The Finance 202: Trump's base is all about his tariffs on imports

The results underscore the extent of Trump’s transformation of the Republican Party from a bastion of free trade into a newly protectionist force. And they could stiffen the president’s spine as his administration considers how aggressively to follow through with punitive measures. 

The most recent Quinnipiac University survey returned similar findings as the Post-ABC poll. The early March poll showed that voters by a 19-point margin oppose the steel and aluminum tariffs the Trump administration announced last month. Only two subsets embraced them — Republicans, by 58 percent to 20 percent, and non-college-educated whites, by 42 to 40 percent. 

Trump has made clear he’s keeping an eye on his base when it comes to trade. A year ago this month, Agriculture Secretary Sonny Perdue talked him out of quitting the North American Free Trade Agreement in part by showing him a map indicating the economic pain of such a move would fall most heavily in farming and manufacturing communities that had supported him. “They like Trump, but I like them, and I’m going to help them,” Trump told The Post at the time. 

Beijing has met Trump’s latest tariff threats by rolling out a response targeted to the same agricultural interests, zeroing in on soybeans and pork. But this time, the president has said he won’t back down. Farmers, he said last week, “understand they’re doing this for the country. And we’ll make it up to them.”

The president’s trade offensive is putting several Republican lawmakers in a bind as campaign season heats up. In the Ohio Senate race, for example, Rep. Jim Renacci, the likely GOP candidate, has been struggling to “broadcast his support for Trump while also navigating aroung a policy that could hurt voters who usually vote Republican,” my colleague Erica Werner wrote this month. 

Yet there are also signs that party leaders are accommodating themselves, however fitfully, to Trump’s position. House Speaker Paul Ryan (R-Wis.) made a rare break with the president when he spoke against the tariffs last month. While Ryan is quitting Congress at the end of the year, Mitt Romney, with whom he shared a presidential ticket in 2012, is endorsing the president’s gambit as he runs for the Senate from Utah. “I think the president is leading with some policies that will wake up our friends in China and they’ll recognize that business as usual is going to have to change,” Romney said this month.

In Indiana, Rep. Todd Rokita — who in 2016 called Trump “vulgar, if not profane” — is aligning himself with the president as he seeks the Republican nod to challenge Sen. Joe Donnelly (D). In an interview with The Post’s Michael Scherer, Rokita defended Trump’s escalation with China despite the possible impact of tariffs on Hoosier State farmers. “I’m willing to go along with President Trump in trying something different,” Rokita said. “I think all Americans who want to make America great again and who want America to come first want their president to be successful.”

— Volatility spreads. WSJ's Chelsey Dulaney and Ira Iosebashvili: "The currencies of places as diverse as Russia, Hong Kong and Kazakhstan slid last week, an alarming sign to some investors who worry that the geopolitical volatility affecting U.S. stocks is spreading to other markets... This week, investors will also confront news that the U.S., U.K. and France launched missile strikes on Syria in retaliation for a suspected chemical-weapons attack... ome investors and analysts worry that foreign exchange could become the next arena in a burgeoning trade conflict between the U.S. and China."

— Fed casts off deflation fears. WSJ's Nick Timiraos: "When Federal Reserve officials gathered last month for Jerome Powell’s first meeting as central bank chairman, not a single official among 15 saw a downside risk to inflation. It marked a milestone.

"The Fed’s mind-set has been shaped during the entire post-financial crisis era by a fear of Japan-like deflation, a downward drift in consumer prices that brings with it debilitating economic anemia. Deflation fears led to giant Fed bond-purchase programs and near-zero interest rates, then glacial interest-rate increases when the expansion became entrenched. The inflation risk assessment, released last week in the minutes of the Fed’s March meeting, showed deflation fear at the Fed is now effectively gone."

— Fed's Rosengren warns on overheating. Bloomberg's Christopher Condon: "Federal Reserve Bank of Boston President Eric Rosengren doesn’t buy the argument that the U.S. economy’s benign mix of low unemployment and low inflation will continue, and worries the central bank may be too slow in raising interest rates... Rosengren, a veteran policy maker who advocated for ultra-easy monetary policy during the financial crisis before switching to a more hawkish tack in 2016, hopes forecasts laid out by his colleagues in March come true. They see economic growth in 2018 of 2.7 percent, joblessness ending the year at 3.8 percent and inflation at 1.9 percent. But he’s not betting on it."

U.S. Stock Futures Rally, Bonds Fall After Syria (Bloomberg)

— Some banks shrug at Crapo bill. WSJ's Ryan Tracy and Christina Rexrode: "[S]ome bankers are underwhelmed. In crafting a bill with enough votes to pass the Senate last month, lawmakers landed on a compromise filled with caveats and exclusions. Many provisions would apply only to slices of the industry. Some small banks benefit, but others don’t. The bill’s centerpiece proposal relaxes rules only for roughly two dozen relatively large regional banks, such as SunTrust Banks Inc. and Ally Financial Inc., with assets of between $50 billion and $250 billion... The mixed sentiment about the bill poses a challenge to the lawmakers trying to push the legislation through the House and to... Trump’s desk."

CHINA WATCH: 

— Trump declines to label China currency manipulator. NYT's Alan Rappeport and Ana Swanson: "The Trump administration, which has been on the verge of a trade war with China, opted on Friday not to label the country a currency manipulator, breaking a key campaign promise by President Trump to punish a government he has called the 'greatest currency manipulators ever.' The Treasury Department, in its biannual currency exchange report, scolded China for its lack of progress in reducing the bilateral trade deficit with the United States, but did not find that it was improperly devaluing its currency, known as the renminbi... It was the third time since Mr. Trump assumed the presidency that the Treasury Department opted not to accuse China of improper meddling."

Mnuchin crimps World Bank lending to China. FT's Shawn Donnan: "The World Bank is set to change its lending model so that China will receive fewer loans as part of a deal with the Trump administration to secure its backing for a $13bn capital increase. The compromise was reached between Jim Yong Kim, the bank’s president, and Steven Mnuchin, US Treasury secretary, in recent days. It is expected to dominate talks behind the scenes at this week’s spring meetings in Washington... The US has been concerned about the World Bank lending to a rival power that has been sitting on trillions of dollars in foreign currency reserves since Barack Obama was president. But Mr Kim has long argued that lending to a rising China helps to solidify a future for the World Bank and gives it a voice in Chinese economic reforms."

Chinese economy shrugs off Trump. Bloomberg: "Forget about trade wars, debt mountains, regulatory crackdowns and even the hullabaloo surrounding Xi Jinping becoming China’s perpetual president. The economy is expected to have tuned out all the background noise and powered ahead in the first quarter. According to the median estimate of economists in a Bloomberg News survey, growth maintained a 6.8 percent pace, well ahead of a target for about 6.5 percent expansion this year."

China, Japan talk. AP: "China and Japan resumed high-level economic talks Monday after a hiatus of nearly eight years in a sign of improving ties in their often-frosty relationship. Led by their foreign ministers, the two sides met in Tokyo for what was billed as the fourth Japan-China High-Level Economic Dialogue, and the first one since August 2010. Asia’s two largest economies have reason to cooperate in the face of... Trump’s moves to impose tariffs on imports from their countries and his demands that they open their markets more to American exports."

— NAFTA progress. The Canadian Press: "A new North American free trade deal appeared closer to reality on Saturday, after U.S. Vice-President Mike Pence became the latest Trump administration official to suggest an agreement could be reached within a matter of weeks. The notably optimistic assessment followed a similar prediction by U.S. Commerce Secretary Wilbur Ross on Friday that a new NAFTA could be completed by the third week of May -- a surprisingly specific date given past uncertainty about the talks. Taken together, the comments suggest the NAFTA negotiations -- which American, Canadian and Mexican trade officials are continuing in Washington this weekend -- are farther along than previously believed."

WHITE HOUSE MELTDOWN WATCH: 

— Trump wants to review seized material. The Post's Devlin Barrett: Trump asked a federal judge Sunday night to allow him to review documents that FBI agents seized from the office of his longtime lawyer before criminal investigators have a chance to see the material. The request underscores the high stakes in an ongoing legal fight in federal court in New York, where Michael Cohen, Trump’s lawyer, is also fighting to get a chance to review material seized as part of a criminal investigation of his business dealings.

"Trump’s request, in the form of a letter from other lawyers representing him, could further complicate a hearing set for Monday afternoon. During that session, lawyers for Cohen are expected to tell the judge overseeing the case how many legal clients he has and how many seized documents he thinks might be covered by attorney-client privilege. Cohen is set to attend the hearing. Also expected to be on hand is adult-film star Stormy Daniels, whom Cohen secretly paid $130,000 in 2016 to keep quiet the details of an alleged sexual liaison she had with Trump."

Comey calls Trump unfit. Devlin and Matt Zapotosky report: "Former FBI director James B. Comey said in his first televised interview since being fired that he believed Donald Trump was “morally unfit to be president” and that it was 'possible' that the Russians had material that could be used to blackmail him. In a wide-ranging conversation with George Stephanopoulos broadcast on ABC late Sunday, Comey took aim at Trump in no uncertain terms, comparing his administration to a mafia family, likening his presidency to a forest fire and asserting there was evidence that he had committed a crime. He said that he would not favor impeaching Trump to remove him from office, because that 'would let the American people off the hook and have something happen indirectly that I believe they’re duty-bound to do directly' — meaning through elections. But he made clear his view of whether Trump was fit to hold the position."

Legal bills mount. The Post's Michelle Ye Hee Lee and Anu Narayanswamy: "Trump’s reelection campaign spent more than $1 out of every $5 on attorney fees this year as the president contended with the ongoing special counsel investigation and a new legal challenge from an adult-film star. Of the $3.9 million that Trump’s committee spent in the first quarter of 2018, more than $834,000 went to eight law firms and the Trump Corp. for legal fees... The latest figures bring the Trump campaign’s total spending on legal fees to nearly $4 million since the president took office."

