American business leaders and investors anxious for reassurance that the Trump team has a plan for its rapidly escalating trade confrontation with China got no such thing over the weekend. 

Two days after President Trump sent the stock market plunging again by threatening to triple the proposed tariffs on Chinese imports, his top economic hands spread out on the Sunday shows with mixed messages about what the administration is up to. 

While Larry Kudlow, the president’s newly minted chief economic adviser, said the process could yield a “very benign” result that heads off tariffs altogether, Peter Navarro, the most ardent trade hawk in Trump’s inner circle, insisted the tariff threats are no mere negotiating tactic. 

Navarro struggled in an interview on NBC’s “Meet the Press” to name specific steps Beijing could take to meet the administration’s demands. “We're moving forward on a measured way with tariffs, with investment restrictions … What we want from China is very clear,” Navarro said. “We want fair and reciprocal trade. We want them to stop stealing our stuff. We want them to guard intellectual property, not take it from us.”

The president signaled confidence in a Sunday tweet that Chinese President Xi Jinping will blink first in their staring contest (after affirming for all those concerned the two leaders' friendship will persevere no matter what): 

This morning, the president harped on "stupid trade:"

A charitable reading of the state of play is the Trump team is holding its cards close as talks get underway. Kudlow, in an appearance on Fox News Sunday, indicated that rather than going it alone, the Trump administration is gathering a "coalition of the willing” to confront China that includes Australia, Canada and much of Europe. And Sen. Lindsey O. Graham (R-S.C.) insisted to ABC’s Martha Raddatz the White House indeed has a strategy — and the upper hand. “I like our chances of prevailing if we stick with it  … Don’t underestimate the problems that China will have over a prolonged engagement with the United States,” he said. 

A less charitable and more plausible version of events, given everything we know about this presidency in general and this episode in particular: The administration is more or less flying by the seat of its pants. Kudlow, hardly privy to a hidden hand, acknowledged to reporters Friday he had found out only the night before about the president’s intent to announce the $100 billion in new tariff threats. (The news rattled jangled investors anew, knocking 572 points off the Dow Jones industrial average and sinking it back into correction territory.) Axios’s Jonathan Swan reports Trump didn’t convene a meeting of his senior advisers to discuss the move, and neither did he consult with Kudlow. 

Kudlow, until he hung up his hat as a CNBC pundit and free-market champion, worried over the possibility that a trade war would sap a humming expansion at home. His longtime ally Art Laffer, picking up where Kudlow left off, tells my colleague Heather Long, “If we do get into a trade war, even a small one, it will hamper growth. And you can see that in the stock market, people don’t like it.” Heather reports that Laffer also said Trump told him the tariff threat was just a bargaining tactic. No one but Trump knows whether that’s true — and it’s possible if not probable the president hasn’t made up his own mind yet. 

For their part, Chinese business leaders are opening the week by looking to deescalate in advance of Tuesday speech by Xi. "China has sought to play the role of responsible guardian of the global trading system in response to tariffs from... Trump and the threat of even harsher sanctions to come," the FT's Gabriel Wildau and Emily Feng write. "Bloomberg reported on Monday, citing unnamed sources, that Beijing was analysing the potential impact of renminbi devaluation as a tool to combat a trade deal that results in lower Chinese exports. Asked about the report, Li Yang... a former member of the People’s Bank of China’s Monetary Policy Committee, said: 'It’s unlikely that a trade war will spread into a currency war.'"


Investors question growth assumptions. WSJ's Ben Eisen,  Michael Wursthorn and Daniel Kruger: "Stock-market investors, already grappling with the tech rout and the threat of a trade war, are starting to reassess a fundamental premise of the powerful rally—that world-wide economic growth is on the verge of blasting out of a long period of weakness. The world’s major economies started to pick up steam together last year, in a break from years of sluggish post-crisis growth in which the U.S. often seemed like the lone bright spot... 

"But recently, the global economic comeback has been in a bit of a rut. In the U.S., gauges of manufacturing and services activity have been pulling back. Retail sales have fallen for three straight months, construction spending decelerated at the start of the year, and auto sales have largely plateaued. On Friday, government data showed a sharp slowdown in U.S. jobs creation last month, reversing some of the labor market’s recent momentum... For U.S. investors, much of the economic outlook hinges on trade."

The forward curve of a closely watched proxy for the Federal Reserve’s policy rate has slightly inverted, signaling investors are either pricing in a mistake from central bankers or end-of-cycle dynamics, according to JPMorgan Chase & Co.
Stocks in Europe climbed and futures pointed to a higher open in U.S. markets as investors looked to China’s Xi Jinping to calm a trade dispute between the world’s two largest economies. Treasuries fell and the dollar steadied.
The dollar steadied on Monday, having retreated late last week due to concerns over U.S.-China trade tensions and following data that showed the U.S. economy created the fewest jobs in six months in March.

