PLAYING HIS TRUMP CARD...: Heading back to Washington after another campaign-like rally in West Virginia where his tax policy script was tossed-aside in favor of red-meat rhetoric, a fired up President Trump ordered his U.S. Trade Representative Robert Lighthizer to prepare another round of tariffs on $100 billion in Chinese imports using Section 301 trade law. China responding quickly saying that they would reciprocate “at any cost” and will prepare a countermeasure of equal proportion in the coming days in tandem with the prior $3B in steel and aluminum tariffs as well as the $50B in IP tariffs. We didn’t see Trump responding to China’s response(s) so quickly but it was inevitable and it’s classic Trump needing to punch back and position himself while negotiations continue saying in a statement "Notwithstanding these actions, the United States is still prepared to have discussions in further support of our commitment to achieving free, fair, and reciprocal trade and to protect the technology and intellectual property of American companies and American people." While the $50 billion of tariffs announced earlier in the week have been in the making since August of 2017, we suspect this proposed round of tariffs was all reactionary Trump (with a nudge from Peter Navarro?) and not part of the overall trade strategy catching most in his inner circle flatfooted by the way Trump also says in his statement “I have instructed the USTR to consider whether $100 billion of additional tariffs would be appropriate under section 301 and, if so, to identify the products upon which to impose such tariffs.” Plenty of time to negotiate between now and mid-May, but the stakes are getting higher with neither side blinking just yet.
FULL STATEMENT: “Following a thorough investigation under section 301 of the Trade Act of 1974, the United States Trade Representative (USTR) determined that China has repeatedly engaged in practices to unfairly obtain America’s intellectual property. The practices detailed in the USTR’s investigation have caused concern around the world. China’s illicit trade practices — ignored for years by Washington — have destroyed thousands of American factories and millions of American jobs. On April 3, 2018, the USTR announced approximately $50 billion in proposed tariffs on imports from China as an initial means to obtain the elimination of policies and practices identified in the investigation. “Rather than remedy its misconduct, China has chosen to harm our farmers and manufacturers. In light of China’s unfair retaliation, I have instructed the USTR to consider whether $100 billion of additional tariffs would be appropriate under section 301 and, if so, to identify the products upon which to impose such tariffs. I have also instructed the Secretary of Agriculture, with the support of other members of my Cabinet, to use his broad authority to implement a plan to protect our farmers and agricultural interests. “Notwithstanding these actions, the United States is still prepared to have discussions in further support of our commitment to achieving free, fair, and reciprocal trade and to protect the technology and intellectual property of American companies and American people. Trade barriers must be taken down to enhance economic growth in America and around the world. I am committed to enabling American companies and workers to compete on a level playing field around the world, and I will never allow unfair trade practices to undermine American interests.”
AN END TO THE EXTENDERS?: House Ways and Means Republicans will continue to hold hearings on the efficacy of keeping over 30 tax extenders - temporary tax measures Republican’s would like to streamline or eliminate in light of the tax code rewrite from 2017. The $17.4 billion (over ten years) in existing extenders still garner support from many special interest groups (and lawmakers) and are part of an annual year-end ritual here in Washington. But many conservative lawmakers and their outside allies on the right want them axed all together branding them as “corporate welfare.” With the recent passage of the Republican tax cut and extensions for 2017 fresh in lawmakers minds, Republicans feel that this may be the perfect time to strike given what they feel may be lack of incentive to move another package in a lame duck session this November after what’s expected to be a bloody midterm season.
ALL ABOUT RUSSIA: The U.S. is expected to impose additional Russia sanctions designed to target oligarchs with ties to President Vladimir Putin, according to unnamed U.S. officials. The sanctions list is expected to include at least a half-dozen people, according to the officials, who said the final number of Russians facing punitive action remains fluid. And voters' views on Russia have soured to their lowest point of President Donald Trump's presidency, with much of the decline coming since special counsel Robert Mueller's appointment in May to investigate meddling in the 2016 election. In a new poll, 20 percent of registered voters said Russia was an ally or "friendly but not an ally," compared to 64 percent who rated the former Cold War adversary as unfriendly or an enemy.
SUNNY DAYS FOR MEDICARE ADVANTAGE AS POLICY ENVIRONMENT CONTINUES TO IMPROVE | UNH, AET, HUM: Great policy environment but 3.4 percent increase may not be reproducible in light of FFS changes; get ready for Part D rebate changes. Read the piece by our Senior healthcare analyst Emily Evans here.
JUSTICE STRUGGLES TO MAKE ITS CASE AGAINST THE ATT/TIME WARNER MERGER (T, TWX, CMCSA): The Court does not seem convinced as DOJ's first expert attempts to quantify AT&T's market power increase if it acquires Time Warner. Read Paul Glenchur's note here.
