President Trump’s trade offensive just drew its first serious opposition at home. 

Congressional Republican leaders may be unwilling for now to do more than voice their objections to billions of dollars in tariffs the administration is moving to impose on imports from around the globe. But the Koch brothers’ political network is stepping into the breach, launching what its executives are framing as a multiyear, multimillion-dollar campaign to knock down the new trade barriers.   

The push by the deep-pocketed conservative powerhouse threatens, for one, to reorder the debate around the president’s trade agenda. Republican lawmakers seeking reelection in a perilous environment have been largely loath to challenge the president. The Koch network is offering an incentive, demanding candidates fight for free trade to win its potentially make-or-break backing. 

“We’ll be supporting those folks who will be champions, not just passive supporters,” Freedom Partners Executive Vice President James Davis said in an interview. He said the group is evaluating candidates on other issues, too — including tax and regulatory policy, immigration and sentencing reform — but trade ranks as a top criterion. 

It's unclear where exactly the Koch organizations will direct their firepower, but it seems possible they could intervene in Republican primaries, an unwelcome development for Republicans already in a tough political environment.

The campaign, which is also backed by the Koch-sponsored Americans for Prosperity and the Libre Initiative, will include spending on “paid media, activist education and grassroots mobilization, lobbying and policy analysis,” the groups said in a release. Davis said that includes an aim to shape public opinion beyond Washington. “We recognize that there has been a rise in protectionist rhetoric and sentiment from both the Republican and Democratic parties, and we want to make sure we’re connecting Americans to the benefits of free trade over the long term,” he said. 

The White House has been ramping up trade hostilities against traditional friends and foes alike in recent days: The administration imposed new levies on steel and aluminum imports from the European Union, Canada and Mexico last week and threatened to press ahead with at least $50 billion in tariffs on Chinese products. More than backing off of those moves, the Koch groups said in a Monday statement of principles that the U.S. should embrace new free trade deals by updating the North American Free Trade Agreement and moving to forge pacts with the United Kingdom, the EU, and Pacific Rim nations. 

The move marks something of a break for the Koch network, which spent much of last year lending critical outside help to the White House-led drive for business-focused tax cuts. But the group began signaling frustration this spring with what they view as a diminished Republican agenda. “For now, the network led by billionaire industrialists Charles and David Koch still plans to spend between $300 million to $400 million on politics and policy during the 2018 cycle,” my colleague James Hohmann wrote back in April. “But they’re growing impatient, rethinking their approach and signaling a willingness to work more closely with Democrats on areas of common ground.”

The Koch network is hardly the only business group decrying Trump's trade moves. The U.S. Chamber of Commerce, the National Association of Manufacturers, and the National Retail Federation, among many others, have denounced the tariffs as growth-killers. But the complaints haven't yet morphed into an effort by those groups to exact a political price from policymakers who enable protectionism. 

Davis said while the organizations will continue to invest in promoting the benefits of the tax cuts — a cornerstone of the argument Republicans are making to voters in the midterms — their new focus on fighting Trump’s trade moves will inevitably cut in. “Are some staffers going to have to divide their attention? Yes,” he said. “It is a significant policy challenge and one that we’re going to bring a lot of resources to.”


Investors shrug off trade worries. WSJ's Riva Gold and Gunjan Banerji: "U.S. stocks marched higher to start the week as the latest sign of a strong domestic economy overshadowed jitters over the back-and-forth on trade. Concerns about the pace of growth world-wide have emerged lately, but an upbeat U.S. employment report Friday spurred a bounce in stocks as worries about Italian politics began to dim. Strong corporate earnings reports, followed by solid jobs data, have supported a move higher for U.S. stock prices, analysts said. Moreover, the latest employment report evinced tame inflation, which had helped roil markets in February. The tech-heavy Nasdaq Composite closed at a fresh record. Markets in Europe, Hong Kong and Japan climbed as well."