Pressure builds for NAFTA deal. WSJ's William Mauldin: "The Trump administration, facing hard deadlines and growing pressure from Capitol Hill over the president’s trade powers, is accelerating negotiations to overhaul the North American Free Trade Agreement and seeking to put together a deal as soon as the coming weeks... Trump’s top trade official has been meeting with Mexican and Canadian counterparts in recent days to assess the possibility of some sort of deal—perhaps an agreement in principle without final details—as soon as possible... 

"Time is running short to get a deal signed and ratified without major complications. Mexico’s presidential election in July could bring a populist candidate to power who wouldn’t support the current government’s proposals. The U.S. is also preparing for midterm congressional elections, which often divide political parties and states in unpredictable ways, halting difficult trade votes and delaying international agreements."

GOP squeezed by trade war threats. The Post's Dave Weigel: "Many of the farmers who helped propel... Trump to the presidency fear becoming pawns in his escalating trade war with China, which threatens markets for soybeans, corn and other lifeblood crops in the Upper Midwest... Trump’s aggressive attacks on China over trade are putting Republicans... in a difficult spot — torn between siding with Trump and acknowledging the economic peril to many of their constituents. The issue presents yet another challenge to the GOP in a tough midterm election year even in the rural areas across the Upper Midwest that swept Trump to victory — and where control of the Senate could be decided.

Trillion-dollar deficits. Forbes's Stan Collender: The new U.S. normal of $1 trillion or more annual federal budget deficits will officially begin this week when the Congressional Budget Office releases its economic and budget outlook report showing that the deficit will be at least that high every year Donald Trump is president. Although there have been private sector projections for months... that the government's red ink will hit and exceed a trillion dollars for years to come, this will be the first report by Congress's official budget watchdog since last year's big tax cut and this year's spending deal were enacted that will show the deficit rising precipitously and staying at that very high level through the next 10 years... The trillion dollar Trump deficits are permanent changes to the federal budget outlook caused by enacted reductions in revenues and increases in spending."

Bond traders braced. Bloomberg's Brian Chapatta and Alex Harris: "Bond traders are focusing on the CBO’s fresh deficit forecast, to see just how much they’ll have to absorb. 'We are, and have been, well above CBO on our deficit estimates for a long time,” said Blake Gwinn, a strategist at NatWest Markets."

Yellen and co.: Don't blame entitlements alone. In a Post op-ed this morning, a group of former chairs of the White House Council of Economic Advisers that includes former Fed chair Janet Yellen fires a warning shot at Republicans targeting safety-net spending: "It is dishonest to single out entitlements for blame. The federal budget was in surplus from 1998 through 2001, but large tax cuts and unfunded wars have been huge contributors to our current deficit problem. The primary reason the deficit in coming years will now be higher than had been expected is the reduction in tax revenue from last year’s tax cuts, not an increase in spending. This year, revenue is expected to fall below 17 percent of gross domestic product — the lowest it has been in the past 50 years with the exception of the aftermath of the past two recessions."


Facebook faces up. The Post's Kristine Phillips: "Two days before Facebook chief executive Mark Zuckerberg is to testify before Congress for the first time, one Republican lawmaker said the scandals plaguing the social media giant might be “too big” for it to fix alone. Sen. John Neely Kennedy (R-La.) hinted Sunday that he might be in favor of regulating Facebook amid revelations that 'malicious actors' used the tech giant’s search tools to collect data on most of its 2 billion users worldwide... Zuckerberg, who for years has resisted calls to testify before Congress, is likely to face tough questions from lawmakers over two days of congressional hearings at the Capitol."

Zuck on the Hill today. Reuters's David Shepardson: "Zuckerberg will hold meetings with some U.S. lawmakers on Monday, a day before he is due to appear at Congressional hearings over a political consultancy’s use of customer data, two congressional aides said on Sunday. The planned meetings at Capitol Hill are expected to continue through Monday afternoon and include some lawmakers from committees before whom Zuckerberg is due to testify, said the aides, who asked not to be identified because the meetings have not been made public."

More cleanup. CNBC's Michelle Castillo: "Facebook is suspending a data analytics firm called CubeYou from the platform after CNBC notified the company that CubeYou was collecting information about users through quizzes. CubeYou misleadingly labeled its quizzes "for non-profit academic research," then shared user information with marketers. The scenario is eerily similar to how Cambridge Analytica received unauthorized access to data from as many as 87 million Facebook user accounts to target political marketing."

Could face record fines. The Post's Craig Timberg and Tony Romm: "Facebook’s disclosure this week that its search tools were used to collect data on most of its 2.2 billion users could potentially trigger record fines and create new legal vulnerability for not having prevented risks to user data, three former federal officials said. The three former officials, all of whom were at the Federal Trade Commission during the privacy investigation that led to a 2011 consent decree with Facebook, said the company’s latest mishap may violate the decree’s provisions requiring the implementation of a privacy program.... David Vladeck, who was head of the FTC’s bureau of consumer protection when the decree was drafted and signed by Facebook... predicted Facebook may face fines of $1 billion or more."

