What to Know in Washington: Top China Trade Negotiator to Visit

China’s top trade negotiator Liu He will visit the U.S. this week for a new round of high-wire talks, in a sign Beijing is battling to keep negotiations on track after President Donald Trump ratcheted up pressure with plans to raise tariffs on Chinese goods Friday.

Vice Premier Liu will meet with U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin on Thursday and Friday, according to a statement today on the Chinese Ministry of Commerce website. At the same time, China is preparing retaliatory tariffs on U.S. imports should Trump carry out his threat, according to people familiar on the matter.

The latest twist sets up Thursday as a crucial moment in the yearlong trade war with potentially huge ramifications for companies, markets, consumers and politicians in both nations: With a U.S. ultimatum now overhead, will Liu offer enough concessions to stave off higher tariffs or will Chinese authorities play hardball and respond with retaliatory measures?

“The fact that China sends a delegation to the U.S. shows it is still willing to solve the dispute by negotiations regardless of what the U.S. is saying,” said Lu Xiang at the state-run Chinese Academy of Social Sciences in Beijing. “If the Trump administration follows through with the tariffs threats on Friday, I think it means the talks fall apart. We then need to be prepared for worse than worst.”

China would make its retaliatory tariffs effective one minute after the U.S., if the decision to add an extra 25 percent in duties on $200 billion of Chinese imports comes into force, the people said, who asked not to be named as the matter isn’t public. The State Council and Commerce Ministry didn’t respond to requests for comment on the tariff plans. Read more from Jenny Leonard, Steven Yang and Shawn Donnan.
Photographer: Mark Schiefelbein / POOL / AFP
U.S. Trade Representative Robert Lighthizer, Chinese Vice Premier and lead trade negotiator Liu He, and U.S. Treasury Secretary Steven Mnuchin pose before trade negotiations in Beijing. Liu will be in Washington D.C. for talks April 3.

Demand for Trump Tax Record Rejected

Mnuchin refused to release Trump’s personal and business tax returns, setting up what could become one of the biggest legal showdowns between the president and a Congress seeking to investigate him.

The rejection of the request by House Ways and Means Chairman Richard Neal (D-Mass.) for six years of the president’s returns opens the door for Democrats to pursue more forceful measures, such as issuing a subpoena or filing a lawsuit.

Mnuchin had put off a firm response for nearly a month but in a letter yesterday evening officially declined the request. He said the Justice Department would issue a published legal opinion affirming the decision “as soon as practicable.”

“I have determined that the committee’s request lacks a legitimate legislative purpose,” he said. “The department may not lawfully fulfill the committee’s request.”

In a statement after Mnuchin released his letter, Neal said he would “consult with counsel and determine the appropriate response.”

Democrats, citing a section of the tax code from 1924, say the law is on their side. The law allows the chairmen of the House Ways and Means and Senate Finance committees and the Joint Committee on Taxation to request the tax returns of any taxpayer and that the Treasury secretary “shall” provide them. Read more from Laura Davison and Joe Light.

Happening on the Hill

Barr Aides Agree to Talk to Nadler: Hours after House Judiciary Chairman Jerrold Nadler (D-N.Y.) set up a vote to hold Attorney General William Barr in contempt of Congress for not providing a fully unredacted version of Special Counsel Robert Mueller’s report, the Justice Department agreed to further talks to resolve the dispute.

“I am pleased that the Department of Justice has agreed to meet with my staff tomorrow —and not Wednesday afternoon, as originally proposed by DOJ,” Nadler said in a statement on yesterday. “It remains vital that the committee obtain access to the full, unredacted report and the underlying materials.”
But Nadler added: “At the moment, our plans to consider holding Attorney General Barr accountable for his failure to comply with our subpoena still stand.” Read more from Steven T. Dennis.

Trump Faces Bipartisan Opposition to Wall Funds: Trump wants a six-fold increase in border wall funding in fiscal 2020. Democrats, emboldened by their control of the House, are pushing for a number closer to zero. The House’s Homeland Security spending bill may not include any funds for border fencing, Rep. Lucille Roybal-Allard (D-Calif.) said last week. She leads the subcommittee responsible for the appropriations bill covering the department.

“I’m not planning on putting any money in,” Roybal-Allard said, when asked about fence funds. “They haven’t even used up the money that we gave them.”

Federal dollars would be better spent on addressing the backlog of immigration cases at the Executive Office for Immigration Review, and ensuring that border security personnel aren’t required to help process paperwork, Roybal-Allard said. Read more from Jack Fitzpatrick.

Republicans Seek to Sync Immigration Bills: Senate Homeland Security and Governmental Affairs Chairman Ron Johnson (R-Wis.) said there are “slight differences” in his immigration legislative proposal compared to those of Sens. Lindsey Graham (R-S.C.) and John Cornyn (R-Texas), which all aim to curb the surge of migrants at the Southwest border. Johnson said he wanted to talk to the other senators about a unified approach to their bills, which each says would raise the bar for asylum standards, Michaela Ross reports.

GOP Asks for Leaks in Russia Probe: Senate Republicans asked the inspector general of the U.S. intelligence community to investigate any leaks from other agencies that came out of the FBI’s probe into election meddling by Russia. The senators “are looking forward” to “forthcoming reports reviewing potential FISA abuses and leaks from FBI personnel in order to gain a better understanding of what happened during the Russia investigation,” Sens. Chuck Grassley (R-Iowa) and Johnson said in a letter yesterday.

Trump has said the special counsel’s investigation into Russia’s meddling was politically motivated and accused former FBI employees Peter Strzok and Lisa Page of treason for their role in the investigation. Grassley and Johnson’s letter refers to text messages sent by Strzok and Page, who wrote to each other about the probe and cited other unnamed agencies, Andres R. Martinez reports.

Lawmakers, Panels Jockey to Influence Senate Privacy Measure: The Senate Banking, Housing and Urban Affairs Committee plans to examine data privacy issues at a hearing today. Companies and privacy advocates alike are calling for a new law, although they differ on the details. But the fate of this year’s effort depends on whether leading lawmakers, especially in the Senate, can balance competing interests and build a supermajority of support for a single measure.

Companies are closely watching the privacy debate to see if they’ll face competing regulations and if the federal effort will head off a growing number of bills in state legislatures. Big tech companies, including Facebook and Twitter, and Republican lawmakers want Congress to pass a federal privacy law to preempt California’s Consumer Privacy Act. Privacy advocates and Democrats want both to preserve state privacy powers and increase federal data privacy enforcement. Read more from Daniel R. Stoller.

Making Audit Disciplinary Cases Public: Sens. Grassley and Jack Reed (D-R.I.) want more transparency and accountability from enforcement cases against U.S. audit firms. The lawmakers introduced a bill that would make Public Company Accounting Oversight Board disciplinary orders public years sooner than under current law. Grassley, who chairs the Finance Committee, and Reed (D-R.I.) have introduced similar legislation each Congress since 2011. Read more from Amanda Iacone.

BGOV Podcast: ACA and Drug Pricing Bills on Tap in House: The Trump administration’s plan to give states wider latitude to pursue changes to the Affordable Care Act will be under the microscope this week, as the House is scheduled to vote on a bill to block recent guidance on the law’s “state innovation waivers.” (Read the bill summary here.)

On this episode of “Suspending the Rules” from Bloomberg Government, legislative analyst Danielle Parnass and senior health care reporter Alex Ruoff break down the waiver issue amid the battle over the ACA, as well as parallel efforts to lower drug prices.

Listen and subscribe to Suspending the Rules from your mobile device: Apple Podcasts | Overcast | Stitcher | Spotify

Movers and Shakeups

Appeals Pick Set for Confirmation: Joseph Bianco, a federal judge and former organized crime and terrorism prosecutor, is one of two Trump nominees set for likely confirmation this week to appeals court seats in New York. The Senate voted Monday, 51-40, to limit debate on Bianco’s nomination to the U.S. Court of Appeals for the Second Circuit with a confirmation vote likely today. Read more from Patrick L. Gregory.

Gauntlet Seen Awaiting ICE Pick: Trump’s choice to lead Immigration and Customs Enforcement, Mark Morgan, faces the same confirmation gauntlet that thwarted Trump’s first two nominees for the position, former officials and immigration advocacy groups said. “It was red hot, now it’s white hot,” John Sandweg, a former ICE acting director, said in an interview, referring to the politicization of the agency in Congress since his tenure during Barack Obama’s presidency. Read more from Michaela Ross.

Puerto Rico Board Gets 60 Days of Approval: The federal board overseeing Puerto Rico’s financial recovery has until July 15 to get U.S. Senate approval for seven board members who were appointed by Trump. The U.S. Court of Appeals for the First Circuit’s order yesterday follows Trump’s nomination last month to ensure seven members on the Financial Oversight and Management Board for Puerto Rico can finish serving their three-year terms. Read more from Diane Davis.

Tiger Woods Awarded Medal of Freedom: Trump awarded Tiger Woods the Presidential Medal of Freedom at the White House yesterday, calling the golfer “one of the greatest athletes in the history of sports” and “a true legend.” Trump has remained close with the superstar golfer despite the scandals, and Woods designed a course in Dubai poised to be managed by the Trump Organization. The pair have played golf together repeatedly, including a round in February at the Trump National Golf Club in Jupiter, Fla. Read more from Justin Sink.

Photographer:Chip Somodevilla/Getty Images
Tiger Woods receives the Presidential Medal of Freedom from President Donald Trump on May 6, 2019.

What Else to Know

Trump Country Winning on Job Growth Even as Pay Gap Persists: Jobs are now growing at a faster rate in Trump country than they are in the Democratic-leaning urban and coastal areas that long had been a main driver of the U.S. economic expansion. During the first 21 months of Trump’s presidency, the 2,622 mostly rural and exurban counties he won in the 2016 election added jobs at twice the pace they did during the previous two years under the Obama administration and at a slightly higher rate than the 490 counties that supported Democrat Hillary Clinton. Red America overtook Blue America last May in 12-month employment growth for the first time in seven years, according to a Brookings Institution analysis of county-level economic data for Bloomberg News. Read more from Mike Dorning.

Harris Calls for Full Repeal of Trump Tax Law: Sen. Kamala Harris (D-Calif.) said she’d seek to repeal all of Trump’s 2017 tax overhaul, including its breaks for wealthy earners, corporations and the middle class. “Get rid of the whole thing,” Harris, a presidential contender, said after a campaign event in Detroit. Her campaign spokesman Ian Sams said she’d seek to replace the law with her proposed LIFT Act, a nearly $3 trillion refundable tax cut focused on middle income earners. Read more from Sahil Kapur and Laura Davison.

Navy Plans $5 Billion for Submarines by 2024: The U.S. Navy plans to boost spending for its next-generation nuclear missile submarine program by $2 billion in fiscal 2021 and continue pushing toward $5 billion in 2024, according to the service’s latest annual report to Congress. The surge begins next year, when the Navy will seek $4.3 billion in funding for the Columbia-class submarine program, up from $2.3 billion in the fiscal year that begins in October. The funding increase includes $3.9 billion in procurement, according to the service’ s new Selected Acquisition Report sent to Congress last month. Read more from Tony Capaccio.

Weapons Tested by Kim Could Strike Deep Into South Korea: The weapons North Korea launched over the weekend traveled into the stratosphere and flew at a distance long enough to strike deep into South Korean territory, according to a South Korean assessment. South Korea’s Joint Chiefs of Staff did not indicate what was fired off of North Korea’s east coast on Saturday and into the sea, but experts believe at least one ballistic missile was launched and the testing may indicate that North Korea has improved its capabilities to strike the South. Read more from Youkyung Lee.

Ukraine Ex-Official Casts Doubt on Biden Conflict Claim: Trump’s personal lawyer is raising the specter that Joe Biden intervened in Ukrainian politics to help his son’s business. But if that was Biden’s aim, he was more than a year late, based on a timeline laid out by a former Ukrainian official and in Ukrainian documents.

The official described to Bloomberg details about the country’s political dynamic in the run-up to early 2016 when Biden, then the U.S. vice president, threatened to hold up U.S. funding to Ukraine unless it cracked down on corruption. Biden’s chief demand was the ouster of a top Ukrainian prosecutor who he said had been ineffective. The episode has come under the spotlight in the last week because at one point, that prosecutor had been investigating a natural gas company where Biden’s son, Hunter Biden, sat on the board and received substantial compensation. Read more from Stephanie Baker and Daryna Krasnolutska.

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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