— SCOTUS eyes online sales tax. WSJ's Richard Rubin and Laura Stevens: "Billions of dollars of goods sold each year by independent merchants on Amazon.com and other online marketplaces would be vulnerable to state sales taxes for the first time if justices decide to reverse a quarter-century-old precedent in a case before the Supreme Court this week... While Amazon.com Inc. itself collects sales taxes on its own products, it does not on most others’ sales through its platform. Justices on Tuesday will hear arguments in the case, South Dakota v. Wayfair Inc., and a decision is expected by the end of June."

Are people using tax cuts to shop? "Retail-sales data due Monday from the Commerce Department will help provide an answer, and economists are betting that consumers finally opened up their wallets a little wider, thanks in part to the boost in paychecks as well as 2017 tax refunds from Uncle Sam," per Bloomberg. "Sales probably rose 0.4 percent in March from the prior month, based on the median estimate of analysts."

Record buybacks. FT's Robin Wigglesworth: "US companies are expected to shower investors with a record amount of share buybacks in the current earnings season, as corporate executives take advantage of major tax cuts and a faltering stock market to increase their repurchase programmes. S&P 500 companies have already announced about $167bn of new buyback authorisations this year, and analysts at JPMorgan predict that trend will accelerate this quarter as boardrooms digest the full scale of the tax cuts passed in December... Overall, US companies will buy back about $800bn of their stock this year, the bank forecasts, up from $525bn in 2017, and boost dividend payouts by about 10 per cent to a record $500bn."

— The Goldman app. WSJ's Liz Hoffman and Peter Rudegeair: "Goldman Sachs bought personal-finance app Clarity Money, acquiring a mobile storefront for its growing consumer bank... Clarity Money’s roughly one million users will quadruple Goldman’s customer base... [The] app is expected to serve as the smartphone storefront for Goldman’s growing suite of retail products, which... could include wealth-management tools, home mortgages, point-of-sale loans and insurance policies."

— Greenberg's war. NYT's Danny Hakim: "At 92, Maurice R. Greenberg is not done fighting. Mr. Greenberg, known as Hank, is a revered figure on Wall Street who built the American International Group into an insurance giant, only to lose it in 2005 amid a securities fraud investigation... Mr. Greenberg has taken aim at the Martin Act, the sweeping state securities law that was used against him... Mr. Greenberg’s bid is gaining traction. He is working alongside a powerful ally, the U.S. Chamber of Commerce, and has the backing of Wall Street Journal editorial page. And he has had a warm relationship with... Trump."

Silicon Valley Venture Capitalists Prepare for an I.P.O. Wave (NYT)

Why Europe, not Congress, will rein in big tech (Michael Birnbaum and Tony Romm)

Wells Fargo says it faces $1 billion penalty for mortgage, auto business misdeeds (Renae Merle)

Today

• The U.S. Chamber of Commerce holds the Transatlantic Business Works Summit.
• The Heritage Foundation holds an event on the Supreme Court’s review of the internet sales tax.

Coming Up

• The Brookings Institution holds an event on the global monetary system on Tuesday.
• The Brookings Institution holds an event on digital currencies on Tuesday.
• The Senate Banking, Housing and Urban Affairs Committee holds a nomination hearing on Tuesday.
• The Consumer Advisory Board Card, Payment, and Deposits Markets holds subcommittee meeting on Tuesday.
• The House Appropriations Subcommittee on Financial Services and General Government holds a hearing on the 2019 budget on the General Services Administration on Tuesday.
• Vice chairman of the Federal Reserve Randal Quarles testifies before the House Financial Services Committee on Tuesday.
• The House Ways and Means Committee holds a hearing on federal perspectives on the jobs gap on Tuesday.
• The Federal Deposit Insurance Corporation holds an open meeting on Tuesday.
• The U.S. Chamber of Commerce holds an event on tax cuts on Tuesday.
• The Senate Commerce, Science and Transportation Committee holds a hearing on robocalls on Wednesday.
• The Securities and Exchange Commission holds an open meeting on Wednesday.
• The Senate Appropriations Subcommittee on Transportation, Housing and Urban Development and Related Agencies holds a hearing on the 2019 budget for the Housing and Urban Development Department on Wednesday.
• The House Agriculture Committee holds a markup on Wednesday.
• The Consumer Advisory Board Consumer Lending holds a subcommittee meeting on Wednesday.
• The Senate Finance Committee holds a hearing on the opioid epidemic on Thursday.
• The American Enterprise Institute holds an event on the future of corporate taxation on Thursday.
• The Senate Banking, Housing and Urban Affairs Committee holds a hearing on the Federal Reserve's supervision and regulation of the financial system on Thursday.
• Vice chairman of the Federal Reserve Randal Quarles testifies before the Senate Banking, Housing and Urban Affairs on Thursday.
• The American Bankruptcy Institute’s annual spring meeting starts on Thursday.

Last Week Tonight's John Oliver talks about corporations shifting profits overseas: 

White House press secretary Sarah Huckabee Sanders said former FBI director James Comey “will be forever known as a disgraced partisan hack:"

From 'slimeball' to 'jail': Trump's many attacks on Comey: