What to Know in Washington: Mexico Tariff Talks Continue Today

Vice President Mike Pence said the U.S. still plans to impose tariffs on Mexico next week, as American and Mexican officials planned further talks aimed at defusing a crisis between the two countries over the flow of undocumented migrants into the U.S.

Negotiations wrapped up last night without an agreement, Mexican Foreign Minister Marcelo Ebrard said, adding that another round of discussions would take place on Friday in Washington to head off the tariffs.

“Tomorrow we are going to maintain these conversations, we don’t have yet an agreement but we are advancing in order to reach an agreement as we want,” Ebrard said as he left the State Department. “So tomorrow morning we are going to work in the, maybe, one of the last sessions in order to make an effort to have an agreement.”

The U.S. has been preparing a draft emergency order to allow President Donald Trump to proceed with the tariffs in the event that talks fail to satisfy his concerns on immigration. At the same time, administration officials have considered delaying the tariffs to give Mexico time to prepare a solution, according to people familiar with the matter.

One U.S. official said the most likely outcome is still that a 5% tariff goes into effect. But the official said U.S. negotiators recognize that Mexico is taking the talks seriously and working quickly to address Trump’s concerns. If the 5% tariff is triggered but Mexico follows through on promises to crack down on migration, the duties could be short-lived, the official said.

Ebrard confirmed that his government has offered to send about 6,000 national guard troops to Mexico’s southern border with Guatemala to help stem migration as part of an agreement to avert the tariffs. Read more from Margaret Talev, Jennifer Jacobs and Eric Martin.

Photographer: David Maung/Bloomberg
A U.S. Customs and Border Protection at the Otay Mesa Cargo Port of Entry in San Diego.

Oil Lobbies Against Tariffs: U.S. oil companies are frantically lobbying congressional allies and the White House against Trump’s proposal to slap escalating tariffs on Mexican exports, saying it would hike the price of gasoline and strain refiners reliant on crude from the country. The oil industry’s pushback adds to the pressure upon Republicans mulling legislation to counter Trump’s threatened 5% tariff, which would raise the cost of roughly 712,000 barrels of crude and petroleum goods imported daily from Mexico. Read more from Jennifer A. Dlouhy.

Congressional Resistance: Trump said Republicans who criticize potential tariffs on Mexico should be “ashamed” of themselves for undercutting the U.S. negotiating position.

Trump, speaking in an interview with Fox News that was broadcast last night, took aim at Speaker Nancy Pelosi (D-Calif.) as well as Republicans he did not identify, for criticizing his threat. “What they’re doing is they’re hurting a deal. They should be saying, we’re with the president, we’ll do whatever he wants to do, and Mexico would fold like an umbrella,” Trump said.

But no matter how much business groups and Republican senators hate Trump’s Mexico tariffs, there may be no stopping them before Monday, and rolling them back if they’re put in place is a daunting prospect.

Congress has constitutional authority over trade and could pass a law to block the president’s action. But partisan gridlock and decades of delegating responsibility to the president will complicate any legislative challenge to Trump’s tariff threat. Read more from Mark Niquette and Erik Wasson.

Tariffs Erase Tax Gains: Trump’s trade wars have already wiped out all but $100 of the average American household’s windfall from Trump’s 2017 tax law. And that’s just the beginning. That last $100 in tax-cut gains could soon completely disappear — and then some — because of additional tariffs Trump has announced. If the president makes good on his threats to impose levies on virtually all imports from China and Mexico, those middle-earning households could pay nearly $4,000 more. Subtract the tax cut, and the average household will effectively be paying about $3,000 more in taxes through additional levies on the products they consume. Read more from Laura Davison.

Coming Up in Congress

Contempt Charges Coming: House Democrats are moving ahead with a contempt-of-Congress resolution against Attorney General William Barr and former White House Counsel Don McGahn for defying subpoenas, and they’re adding a shortcut for future legal confrontations with the Trump administration. A floor vote on the measure by all House members is set for Tuesday.

“We will not allow this president and his administration to turn a blind eye to the rule of law,” Rules Committee Chairman Jim McGovern (D-Mass.), sponsor of the resolution, said in a statement yesterday. “This resolution will allow Congress to hold the president accountable while this Democratic majority continues delivering on issues like health care and jobs.”

The Barr and McGahn contempt citations were sought by House Judiciary Chairman Jerrold Nadler (D-N.Y.). The resolution also would give Nadler and a number of other committee chairmen the power to issue future contempt citations without waiting for approval from the full House. Instead, they would need approval only from a Democratic-controlled five-member panel of House leaders, led by Pelosi. Read more from Billy House.

Gavels and Golf: Sen. Lindsey Graham (R-S.C.) has two sources of power in Washington: his gavel and his golf clubs.

Graham chairs the influential Judiciary Committee, but his frequent phone conversations and golf games with Trump set him apart from other senior Republicans. Democrats may be dismayed by his reflexive backing of Trump, but they also see him as the man to break the logjam in the Senate.

Sen. Sheldon Whitehouse (D-R.I.) and Richard Blumenthal (D-Conn.) are partnering with him on a bill to criminalize voting system hacks. Sen. Bob Menendez (D-N.J.) is working with Graham on sanctions against Russia and Saudi Arabia. Other Democrats have sought him out on immigration and gun legislation.
The willingness of Democrats to keep reaching out to Graham reflects the unique role he has carved out for himself. He’s one of the only people who regularly talks to the president and has a long history of working with Democrats. Read more from Steven T. Dennis.

Trump ACA ‘Sabotage’ Amid Surprise Billing Effort: Some Senate Democrats are wary of backing bipartisan legislation to rein in surprise medical bills without pairing that effort with their party’s measures to bolster Obamacare. Republican and Democratic leaders on a key health Senate committee are moving forward with a slate of bills aimed at ending surprise medical bills—the unexpected, high charges from a hospital or doctors that insured patients can receive for out-of-network services.

The Senate Health, Education, Labor, and Pensions Committee is expected to hold at least one hearing on the package this month with an eye to getting a floor vote in July. But some Democrats on the HELP panel worry backing the legislation means walking away from their promise to bolster the Affordable Care Act and check what they view as the Trump administration’s efforts to undercut the health law. Read more from Alex Ruoff.

Finance Firms Face Diversity Data Request: The House lawmaker overseeing financial services is pressing American Express, Discover, and 35 other top firms in the industry for details on their workforces’ diversity. Rep. Maxine Waters (D-Calif.), who chairs the House Financial Services Committee, asked the firms in a letter to provide demographic data from 2015 to today on the gender, race, and ethnicity of their employees and board directors. Waters’ request also seeks information on company-wide policies on diversity and any challenges the companies face in meeting diversity goals. Read more from Andrea Vittoro.

Elections and Politics

Biden Reverses on Abortion Measure: Democratic front-runner Joe Biden came out yesterday against the Hyde Amendment, which bars federal funds for abortion, just a day after affirming his support and drawing fierce criticism from rivals and progressive activists. Biden, speaking at a Democratic National Committee event in Atlanta last night, said he no longer supports the 1976 provision.

“I can’t justify leaving millions of women without access to care they need and the ability to exercise their constitutionally protected right.” Biden said. “Times have changed.”

On Wednesday, his campaign said in a statement that the former vice president was sticking with his long-standing support of the Hyde Amendment, which has been routinely added to government funding bills and blocks federal medical programs from paying for abortions except in cases of rape, incest or to save the life of the woman. That position put him at odds with his party, particularly House appropriators and his rivals for the nomination. Democrats in Congress had put off the fight over the Hyde Amendment in this year’s appropriations process, but had planned to end the ban in future years if a member of their party wins the White House in 2020. Jack Fitzpatrick has more.

Anti-Phishing Aid for Campaigns Hits Snag: A small, Silicon Valley company that wants to prevent “phishing” expeditions against political campaigns faces questions from regulators on whether its plans comply with campaign finance laws. The Federal Election Commission said more time is need to respond to a request from Area 1 Security Inc., a 100-employee firm specializing in shielding organizations against a specific type of cyberattack, known as phishing.

Commission Chairwoman Ellen Weintraub (D) said granting the request could “open up a colossal loophole” and raised concerns that other corporations also would want exceptions from the federal ban on corporate contributions “to do all sorts of nice things for candidates.” Read more from Kenneth P. Doyle.

Strategist’s Files Detail N.C. Gerrymandering: A late Republican consultant, Thomas Hofeller, spearheaded a Republican gerrymandering strategy in North Carolina and left behind four hard drives and 18 thumb drives containing over 75,000 files found by his estranged daughter after his death in August, reports The New York Times, citing a N.C. county court case. Advocacy group Common Cause said in court documents submitted yesterday that Hofeller’s files include evidence that show how North Carolina’s Republicans misled a federal court to exte nd the life of their map of state legislative districts, ruled unconstitutional, the Times reports.

What Else to Know

China Tariffs: Trump said he’ll decide whether to enact tariffs on another $325 billion in Chinese imports after the Group of 20 summit at the end of the month in Japan, where he’s expected to meet with Chinese President Xi Jinping, Margaret Talev and Alyza Sebenius report. “I will make that decision after the G-20,” Trump told reporters at a meeting with French President Emmanuel Macron in Caen, France, yesterday. “I’ll be meeting with President Xi and we’ll see what happens but probably planning it sometime after G-20.”

U.S. and Chinese negotiators hit an impasse in trade talks last month, which Trump said happened because Beijing reneged on provisions of a tentative deal. He raised tariffs on about $200 billion in Chinese imports to 25% in response, and at the time hung out the possibility of further action.
Meanwhile, People’s Bank of China Governor Yi Gang said China has “tremendous” room to adjust monetary policy if the trade war with the U.S. deepens. “We have plenty of room in interest rates, we have plenty of room in required reserve ratio rate, and also for the fiscal, monetary policy toolkit, I think the room for adjustment is tremendous,” said Yi in an exclusive interview in Beijing. Read more.

Trump’s Currency War Plan: Trump is poised to turn the $5.1 trillion-a-day global currency market into the next battlefield in his trade war with a proposal that has set two U.S. government agencies on a collision course. A Commerce Department proposal to impose countervailing tariffs on countries that it determines have devalued their currencies has alarmed officials at the Treasury Department, according to four people familiar with the matter. They are wary of market disruptions and a politicization of foreign-exchange policy, among other concerns, the people said. Read more from Saleha Mohsin.

Jobs Outlook: Economists expect U.S. payroll gains cooled last month to a still-solid pace that’s down somewhat from the prior reading but still in line with consistent signs of a broadly robust job market. Nonfarm employment increased by 175,000, according to Bloomberg’s survey, a level that would be down from April’s 263,000 but still well above what economists consider sufficient to accommodate labor-force growth. The unemployment rate is projected to remain at a 49-year low of 3.6% while annual wage gains hold for a third month at 3.2%, near the strongest pace of the economic expansion. Read more from Jeff Kearns.

Antitrust Official Opposes Qualcomm Monopoly Ruling: The White House’s antitrust czar signaled yesterday that he disagrees with a federal judge’s ruling that Qualcomm Inc. acts as a monopoly, adding another powerful voice to the company’s defense as it pursues an appeal. Makan Delrahim’s remarks did not mention the U.S. chipmaker by name, but the head of the Justice Department’s antitrust division took aim at the legal reasoning underpinning a May 21 ruling in favor of the Federal Trade Commission that threatens to upend Qualcomm’s business model. Read more from Susan Decker and Ian King.

Automakers Press for Emissions Deal: A group of major domestic and foreign automakers has formally asked Trump to restart talks with California over vehicle emission regulations, saying that failing to reach a unified national standard could destabilize the industry and hamper investment. The petition sent yesterday from 17 carmakers — including General Motors, Ford and Toyota’s U.S. subsidiary — comes less than a month after California’s top environmental regulator threatened to enact much tougher pollution rules. Read more from Chester Dawson.

FERC Fight: Since day one, Neil Chatterjee has fended off criticism that he’s too partisan to lead the politically independent Federal Energy Regulatory Commission. But the real ideologue on the commission, according to Chatterjee, is Democrat Rich Glick. “If we are going to talk about politics infecting the agency’s work, let’s be fair in seeing who is it that’s actually being political,” Chatterjee said in an interview. Glick has been “unwilling to compromise on his ideology,” he said. “I am compromising to get things done and accomplished. I don’t know that that can be said of all my colleagues.”

Chatterjee’s remarks — made after he was criticized for promoting LNG exports as “freedom gas” — are the latest example of partisan discord at the agency long known for its political neutrality. The growing tension has raised concerns about potential deadlocks and the future of natural gas project permits. Read more from Stephen Cunningham.

Air Force One’s Color Palette: The White House is pressing ahead with Trump’s demand that Boeing paint new Air Force One jets red, white and blue, replacing the blue-and-white pattern used since the early 1960s. The Air Force, which manages the $5.3 billion program to build two new presidential planes, hasn’t been given a formal request by the White House Military Office to abandon the color pattern originated under President John F. Kennedy. But the White House is “evaluating specific red, white, and blue livery (paint scheme) options,” the Air Force said in a statement.

Trump’s seemingly off-hand proposal a year ago on how to paint the new planes was among the quirkier examples of the president’s willingness to intervene in Defense Department projects — from pushing personally for reductions in the cost of the Air Force One replacements and the F-35 fighter jet to demanding that the Navy use old-fashioned steam-based catapults on its new aircraft carriers instead of a more advanced but occasionally unreliable electromagnetic system. Read more from Tony Capaccio.

To contact the reporters on this story: Zachary Sherwood in Washington at zsherwood@bgov.com; Brandon Lee in Washington at blee@bgov.com

To contact the editors responsible for this story: Giuseppe Macri at gmacri@bgov.com; Loren Duggan at lduggan@bgov.com

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