The Associated Press digs more into that here.
  • Wage growth has also lagged behind the sharp drop in unemployment, even as job openings outnumber available workers by close to 1 million, according to Labor Department estimates.

 

Trump signs bipartisan IRS reform bill: President Trump on Monday signed into law a bipartisan bill to make improvements to the IRS that does not include a controversial provision that would have codified the Free File program for low- and middle-income taxpayers.

The law would make a host of targeted improvements to the IRS, aimed at bolstering its customer service, modernizing its information technology, helping victims of tax-related identity theft and strengthening taxpayers' rights during the IRS enforcement process.

  • Among the provisions in the bill are establishing an independent appeals office, preventing low-income taxpayers from having their cases referred to the IRS's private-debt collection program and creating a single point of contact at the IRS for identity theft victims. 
  • It also includes a provision to increase the penalty for failing to file a tax return, so that the bill does not add to the deficit.

The Hill's Naomi Jagoda tells us more about the bill here.

 

GOOD TO KNOW

  • President Trump on Monday hailed New Jersey legislators for rebuffing Gov. Phil Murphy's (D) effort to pass legislation that would have raised taxes on residents with more than $1 million in annual income.
  • The minimum wage rose Monday in New Jersey, Oregon, and 16 cities around the country, as part of scheduled increases.
  • An economist and adviser to President Trump said Federal Reserve Board Chairman Jerome Powell should work with the White House and lower interest rates, arguing that the board should not be independent of the White House.
  • Bloomberg News: "Empty Desks and Early Beers: Life at Deutsche Bank in New York"
  • "U.S. manufacturing activity slowed to near a three-year low in June, with a measure of new orders received by factories tumbling, amid growing anxiety over an escalation in trade tensions between the United States and China," according to Reuters.

 

ODDS AND ENDS

  • Op-Ed: Peter Adriaens, director of the University of Michigan Center for Smart Infrastructure Finance, lays out his "'Moneyball' approach to closing the $2 trillion infrastructure finance gap.