with Paulina Firozi


Put 30 days back on the trade war countdown clock. 

Just hours before steel and aluminum tariffs were set to kick in at midnight for key trading partners, President Trump announced late Monday he is extending their exemptions until June 1. That has given the whole bunch something to cheer about, with the notable exception of the European Union

The White House said it has reached agreements to permanently carve out three of the countries that got exemptions — including Argentina, Australia, and Brazil — and will finalize details soon. South Korea likewise has nailed down terms waving off the steel tariffs as part of a retooled bilateral trade pact. But leaders of Canada, Mexico, and the European Union need to sweat through another month of heat from Washington, as the Trump administration presses them for more concessions

Already, though, the United States’ erstwhile allies in Europe look to be the odd ones out. Canada and Mexico are likely to secure exemptions pending the resolution of North American Free Trade Agreement negotiations that resume next week. “Trump’s strategy with the European Union is more fluid, as he has praised some countries, such as France, but chastised others, such as Germany, which he says needs to allow U.S. companies more access to consumers,” The Washington Post’s Steven Mufson and Damian Paletta write

The Trump team has been pushing in part for quotas that would limit European imports of the metals, but E.U. negotiators have resisted. “In all of these negotiations, the Administration is focused on quotas that will restrain imports, prevent transshipment, and protect the national security,” the administration said in its statement announcing the extensions.

Prospects for a permanent U.S.-E.U. deal are “dim,” the Financial Times’s Shawn Donnan and Jim Brundsen write. Commerce Secretary Wilbur Ross spoke to E.U. Trade Commissioner Cecilia Malmstrom on Monday, but “officials close to the discussions said broader talks had become bogged down in a ‘mismatch’ of expectations,” they write. Specifically, while the Trump administration pushes new terms for trade of industrial goods, with a focus on autos, the Europeans have balked at negotiating under the tariff threat.  

The optimist’s view from across the Atlantic maintains that it can’t hurt to try. German Economy Minister Peter Altmaier said in an interview on German radio Monday that he thinks a broader agreement to lower tariffs on a number of products, focused on manufacturing, is still possible. “I personally believe we should present an offer,” he said. And Frank Sportolari, president of American Chamber of Commerce in Germany, said he is cautiously optimistic, per Reuters. “In the end, President Trump won’t do anything unreasonable,” Sportolari said. “He piles in with announcements of draconian measures. But in the end, there is often a solution both sides can live with.”

To that point, Evercore ISI, in a Monday night note to clients, called the exemptions an “incremental positive in a diplomatic sense, since it shows sensitivity to the impact of US tariff decisions on relationships with other countries and preserves Trump options on US national security and other issues that the US sees as interlinked and related to trade decisions.”

Trump has plenty of reasons to cut the Europeans some slack on tariffs considering the flash points he is confronting around the globe. Most immediately, Trump could use their help facing down China on that country’s trade practices. He’s sending a delegation of top economic advisors to Beijing later this week to try to forge a breakthrough on a number of trade fronts, as he tweeted this morning: 

But China should also figure centrally in the administration’s approach to the global glut of steel and aluminum. “China accounts for about 3 percent of U.S. steel imports by value, but Trump says that the worldwide flood of cheap steel is one factor that has led to the closure of numerous U.S. smelters, and the loss of American jobs,” Steve and Damian write. “A number of other countries have agreed with U.S. officials for decades that China needs to do more to address a global oversupply of steel and aluminum, but so far they have taken measured steps at international gatherings to try to prod China toward change. Trump upended this approach by declaring he would act unilaterally, and threatening to slap tariffs on numerous U.S. allies, not just China.”

Punting on the tariffs could give the administration the time and space to refocus its attention and that of its allies on China. Yet nothing about the scattershot offensive that Trump has pursued so far suggests that’s likely.

The Cybersecurity 202 is coming to your inboxes on May 9. Derek Hawkins will break down the latest news on election security, major hacks and what lawmakers are planning to do about it all in the newest member of our 202 franchise. Sign up here.