But summer volatility looms. "While the sunny season in Western Europe and the U.S. is typically characterized by lower trading volumes, a multitude of political risks from Brexit to trade frictions aren’t showing signs of letting up," Bloomberg's Natasha Doff and Sid Verma write. "Even as jitters over Italy’s new populist government abate, its ability to lead is already being questioned by the likes of George Soros, who warned over the weekend that differing agendas could spark renewed crisis and may ultimately doom the coalition. Trade tensions among the wealthiest nations have reached a boiling point as world leaders prepare to decamp to Charlevoix, Quebec for a Group of Seven summit Friday."

Twitter Inc. is slated to join the S&P 500 before trading opens on Thursday, according to S&P Dow Jones Indices, as the social-media platform replaces Monsanto Co. on the widely watched index.
Bubble warnings are getting louder. American tech giants keep surging ahead of the market, with the Nasdaq Composite Index closing a fresh record. But Goldman Sachs has a soothing message.


— Corker readies a tariff challenge. The Washington Post's Erica Werner and Seung Min Kim: “Sen. Bob Corker said Monday that he is preparing legislation to subject tariffs to congressional approval, in response to ... Trump’s new levies on steel and aluminum imports from the European Union, Canada and Mexico. The aim of the bill, the Tennessee Republican said, would be 'to make sure that before those things could even occur, you’d have to get congressional approval.' 'I think it’s inappropriate just to be willy-nilly throwing tariffs around and changing your mind,” he said. 'That’s not the way you deal with economic issues like that.' The senator, who is retiring at the end of the year, said he was aiming to assemble a bipartisan coalition in support of the legislation, which he hopes to unveil soon.”

But Senate Majority Whip John Cornyn (R-Tex.) threw some cold water on a legislative response, per CNN's Phil Mattingly: 

Small U.S. businesses may suffer. AP's Joyce M. Rosenberg: “Many small companies in the United States can expect to pay more for steel and aluminum following the Trump administration’s imposition of tariffs on imports from Europe, Canada and Mexico, small business advocacy groups say... Trump has also said tariffs will make U.S. metals producers more competitive and create jobs. But even if domestic producers benefit, many small manufacturers and other businesses will see their profits squeezed as tariffs drive up costs for raw materials and components and products made with steel and aluminum, says Raymond Keating, chief economist with the advocacy group Small Business & Entrepreneurship Council.”

Maple syrup gets drawn into trade disputes. Reuters's Allison Martell: “Canada’s retaliation against ... Trump’s steel and aluminum tariffs includes proposed duties on maple syrup, a nod to a national symbol and a powerful industry in the French-speaking province of Quebec that could hurt producers in Maine. While small in dollar value, the tariff shows how Canada’s retaliation has turned a dispute over metals into a broader conflict, touching many sectors.”

Cornyn says it's too late for NAFTA this year. Bloomberg's Jenny Leonard and Erik Wasson: "The U.S. Congress probably won’t have time to approve a new North American Free Trade Agreement this year, as Cabinet members from the three trading partners continue to negotiate changes to the pact, according to... Cornyn. Asked if the deadline for congressional approval of a new deal had run out, Cornyn said, 'yeah, I think so.' 'It looks like they are kicking it over to 2019,' he told reporters in Washington on Monday. 'I wish it had been handled earlier.'"

— Trudeau braces for tense G7. Reuters's David Ljunggren and Roberta Rampton: “Prime Minister Justin Trudeau this week plays host to a summit of the Group of Seven leading industrialized nations with six of the seven members outraged at the United States over a slew of recent moves by ... Trump ... Trudeau, who wants the June 8-9 meeting to focus on economic growth, insists he can handle the challenge, though insiders and analysts say he will have to fight to keep the grouping together at a time when Trump’s trade and diplomatic moves have isolated the United States and risk undermining the G7’s relevance. 'What this G7 is going to show is that the United States are alone against everyone and especially alone against their allies,' French Finance Minister Bruno Le Maire told reporters on Friday.”

— How China cheats on steel tariffs. The Wall Street Journal's Matthew Dalton and Lingling Wei: “As the Trump administration ramps up its fight against Chinese steel and Commerce Secretary Wilbur Ross ended trade talks with Beijing over the weekend without a settlement, U.S. officials are confronting a strategic shift from China’s state-backed manufacturers. For the past several years, they have been shutting production at home and expanding overseas, fueled by tens of billions of dollars from Chinese state-owned lenders and funds. By owning production abroad, Chinese steelmakers aim to gain largely unfettered access to global markets. Their factories back in China are constrained by steep tariffs imposed by the U.S. and numerous other countries — largely before ... Trump took office — to stop Chinese steelmakers from dumping excess production onto world markets. But their factories outside China face few so-called anti-dumping tariffs.”


— Trump floats self-pardon. The Post's John Wagner: “Trump on Monday asserted an 'absolute right' to pardon himself of any federal crimes but said he has no reason to do so because he has not engaged in any wrongdoing. 'As has been stated by numerous legal scholars, I have the absolute right to PARDON myself, but why would I do that when I have done nothing wrong?' Trump wrote on Twitter. In a subsequent tweet Monday, Trump also claimed that the appointment of special counsel Robert S. Mueller III to investigate Russian interference in the 2016 election had been 'totally UNCONSTITUTIONAL!' 'Despite that, we play the game because I, unlike the Democrats, have done nothing wrong!' Trump said.”

Manafort accused of witness tampering. The Post's Spencer Hsu and co.: "Federal prosecutors accused former Trump presidential campaign chairman Paul Manafort of witness tampering late Monday in his criminal case and asked a federal judge to consider revoking or revising his release. Prosecutors accused Manafort and a longtime associate they linked to Russian intelligence of repeatedly contacting two members of a public relations firm and asking them to falsely testify about secret lobbying they did at Manafort’s behest."

Wyden threatens Treasury holds for Russia docs. Washington Examiner's Joseph Lawler: "Sen. Ron Wyden, D-Ore., pledged Monday to continue blocking... Trump's nominees to the Treasury Department in a bid to get documents related to Trump's dealings with Russia. The Oregon Democrat and ranking member on the Finance Committee committed to holding up nominees after Trump called out Democrats for stalling his nominations in his weekly address. The president specifically called it 'a disgrace' that Democrats have prevented confirmation for Isabel Patelunas to serve as assistant secretary of the treasury for intelligence and analysis. On Monday, Wyden said he has placed a hold on Patelunas in order to gain documents from the Treasury relating to Trump's financial ties with Russia, and said conducting oversight is a 'constitutional duty, not a resistance tactic.'"


Tax staffers cash in. Politico's Aaron Lorenzo: "Top-level GOP aides who helped write the new tax law are now leaving the Hill in droves to cash in as lobbyists on K Street and other marquee private-sector destinations. Powerhouse accounting firm PwC landed one of the biggest prizes, announcing Monday that Mark Prater, the Senate Finance Committee's longtime GOP chief tax counsel, is the new managing director of its tax policy services group. Others who have made the switch include a top aide to Senate Majority Leader Mitch McConnell (R-Ky.), Brendan Dunn, who joined Akin Gump Strauss Hauer & Feld in May as a partner in its public law and policy practice. Some less visible tax aides from both chambers have also gone through the revolving door to companies hoping to rake in new business and more profits from the package of tax cuts and legal changes.

"And it's not just a Hill phenomenon. Down Pennsylvania Avenue, Shahira Knight, who was at the negotiating table on behalf of the White House as the tax bill developed, is heading to The Clearing House, a banking policy and lobbying group, that company said Monday."

Treasury clarifies overseas earnings rules. WSJ's Richard Rubin: "The U.S. Treasury Department will give multinational corporations some but not all of what they want in closely watched international-tax regulations needed to implement the 2017 tax law, a senior Treasury official said Monday. The proposed rules, expected by year’s end, will attempt to balance concerns that U.S.-based companies operating overseas subsidiaries will be at a tax disadvantage, with the need to avoid opening up new tax-reduction strategies. 'It will not be a thing of conceptual beauty,' said Chip Harter, deputy assistant secretary for international tax affairs.”

The Switch
A top Democrat in Congress is calling on the U.S. government to investigate Google, the latest sign that some party lawmakers are ready to challenge an industry that they had befriended in the past.
Tony Romm

Schultz 2020? NYT's David Gelles: "[Howard] Schultz, the chairman and former chief executive of Starbucks, said on Monday that he was stepping down from the company’s board. Though he did not announce a presidential bid, he acknowledged that he was considering entering politics. 'I intend to think about a range of options, and that could include public service,' he said. 'But I’m a long way from making any decisions about the future.' Although no chief executive has thus far undertaken a formal bid for the White House, and Mr. Trump’s victory may well prove an historical anomaly, many have been pegged as potential candidates, including Oprah Winfrey; Bob Iger, the chief executive of Disney; and Mark Cuban, the owner of the Dallas Mavericks."

Microsoft buys GitHub. WSJ's Jay Greene: "Microsoft Corp. agreed to buy coding-collaboration site GitHub Inc. for $7.5 billion in stock, one of the biggest in a string of deals by Chief Executive Satya Nadella to transform the software giant beyond its legacy products and focus on fast-growing areas like cloud computing.The deal values GitHub at nearly four times the $2 billion valuation given by private investors in a fundraising round three years ago. GitHub has grown into a major nexus for software developers to share and collaborate on code—it claims 28 million users.” 

Former State Street exec goes on trial. Reuters's Nate Raymond: "A former executive at State Street Corp went on trial on Monday on U.S. charges that he participated in a scheme to defraud the bank’s clients by charging them secret commissions on billions of dollars in trades. Jury selection wrapped up on Monday in Boston federal court in the case of Ross McLellan, a former executive vice president at the bank accused of committing securities fraud and wire fraud. Lawyers will deliver their opening statements on Tuesday. McLellan is one four former employees of the Boston-based bank who have since 2016 faced charges by the U.S. Justice Department that they engaged in schemes to overcharge institutional clients, allowing State Street to earn millions of dollars."

Many limited partners in private equity are grappling with internal resource constraints, particularly around recruiting high-quality talent, at the very time that competition is heating up for access to popular funds.

CFPB board purge ahead? American Banker's Kate Berry: "Mick Mulvaney's decision to scrap meetings of the Consumer Financial Protection Bureau's consumer advisory board is stoking fears among consumer advocates that the agency's acting director wants to stack the panel with his own hand-picked members. Members of the 25-member board, which under the Dodd-Frank Act is mandated to 'advise and consult' the agency, on Monday voiced criticism of the CFPB's having canceled a meeting scheduled later this week and a previous one in February. They said Mulvaney is flouting the law, and appears to be laying the groundwork to change the board's composition."

SEC to stress cyber threat. Reuters's Katanga Johnson: "The head of the U.S. Securities and Exchange Commission will warn of the need to boost its defenses against 'advanced' and 'persistent' cyber threats when he asks Congress on Tuesday for more funding... SEC chairman Jay Clayton will testify on Tuesday before the Financial Services and General Government Subcommittee of the Senate Committee on Appropriations to make the case to increase the agency’s budget."

Democratic CFTC commissioner Rostin Behnam said Monday that the proposed changes to the proprietary trading ban go too far.
American Banker


  • The Federal Trade Commission and Justice Department hold a workshop on real estate brokerage competition issues.
  • The Center for American Progress holds an event on money in politics with Montana Gov. Steve Bullock.

Coming up

  • The House Small Business Committee holds a hearing on Millennials and the gig economy on Wednesday.
  • The House Financial Services Subcommittee on Financial Institutions and Consumer Credit holds a hearing on transparency at the Consumer Financial Protection Bureau on Wednesday.
  • The House Foreign Affairs Subcommittee on the Western Hemisphere holds a hearing on business investment and trade on Thursday.
  • The American Enterprise Institute holds a conversation with former Federal Reserve chairman Ben S. Bernanke on Thursday.
  • The Bipartisan Policy Center holds an event with HUD Secretary Ben Carson on Friday.
  • The Brookings Institution holds an event on “Building a more dynamic an competitive economy” on June 13.

From The Post's Tom Toles: "Trump’s team is now asserting he is way way way above the law:"


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Why California’s unique primary setup means a quirky battle for governor: