On The Money: Stocks decline as Trump digs in on trade war | New tariffs on Chinese goods take effect | Deutsche Bank throws curveball in Trump tax return fight

On The Money: Stocks decline as Trump digs in on trade war | New tariffs on Chinese goods take effect | Deutsche Bank throws curveball in Trump tax return fight
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Happy Tuesday and welcome back to On The Money, where we're back on a daily schedule after a brief summer break. 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--Stocks decline as Trump digs in on trade war: U.S. stock markets took a dive Tuesday as President TrumpDonald John TrumpTrump conversation with foreign leader part of complaint that led to standoff between intel chief, Congress: report Pelosi: Lewandowski should have been held in contempt 'right then and there' Trump to withdraw FEMA chief nominee: report MORE vowed to keep up the pressure on China in the year-plus trade war.

  • The Dow Jones Industrial Average closed with a loss of 1.1-percent, losing 285 points before the closing bell and falling low as 377 points below its Friday close before recovering some ground. 
  • The Nasdaq composite closed with a loss of 1.1 percent, while the S&P 500 fell 0.7 percent.

 

What drove the losses: 

Trump's latest warnings to China: Trump tweeted before the opening bell that the trade war would cost China businesses, jobs and money, and said he would only get tougher on the world's second-largest economy if he wins reelection in 2020, setting the stage for a prolonged trade battle.

  • The president added that if he secures a second term, a deal "would get MUCH TOUGHER!" and raised the prospect of further escalating trade tensions with European allies. He rejected criticism for fighting a multifront trade war instead of cooperating with the European Union to put pressure on China.
  • "For all of the 'geniuses' out there, many who have been in other administrations and 'taken to the cleaners' by China, that want me to get together with the EU and others to go after China Trade practices remember, the EU & all treat us VERY unfairly on Trade also. Will change!" he wrote.

 

The implementation of new tariffs: The Trump administration imposed 15 percent tariffs on roughly $112 billion of Chinese imports on Sunday amid growing fears of a global economic downturn and increasing pessimism about the prospects of striking a trade deal. Why is that freaking people out?

  • The new tariffs will hit consumer goods, including some big holiday retail items like shoes, winter clothes, sports equipment, some electronics and toys, and even Christmas ornaments. The tariffs also cover a slew of school supplies, such as including pencils, crayons, calendars, ballpoint pens, and boys' and girls' overcoats and windbreakers.
  • With every volley of new tariffs from Trump, Beijing has retaliated with its own tariffs hitting American companies. China imposed tariffs of 5-10 percent on roughly $28.7 billion of American products Sunday, and another $45.5 billion are on the docket for Dec. 15, for a total of roughly $75 billion.

 

Weak manufacturing data: Manufacturing activity shrank in August for the first time in Trump's presidency, according to a survey released Tuesday. The Institute for Supply Management (ISM) said that its closely watched manufacturing index dropped to 49.1 in August from 51.2 in July. Any figure below 50 indicates a contraction of manufacturing activity, and August's dip below that level is the first since August 2016.

 

LEADING THE DAY

Deutsche Bank throws curve into Trump tax return fight: Deutsche Bank's revelation that it has some tax returns related to President Trump has thrown a curve ball into the battle over the president's financial documents.

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The bank has long been seen as a possible avenue to learn more about Trump's finances since it provided loans to his businesses for many years, even when other banks would not.

Deutsche Bank's disclosure that it has tax returns confirms that Democrats have an additional route -- one some experts think is the most promising -- to get tax documents that lawmakers in the party have long sought. The Hill's Naomi Jagoda explains why here.

 

Key Democrat says Trump North American trade pact approval unlikely in 2019: A House Democrat playing a key role in negotiations over President Trump's new North American trade pact said Tuesday that talks to win congressional support for the deal will likely "seep into next year."

Rep. Rosa DeLauroRosa Luisa DeLauroLawmakers run into major speed bumps on spending bills Overnight Health Care — Presented by PCMA — FDA says Juul illegally marketed e-cigarettes | AMA warns against vaping after deaths | Two Planned Parenthood clinics to close in Ohio Overnight Health Care: Watchdog details severe trauma suffered by separated children | Judge approves B CVS-Aetna merger | House Dem Caucus chair backs 'Medicare for All' MORE (Conn.) told The Middletown Press in an interview published Tuesday that House Democrats are unlikely to support Trump's proposed North American Free Trade Agreement (NAFTA) rewrite before the start of 2020.

"When we get to where we need to get to, we will move," said DeLauro, a member of a House Democratic working group negotiating with the White House on changes to the deal.

"We're not there yet. And that's critically important to understand."

 

GOOD TO KNOW

  • PayPal on Friday suspended an account used by an offshoot of the Ku Klux Klan nearly a week after activists flagged it, according to BBC News.
  • The Washington Post explains how occupational licensing laws hinder the formerly incarcerated from entering the workforce.

 

ODDS AND ENDS

  • Bloomberg News: "South Korean imports of beer from Japan plunged 97% in August from a year earlier, a local newspaper reported, amid a popular backlash against Japanese products that has spread as relations between the two countries sour."
  • British Prime Minister Boris Johnson suffered a key defeat to his Brexit agenda on Tuesday as Parliament sought to block him from having Britain leave the European Union without a deal.