On The Money: Stocks slide after Trump warns China: ‘I am a Tariff Man’ | Mnuchin urges Congress to pass new NAFTA without changes | Postal reforms could inflame Trump-Amazon feud

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THE BIG DEAL– Stocks slide after Trump warns China: ‘I am a Tariff Man.’ Stocks fell dramatically on Tuesday after President Trump on Tuesday declared himself a “Tariff Man,” stressing he will not hesitate to raise tariffs on China if it does not agree to fundamentally change its trade practices.

The Dow Jones Industrial Average closed down nearly 800 points and the Standard & Poor’s 500 index dropped more than 3 percent on the day, a sharply negative turn one day after markets were jolted by news that Trump reached a trade ceasefire with Chinese President Xi Jinping. 

“Investors are spooked by President’s Trump handling of the trade war with China,” Mark Zandi, chief economist at Moody’s Analytics, wrote in an email. “Despite the arrangement Trump and Xi agreed to last week in Argentina, they are nervous that the negotiations will go off the rails and the trade war will escalate.”

The Hill’s Jordan Fabian tells us why here.

What happened:

• In a Tuesday morning tweet, Trump raised the possibility that the 90-day trade truce he brokered last weekend with Xi could be extended if the two nations are making progress toward a broader deal. That agreement froze U.S. tariffs while the two countries negotiate.
• But the market was shaken by Trump’s threat suggesting he would proceed with plans to raise tariffs on $250 billion in Chinese goods from 10 percent to 25 percent if talks fail.
• “President Xi and I want this deal to happen, and it probably will. But if not remember, I am a Tariff Man,” Trump said in a series of tweets.
• “When people or countries come in to raid the great wealth of our Nation, I want them to pay for the privilege of doing so,” he continued. “It will always be the best way to max out our economic power. We are right now taking in $billions in Tariffs. MAKE AMERICA RICH AGAIN.”

The bigger picture: It wasn’t just Trump’s tweet that sent stocks into a frenzy, though. The skid happened as the yield curve flattened, and looked at risk of inverting, in what is considered a common early indicator of recessions. 

In an inverted yield curve, bond traders expect higher returns in the short term than in the long term, an indication that the market expects the economy to be worse in the future. The Hill’s Niv Elis breaks that down here.

Bloomberg News also compiled a list of other factors weighing on Wall Street today, including global economic uncertainty, stocks breaking below some technical levels, bad news in the housing market and Brexit.

Even so, 70 percent of the U.S. economy is powered by consumer spending. Heather Long at the Washington Post explains why that’s helping fend off other storm clouds.

LEADING THE DAY

Mnuchin urges Congress to pass Trump’s new NAFTA without changes: Treasury Secretary Steven Mnuchin on Tuesday dismissed bipartisan criticism of the Trump administration’s renegotiated North American trade pact and urged Congress to pass the deal without changes.

Mnuchin told Fox Business Network that President Trump expects Congress to approve an updated version of the North American Free Trade Agreement (NAFTA) as written and would terminate the original deal if lawmakers refuse.

“This is a great deal and there’s people who will want to make this a political issue,” Mnuchin said Tuesday. “People who think they can micromanage the deal for political reasons because they don’t want to support the president, you know that’s a bad strategy.”

I’ve got more on the battle here.

What’s on the line?

• Trump, Canadian Prime Minister Justin Trudeau and former Mexican President Enrique Peña Nieto on Saturday signed the NAFTA rewrite, called the “United States-Mexico-Canada Agreement,” (USMCA) which was finalized in September.
• While Trump and his top aides boasted of fulfilling a major agenda item, the deal will not be official until it’s approved by legislatures in all three countries. Democrats and a handful of Republicans have denounced the new NAFTA, threatening its chance for passage in Congress.
• Trump has sought to ramp up pressure on Congress to approve the new pact by pledging to cancel NAFTA, forcing holdouts to choose between his deal or none at all.

The concerns:

• Critics say the deal makes few changes from NAFTA without including strong enough labor and environmental protections. Free-trade skeptics Sens. Elizabeth Warren (D-Mass.) and Bernie Sanders (I-Vt.) have vowed to oppose the deal, while Sen. Marco Rubio (R-Fla.) expressed concerns about a lack of agricultural provisions.
• “If it’s not passed he’s going to terminate the existing agreement. So, for those who think they can get a better agreement, this is a very, very good agreement,” Mnuchin responded. He touted updates to agricultural, automobile, intellectual property and financial services provisions.
• “This is a big change and people who say this is just NAFTA 2.0 don’t understand the details,” Mnuchin continued.

Trump backs postal reforms that could raise rates, setting up fight with Amazon: The Trump administration on Tuesday released a report that recommends the U.S. Postal Service (USPS) enact reforms that could raise shipping rates for certain packages, a move that could inflame tensions with Amazon and other online retailers.

The administration’s USPS task force says the changes are needed to bring in more revenue for the cash-strapped Postal Service, which reported $3.9 billion in losses in fiscal 2018. 

The report recommends that the USPS divide its mail and package shipments into essential and commercial service categories. Many e-commerce shipments would fall into the latter category, which would not be protected by existing price caps and thus be subject to rate increases.  

Senior administration officials say the Postal Service would be able to change package rates without an act of Congress. But such a move would likely require reworking negotiated service agreements with Amazon and other companies. Jordan Fabian explains why here.

GOOD TO KNOW

• The IRS said Tuesday that it has seen a “surge” in reports of tax-related email phishing scams, warning taxpayers to be on the lookout so that their information and refunds are not stolen by identity thieves.
• Top executives from three major German automakers met with President Trump on Tuesday at the White House amid the president’s threats to impose new tariffs on European cars.
• Republican and Democratic leaders on Monday agreed to a two-week stopgap spending measure that would put to rest fears of a partial government shutdown later this week.
• News that the General Motors would be shuttering four plants in the U.S. and laying off 15,000 employees has sparked bipartisan anger in Washington and sent the company’s public relations team into crisis mode.
• The Maryland and D.C. attorneys general plan a flurry of subpoenas to prove that President Trump has illegally profited from the presidency.
• Some men on Wall Street have found it easier to avoid female colleagues altogether than try to treat them like fellow human beings, according to Bloomberg.
• Former Federal Deposit Insurance Corporation Chair Sheila Bair says the Fed should hold off on rate hikes. And Federal Reserve Chairman Jerome Powell said Monday that despite solid economic progress, the country still faces a number of challenges, according to the AP.

ODDS AND ENDS

• China’s government won’t be able to respond to Trump’s comments on trade until President Xi Jinping returns from abroad, according to Bloomberg.
• Google CEO Sundar Pichai’s testimony before the House Judiciary Committee has been rescheduled for Dec. 11 as lawmakers pay tribute this week to the late President George H.W. Bush.
• Protesters interrupted JPMorgan CEO Jamie Dimon’s presentation at an investor conference Tuesday twice over the bank’s ties to private prisons.