Extra bank relief. Politico's Victoria Guida: "Congress is set to endorse a novel way to boost the nation‘s small banks: bypassing limits on deposit insurance. A little-noticed provision in the sweeping deregulation bill the Senate passed last month aims to help certain banks sidestep the $250,000 cap on federally insured deposits, as a way to encourage more funds to flow into those banks. 

"The provision would make it easier for banks that have less capital than regulators would like to split up large sums of money from their affluent customers, including businesses, so the total amount can be insured by the FDIC. The proposal, long sought by banks, is raising eyebrows among some experts, who warn that the provision could increase the base of deposits that the FDIC might be on the hook for during a bank failure."

GOP sees opportunities to tighten its grip on the Senate, with a top recruit -- Florida Gov. Rick Scott -- poised to announce his candidacy.
Sean Sullivan
A lack of hard deadlines and the political realities of an election year together mean that serious legislation is unlikely to pass before November.
Mike DeBonis

Deutsche Bank trims sails with new chief. WSJ's Jenny Strasburg: "Deutsche Bank replaced its British chief executive, John Cryan, with the senior German head of its retail bank, a switch that signals a less ambitious future after years of grim financial results and sputtering attempts to regain a spot among global investment-banking powerhouses. Germany’s biggest bank, struggling after a string of money-losing years, named as Mr. Cryan’s replacement an executive steeped in auditing, risk control and retail banking. Mr. Cryan will leave at the end of this month, Deutsche Bank said. New CEO Christian Sewing has spent more than 25 of his 47 years at the Frankfurt-based lender, starting as an apprentice banker and rising to the management board three years ago. He has held senior risk and audit roles in London, Tokyo and Toronto but has a low profile outside of Germany."

Credit card signatures are going extinct. NYT's Stacy Cowley: "Credit card networks are finally ready to concede what has been obvious to shoppers and merchants for years: Signatures are not a useful way to prove someone’s identity. Later this month, four of the largest networks — American Express, Discover, Mastercard and Visa — will stop requiring them to complete card transactions... When credit card signatures disappear, handwritten authentications will be relegated to a few special circumstances: sealing a giant transaction like a house purchase, or getting a celebrity to autograph a piece of memorabilia — and even that is being supplanted by the cellphone selfie. Card signatures won’t vanish overnight. The change is optional, leaving retailers to decide whether they want to stop collecting signatures."

Social Issues
Many men are reluctant to come forward.
Michael Alison Chandler

Trump's lost investors confidence. Bloomberg View's Robert Burgess: "Trump likes to equate the rally in stocks since the November 2016 elections with confidence in him and his policies. And yes, the S&P 500 Index has surged 22 percent since then, but a deeper look at  equities, bonds and the dollar reveals anything but trust in his stewardship. Here's the executive summary: U.S. companies are valued less now than before Trump was elected, despite the run-up in stocks, big corporate tax cuts, reductions in regulations and booming earnings. The cost to borrow for the U.S. has soared relative to other governments, a sign investors are worried about America's creditworthiness. The dollar's share of global currency reserves has dropped by the most since 2002."

The exact wording varies, but it's a good bet that exclamation points will be prominently involved in these 280-character odes to tariffs.
Matt O'Brien
In these volatile times, trying to trend-surf the market is even more foolish than usual.
Allan Sloan


  • The Heritage Foundation holds an event on the 2018 index of economic freedom.
  • The Federalist Society holds an event.
  • Brookings Institution holds an event on the Tax Cuts and Jobs Act.

Coming Up

  • The Heritage Foundation holds an event on the Kansas tax plan on Tuesday.
  • The House Financial Services Committee holds a hearing on “The 2018 Semi-Annual Report of the Bureau of Consumer Financial Protection” on Wednesday.
  • Facebook CEO Mark Zuckerberg will testify before the House Energy and Commerce Committee on Wednesday.
  • The Senate Finance Committee holds a hearing on the 2018 tax season and future IRS challenges on Thursday.
  • The House Ways and Means Committee holds a hearing on the effects of tariff increases on Thursday.
  • The Heritage Foundation holds an event on the tax provisions that expired in 2017 on Thursday.
  • The House Financial Services Subcommittee on Monetary Policy an Trade holds a hearing on Thursday.
  • The House Financial Services Subcommittee on Oversight and Investigations holds a hearing on oversight of the FHFA on Thursday.

From The Post's Tom Toles: 


White House press secretary Sarah Huckabee Sanders says Trump is the "best negotiator" for the U.S. economy:

Here's why this year's White House correspondents’ dinner is so weird, again:

Saturday Night Live mocks Facebook CEO Mark Zuckerberg and the Cambridge Analytica breach: