Jeff Flake says he’s ready to put his vote where his mouth is to push back on President Trump’s trade offensive. 

The retiring senator from Arizona, one of Trump’s toughest Republican critics in Congress, has begged off going rogue against the GOP’s razor-thin Senate majority to force a confrontation with the president on trade, or the other handful of issues where Flake says Trump is violating traditional conservative principles. But on Sunday, he said he will block Trump’s judicial nominees until the Senate votes on a bill to limit the president's power to levy tariffs. 

“I do think that unless we can actually exercise something other than just approving the president’s executive calendar, his nominees, judges, that we have no reason to be there,” Flake said in an interview on ABC’s “This Week.” “I think myself and a number of senators, at least a few of us, will stand up and say — let’s not move any more judges until we get a vote, for example, on tariffs.”

Trump, meanwhile, is only ratcheting up his threats to slap levies on imports from around the globe. On Sunday he tweeted that "all countries" will face new tariffs if they don't lower their own trade barriers:

The escalating tension — the administration is also planning to ramp up its crackdown on China, as Europe pledges retaliation against auto tariffs (see our Trade Fly-Around section below for more on both those stories) — suggests a reckoning between Trump and pro-trade Republicans on the Hill could finally be at hand. Among the latest signs Trump's trade war is producing real-world pain, Harley-Davidson announced this morning it's shifting some motorcycle production abroad in response to retaliatory European Union tariffs.

Flake's threat to take matters in his own hands is real enough: He serves on the Judiciary Committee, where Republicans claim only an 11-to-10 advantage. And the party has no votes to spare in the full Senate, since the GOP's majority stands at 51 and Flake’s senior colleague, John McCain, is home for brain cancer treatment. 

Flake has made similar noises without following through, as my colleague Dave Weigel notes, including in April when toyed with sinking the nomination of Jim Bridenstine to lead NASA. But he signaled last week he’s considering plugging the pipeline of judges that Senate Majority Leader Mitch McConnell (R-Ky.) is eager to keep flowing through the chamber — to protest Trump’s tariffs and his Cuba policy. And he delayed a vote on an appeals court nominee but declined to say why, telling reporters it is “just something I’m working out.”

There’s some evidence he’s not alone. Sen. Bob Corker (R-Tenn.), another Trump critic emboldened by his impending retirement, said Sunday there’s a “jailbreak brewing” among congressional Republicans on the trade front. 

Flake, on ABC, called for Republicans to “stand up on issues like tariffs facing us right now. We're if the nascent stages of a full-scale trade war. And the president simply seems to want to escalate. And it all stems to the steel and aluminum tariffs. Congress ought to stand up and say, no, we're not going to do that. You can't use section 232 to claim that Canada is a national security threat. That's not who we are.”

Corker has drawn eight Republican cosponsors — and five Democrats — for a bill that would force the president to get congressional approval before imposing tariffs in the name of national security. Trump has taken the proposal seriously enough to get involved personally in lobbying against it, working the phones from his nuclear summit in Singapore earlier this month and inviting Senate Republicans to the White House to urge them to back off. 

Corker failed attach the measure to the defense authorization bill, as he had aimed. But Senate Republicans demonstrated during that debate that they’re willing, in some circumstances at least, to stand up to the president on trade matters: They added language to the bill reinstating penalties on Chinese telecom company ZTE. 



— Trump wants to limit Chinese investment in U.S. tech companies. WSJ's Bob Davis: "Trump, already embroiled in a trade battle with China, plans to ratchet commercial tensions higher by barring many Chinese companies from investing in U.S. technology firms, and by blocking additional technology exports to Beijing... The twin initiatives, set to be announced by the end of the week, are designed to prevent Beijing from moving ahead with plans outlined in its “Made in China 2025” report to become a global leader in 10 broad areas of technology, including information technology, aerospace, electric vehicles and biotechnology.

"The Treasury Department is crafting rules that would block firms with at least 25% Chinese ownership from buying companies involved in what the White House calls 'industrially significant technology.' ... In addition, the National Security Council and the Commerce Department are putting together plans for 'enhanced' export controls, designed to keep such technologies from being shipped to China."

China doesn't intend to punish U.S. companies that operate on Chinese soil. Bloomberg News's Tian Chen: “China has no plan to target U.S. companies operating in the nation amid escalating trade tensions, as that would run counter to Beijing’s goal of attracting foreign investments, South China Morning Post reported on Sunday . . . The policy makers sought to reassure foreign businesses in China amid fears that the Beijing government would retaliate for . . . Trump’s proposed tariffs on Chinese goods by harassing American firms or depriving them of commercial opportunities, the Hong Kong-based newspaper reported, citing 'two Chinese government sources.' The option of targeting these business 'has never been on the cards,' according to one of the people.”

Trump will feel the pressure when the tariffs on Chinese goods kick in. The Post's David J. Lynch: “Once the U.S. tariffs on the first $34 billion in Chinese goods take effect on July 6 — and trigger Chinese retaliation against American farmers and exporters — the political pain will mount for the president, according to several former U.S. negotiators and trade analysts. Complaints from affected voters could push Trump to settle for a limited deal involving higher Chinese purchases of American products and promises of future market openings and leave the president vulnerable to charges of having blinked in his confrontation with China, the former officials said. 'He’s set himself up perfectly for that attack,' said Derek Scissors of the American Enterprise Institute, who has advised U.S. officials on China policy. 'There’s a group inside the administration that very, very much wants a deal. . . . But I’m talking about a Band-Aid.' ”

ZTE is about to meet U.S. conditions. Reuters: “ZTE Corp . . . is expected to deposit $400 million in an escrow account in a U.S. bank in the 'next couple of days,' the last step the Chinese company must take before a ban on U.S. suppliers can be lifted, a U.S. Department of Commerce official told Reuters on Friday. ZTE, which makes smart phones and networking gear, agreed to pay a $1 billion penalty and put $400 million in escrow as part of a settlement it reached on June 7 with the Commerce Department to regain access to the U.S. market, which it needs for components. . . . The escrow account in the new settlement is designed to allow the U.S. government access to the $400 million if ZTE violates the latest deal.”

— Trump threatens Europe with car tariffs. The Washington Post's Damian Paletta and James McAuley: “Trump on Friday threatened in a tweet to unilaterally impose a 20 percent tariff on all automobile imports from Europe, further breaking from Republicans in Congress and front-running an investigation he had ordered from the Commerce Department into whether these imports harm the U.S.'s national security. It was the first time he had threatened to impose a specific level of tariffs on automobiles from Europe. The tweet came as Europe imposed tariffs on goods worth 2.8 billion euros ($3.2 billion) — including Harley Davidson motorcycles and Levi's jeans — which are themselves a targeted response to Trump’s earlier decision to impose steel and aluminum tariffs on European exports to the United States. . . . The E.U. charges a 10 percent tariff on auto imports from the United States. Trump is threatening to impose a tariff double that size if the E.U. doesn't remove its barriers.”

And Europe says it would retaliate. Reuters's Mathieu Rosemain: “The European Union will respond to any U.S. move to raise tariffs on cars made in the bloc, a senior European Commission official said, the latest comments in an escalating trade row. . . . 'If they decide to raise their import tariffs, we’ll have no choice, again, but to react,' EU Commission Vice President Jyrki Katainen told French newspaper Le Monde. 'We don’t want to fight (over trade) in public via Twitter. We should end the escalation,' he said in the comments published on Saturday.”

The Mood: E.U. says the future of trade is bleak. Bloomberg News's Nikos Chrysoloras and Richard Bravo: “The global trade war is about to get worse, as the rules-based system of international commerce is poised to revert to an environment where the strong impose their will upon the weak, according to an internal memo circulated among European Union governments. The disputes between the U.S. and its closest trading partners are set to escalate 'in the coming months, as more unilateral measures are threatened and imposed, leading, in some cases, to countermeasures, or to mercantilist deals,' according to the memo drafted by the European Commission, which manages trade policy for the entire bloc. . . . Our world will go back 'to a trading environment where rules are only enforced where convenient and where strength replaces rules as the basis for trade relations,' according to the memo.”

— Meanwhile, the dispute over steel and aluminum tariffs continues. Bloomberg News's Olga Tanas, Stepan Kravchenko and Andrey Biryukov: “Russia is the latest country to threaten the U.S. with retaliation for tariffs on metals imports, warning Friday that American cars could soon face higher taxes. Economy Minister Maxim Oreshkin said autos from the U.S. could be targeted, just days after saying that the government also is likely to hit American road-building equipment with higher levies. Both moves are in response to new U.S. tariffs on steel and aluminum, important Russian exports.”

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— Russia backs plan to increase oil production. The Wall Street Journal's Christopher Alessi and Summer Said: “Russia on Saturday threw its support behind Saudi Arabia’s plan to ramp up global oil production in the face of higher prices, after more than a year of holding back output in coordination with OPEC. Russian Energy Minister Alexander Novak said his country backed a plan by the Organization of the Petroleum Exporting Countries to raise crude production by a nominal one million barrels a day starting next month. Though, the actual increase is expected to be around 600,000 barrels a day . . . due to some producers being unable to increase output. That is far lower than the 1.5 million barrel a day increase Russia had been targeting ahead of a series of OPEC-led meetings in Vienna this week.”

— $39 billion in stocks traded in less than one second. WSJ's Asjylyn Loder: “A record 1.2 million shares worth more than $39 billion traded in less than a second on Friday during Nasdaq ’s closing auction. The reason: the end of this year’s rebalancing of FTSE Russell’s widely followed stock indexes. There are $9.2 trillion pegged to Russell U.S. benchmarks, dwarfing the $29.5 billion linked to the Dow Jones Industrial Average, which made headlines last week by ejecting General Electric Co. after more than a century. When Russell adds and removes stocks each year to and from its indexes, stocks that are part of the revisions typically experience a trading volume spike 45 times higher than average, according to research from Keefe, Bruyette & Woods. This year, nearly 300 companies were added or dropped from the Russell 2000 alone.”

— The Chinese central bank is easing credit rules. WSJ's Lingling Wei and Chao Deng: “China’s central bank is freeing up more than $100 billion for commercial banks to boost lending and restructure debt, as the Chinese leadership tries to shore up growth amid slowing momentum for economic expansion and an intensifying trade brawl with the U.S. In a statement Sunday, the People’s Bank of China announced that it is reducing the amount of reserves banks are required to keep with the central bank by half a percentage point starting July 5. That is the day before a U.S. deadline to slap punitive tariffs on tens of billions of dollars in Chinese goods. Under the reserve cut, some 500 billion yuan ($76.86 billion) will be released for 17 large banks, including the Big Five state-owned banks, the central bank said. It said the banks are to use the freed-up funds by converting bad loans into equity in companies that default on their debts.”


— Amazon employees say the company shouldn't sell facial recognition to law enforcement. The Post's Hamza Shaban: “Employees at are calling on chief executive Jeffrey P. Bezos to end the sale of facial-recognition technology to law enforcement agencies and to discontinue partnerships with companies that work with U.S. Immigration and Customs Enforcement. In a letter, a group of Amazon workers said they are also troubled by a recent report from the American Civil Liberties Union revealing the company's sale and marketing of Rekognition, its facial-recognition technology, to police departments and government agencies. Workers at Amazon are protesting the recently halted Trump administration policy of separating migrant children from their parents at the U.S.-Mexico border.” (Bezos is also the owner of The Post.)

— Board members of tech giants don't attend shareholder meetings. Reuters's Ross Kerber: “Some small investors who want to give a piece of their minds to big tech company directors are losing their only chance: many board members are skipping annual shareholder meetings. Companies that hold meetings online have some of the worst records for attendance. A large portion of Alphabet Inc . . . Facebook Inc . . . Netflix Inc . . . and Twitter Inc . . . directors have not attended annual shareholder meetings in recent years, company records and securities filings show, in some cases in growing numbers. Recent high-profile no-shows at the meetings — which are often the only chance 'mom-and-pop' retail investors get to ask directors questions — include Alphabet Chief Executive Larry Page and Facebook board member Peter Thiel. The companies declined to discuss the absences in detail.”

— Some financial services companies are cutting ties with the gun industry. The Associated Press's Lisa Marie Pane: “In the wake of high-profile mass shootings, corporate America has been taking a stand against the firearms industry amid a lack of action by lawmakers on gun control. Payment processing firms are limiting transactions, Bank of America stopped providing financing to companies that make AR-style guns, and retailers like Walmart and Dick’s Sporting Goods imposed age restrictions on gun purchases. The moves are lauded by gun-safety advocates but criticized by the gun industry that views them as a backhanded way of undermining the Second Amendment. Gun industry leaders see the backlash as a real threat to their industry and are coming to the conclusion that they need additional protections in Congress to prevent financial retaliation from banks.”

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— The GOP wants to show that it worries about the deficit. The Hill's Niv Elis: “Six months after passing a tax bill that is projected to blow a $1.9 trillion hole in the deficit, Republicans on the House Budget Committee are scrambling to regain fiscal credibility with their 2019 spending plan. The plan would cut over $8 trillion in spending over the course of a decade, according to estimates from the Committee for a Responsible Federal Budget, including $5.4 trillion in mandatory spending. . . . Republicans, who have traditionally defined themselves as the party of fiscal responsibility, have been playing defense on the issue. They’ve faced accusations from Democrats that they’ve mortgaged America’s future for the sake of the tax cut.”


— Mulvaney backs Kraninger to lead the CFPB. The Hill's Sylvan Lane: “Consumer Financial Protection Bureau (CFPB) acting Director Mick Mulvaney is going to bat for his potential successor, and in doing so he's poised to extend his influence at the watchdog agency. Mulvaney, who doubles as head of the White House Office of Management and Budget (OMB), has emerged as a key proponent of Kathy Kraninger . . . Trump’s pick to be the CFPB’s full-time director, despite his previous reluctance to influence the selection process. . . . Congressional Republicans have praised Mulvaney's efforts to rein in the CFPB’s regulatory actions and are expected to support Kraninger, who they see as building on Mulvaney’s legacy. That, in turn, has raised concerns among Democratic lawmakers and other White House critics who say her nomination is an attempt to extend Mulvaney’s influence over the CFPB.”

— The fiduciary rule is essentially gone. The New York Times's Tara Siegel Bernard: “Retirement investors, you’re back on your own. Just a year after it took partial effect, the so-called fiduciary rule — a requirement that financial professionals put their customers’ interests ahead of their own with retirement accounts — has effectively died. On Thursday, a federal appeals court dealt a final blow to the rule, legal experts said. The court made effective its decision in March voiding the Obama era rule. That decision said the Department of Labor, which oversees retirement accounts, overstepped its authority. The department did not try to defend the rule after the appeals court’s initial decision, experts said, and it let a deadline pass to petition the Supreme Court to hear the case.”


From Bloomberg News:


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