Fed stays on track. AP's Martin Crutsinger: “The Federal Reserve is all but sure to leave interest rates unchanged this week, though steady economic growth and inflation pressures will likely keep the Fed on a path toward further rate hikes later this year. The central bank is meeting as its board is undergoing a makeover, with a raft of new appointees by ... Trump who appear generally supportive of the Fed’s cautious approach to rates since the Great Recession ended ... The Fed does seem inclined to continue raising rates modestly this year to reflect a steadily improving economy and to keep inflation pressures under control.” 

The meeting comes as inflation hit the Fed's 2 percent target in March, the first time that's happened in more than a year, the WSJ notes

— A happy economic trifecta is ending. The Post's David Lynch: "For most of the past decade, as the U.S. economy marched through the second-longest expansion in its history, Americans enjoyed a rare trifecta: soaring stock values, cheap loans and consumer prices that rarely rose. That favorable climate benefited everyone from people nearing retirement to those buying their first homes or just filling their gas tanks. But suddenly, the good fortune is melting away, imperiling the props that have supported American economic confidence and incomes and intensifying pressure on... Trump to deliver the faster growth and higher wages he has promised.

"Consumer prices by a key measure are rising at their fastest point in seven years, with mass consumer companies such as McDonald’s and Amazon.com increasing prices on some of their popular offerings. Mortgages and business loans are becoming more expensive. And after peaking in late January, the Dow Jones industrial average is now roughly flat on the year."

U.S. sets borrowing record. Bloomberg's Saleha Mohsin and Randy Woods: "Treasury Secretary Steven Mnuchin said he’s unconcerned about the bond market’s ability to absorb rising government debt after his department said it borrowed a record amount for the first quarter. 'It’s a very large, robust market -- it’s the most liquid market in the world, and there is a lot of supply,' he said in a Bloomberg TV interview on Monday. 'But I think the market can easily handle it.' Earlier on Monday the Treasury said net borrowing totaled $488 billion from January through March, a record for that period and about $47 billion more than it had previously estimated, according to a statement released in Washington."


Administration weighs restricting Chinese researchers. NYT's Ana Swanson and Keith Bradsher: "The Trump administration, concerned about China’s growing technological prowess, is considering strict measures to block Chinese citizens from performing sensitive research at American universities and research institutes over fears they may be acquiring intellectual secrets, according to people familiar with the deliberations. The White House is discussing whether to limit the access of Chinese citizens to the United States, including restricting certain types of visas available to them and greatly expanding rules pertaining to Chinese researchers who work on projects with military or intelligence value at American companies and universities.

"The exact types of projects that would be subject to restrictions are unclear, but the measures could clamp down on collaboration in advanced materials, software and other technologies at the heart of Beijing’s plan to dominate cutting-edge technologies like advanced microchips, artificial intelligence and electric cars, known as Made in China 2025. The potential curbs are part of a broad set of measures the administration says are necessary to combat a growing national security threat from China, which it has accused of pressuring or coercing American companies into handing over valuable trade secrets."

As Treasury meets with business groups to discuss. Reuters's Ginger Gibson and Diane Bartz: "Treasury officials met with about 10 industry groups on Monday to discuss the latest draft of legislation that would tighten scrutiny of foreign investment in order to limit Chinese efforts to acquire sophisticated U.S. technology...The official said it remained to be seen how the House and Senate would ultimately craft the legislation, which would broaden the reach of the inter-agency Committee on Foreign Investment in the United States."


Mueller's questions. NYT"s Michael Schmidt: "Robert S. Mueller III, the special counsel investigating Russia’s election interference, has at least four dozen questions on an exhaustive array of subjects he wants to ask... Trump to learn more about his ties to Russia and determine whether he obstructed the inquiry itself, according to a list of the questions obtained by The New York Times. 

"The open-ended queries appear to be an attempt to penetrate the president’s thinking, to get at the motivation behind some of his most combative Twitter posts and to examine his relationships with his family and his closest advisers. They deal chiefly with the president’s high-profile firings of the F.B.I. director and his first national security adviser, his treatment of Attorney General Jeff Sessions and a 2016 Trump Tower meeting between campaign officials and Russians offering dirt on Hillary Clinton.

"But they also touch on the president’s businesses; any discussions with his longtime personal lawyer, Michael D. Cohen, about a Moscow real estate deal; whether the president knew of any attempt by Mr. Trump’s son-in-law, Jared Kushner, to set up a back channel to Russia during the transition; any contacts he had with Roger J. Stone Jr., a longtime adviser who claimed to have inside information about Democratic email hackings; and what happened during Mr. Trump’s 2013 trip to Moscow for the Miss Universe pageant."

Trump responded this morning: 

— Kelly on the outs. NBC's Carol Lee and co.: "White House chief of staff John Kelly has eroded morale in the West Wing in recent months with comments to aides that include insulting the president's intelligence and casting himself as the savior of the country, according to eight current and former White House officials. The officials said Kelly portrays himself to Trump administration aides as the lone bulwark against catastrophe, curbing the erratic urges of a president who has a questionable grasp on policy issues and the functions of government. He has referred to Trump as 'an idiot' multiple times to underscore his point, according to four officials who say they've witnessed the comments. Kelly called the allegations 'total BS.'"

Trump responded to this story last night:


Rubio criticizes corporate tax cut. The Post's Jeff Stein: “Democrats frequently claim Republicans' corporate tax cuts enriched big businesses while doing little for workers, but now that line of criticism is coming from a prominent Republican: Sen. Marco Rubio. 'There is still a lot of thinking on the right that if big corporations are happy, they’re going to take the money they’re saving and reinvest it in American workers,' the Florida senator told the Economist in a recent interview. 'In fact they bought back shares, a few gave out bonuses; there’s no evidence whatsoever that the money’s been massively poured back into the American worker.' ... The remark was seized on by Senate Democrats, with the office of Senate Minority Leader Charles E. Schumer (D-N.Y.) broadcasting it on Monday.”

He's not wrong. NYT's Matt Phillips and Jim Tankersley: “Republicans sold the 2017 tax law as 'rocket fuel' for American investment and growth, saying that corporations — flush with cash from lower tax rates — would channel money back into the economy by building factories and offices and investing in equipment, which would help companies grow and provide winnings for workers. Economists say that may happen ... But, so far, hard evidence of such an acceleration has yet to appear in economic data, which show more of a steady investment roll than a rapid escalation ... Corporate spending on buying back stock is increasing at a far faster clip.”

WH will put off Round Two. FT's Mark Vandevelde: "The White House will wait until after midterm elections in November before pushing forward with its plans to make last year’s tax cuts permanent, according to... Mnuchin... The Trump administration had previously indicated that it could seek to extend the temporary tax cuts for individuals, which were among the most provisions of the sweeping tax reform plan that took effect in January. It has neither given a timetable for further reform nor sent any legislation to Congress." Trump is heading to Cleveland to promote the tax law on Saturday, the AP reports

Elizabeth Warren and the ABA agree on something. (Reelecting Jon Tester.) Politico's Zachary Warmbodt: "Sen. Elizabeth Warren is coming to the rescue of Sen. Jon Tester in the face of escalating attacks by... Trump, just weeks after her campaign trashed the politically vulnerable Montana Democrat for supporting a landmark bank deregulation bill. In a fundraising email Monday, the progressive leader called on her vast base of supporters to donate to Tester's reelection campaign and help him fight back... Less than two months ago, Warren's team circulated Tester's name as part of a list of senators who voted for the banking bill, suggesting that he and other moderate Democrats who backed the legislation were on the side of Wall Street rather than the American people."

Warren and the American Bankers Association don't typically see eye-to-eye. But the ABA last week announced that it will bankroll ads in Montana backing Tester — a first for the group and a thank-you to the Democrat for pushing the deregulation bill that Warren has railed against. 

Crapo bill could get House vote this month. Speaker Paul Ryan (R-Wis.) indicated to the Weekly Standard's Stephen Hayes in a Monday interview that the House will soon take up the Senate-passed bill. "We're a few weeks away from getting our bill into law that rewrites the Dodd Frank law," he said. "We already have a bill out of the House. We have a bill out of the Senate, which is pretty amazing. So, we're gonna get that done." House Majority Leader Kevin McCarthy (R-Calif.) echoed that assessment Monday. "“I think you are within a month of getting it ... done,” he said in an interview at the Milken Institute Global Conference  in California, Reuters reports


The Mooch's deal falls apart. WSJ's Julie Steinberg, Kate O’Keeffe and Rob Copeland: “Chinese conglomerate HNA Group Co. is set to drop its pursuit of SkyBridge Capital, the investment firm founded by former White House communications chief Anthony Scaramucci, after resistance from a U.S. national security panel ... Instead, Mr. Scaramucci will return full time to SkyBridge as co-managing partner and oversee efforts that could include a joint venture with HNA ... The arrangement ... would be dramatically more watered down and less lucrative than the deal that once looked to make Mr. Scaramucci much richer.”

Banks explore monitoring gun purchases. WSJ's AnnaMaria Andriotis, Telis Demos, and Emily Glazer: “Banks and credit-card companies are discussing ways to identify purchases of guns in their payment systems, a move that could be a prelude to restricting such transactions ... The discussions are preliminary but could be deeply controversial. Gun-rights groups have long resisted any effort to monitor which Americans own guns; there are federal laws limiting the government’s use of electronic databases of gun sales. The financial companies have explored creating a new credit-card code for firearms dealers, similar to how they code restaurants or department stores, according to people familiar with the matter. Another idea would require merchants to share information about specific firearm products consumers are buying.”

Closing arguments in the AT&T trial. The Post's Brian Fung: “Wrapping up its six-week antitrust trial against AT&T, the Justice Department made a final pitch to a federal judge on Monday in calling for the telecom giant's $85 billion merger with Time Warner to be blocked — or that AT&T be permitted only to buy a portion of the media and entertainment giant. Addressing a packed courtroom that included the chief executives of both companies, Justice attorney Craig Conrath cited economic analyses, industry witnesses and AT&T's own statements to support the government's case opposing the tie-up ... Analysts say the outcome of the AT&T trial is likely to influence the Justice Department's ability and likelihood of bringing antitrust cases in the near future.”

Sainsbury's CEO is excited about the company's Asda acquisition. He's singing about it: 


SEC cautiously open to ICOs. CNBC's Kate Rooney: “Regulators at the Securities and Exchange Commission are still worried about the cryptocurrency fundraising craze known as initial coin offerings. But the agency is not looking to ban them and remains open to a legal avenue for crypto investments, according to one commissioner. 'Investors are having a hard time telling the difference between investments and fraud,' SEC Commissioner Robert Jackson told CNBC's 'Squawk Box' on Monday. 'Down the road, I think we will be thinking about ways to make those investments work consistent with our securities laws.'”



  • The Milken Institute’s 2018 Global Conference continues.
  • The Women in Housing and Finance, Inc. holds an event.
  • The U.S. Chamber of Commerce holds the 9th China Business Conference begins.

Coming Up

  • Securities of Exchange Commission chairman Jay Clayton speaks at Temple University on Wednesday.  
  • The 40th annual Law & Compliance Conference begins on Wednesday.
  • Brookings Institution holds an event on the future of trade in U.S.-Japan relates on Wednesday.
  • The American Enterprise Institute holds a conversation on President Trump’s strategy in the America on Thursday.
  • The National Economists Club holds an event on Thursday.
  • The 2018 Consumer Financial Protection Bureau Research Conference begins on Thursday.

The people around President Trump aren’t shy about validating him:

The people around President Trump aren’t shy about feeding his never-ending thirst for validation. (JM Rieger/The Washington Post)

Stephen Colbert on Stormy Daniels's latest suit against the president: 

Trevor Noah weighs in on Michelle Wolf's performance at the White House Correspondents' Dinner: