On The Money — Presented by Wells Fargo — Trump signs first phase of US-China trade deal | Senate to vote Thursday on Canada, Mexico deal | IRS provides relief for those with discharged student loans

Happy Wednesday and welcome back to Phase One of today’s On The Money. I’m Sylvan Lane, and here’s your nightly guide to everything affecting your bills, bank account and bottom line.

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THE BIG DEAL–Trump signs first phase of US-China trade deal: President Trump and Chinese Vice Premier Liu He signed an initial “Phase One” trade agreement Wednesday, freezing a 20-month trade war between Washington and Beijing and opening the door to a more-substantial “Phase Two” deal.

“Today we take a momentous step, one that has never been taken before with China, toward a future of fair and reciprocal trade as we sign Phase One of the historic trade deal between the United States and China,” Trump said.

“Together we are righting the wrongs of the past and delivering a future of economic justice and security for American workers, farmers and families.”

The Hill’s Niv Elis and Brett Samuels break it down here.

What’s inside: 

• The deal will halve 15 percent tariffs on $120 billion of Chinese imports, but leave 25 percent tariffs on an additional $250 billion of imports in place. Agreement on the deal prevented a planned increase in the tariff rate in October and a new round of tariffs in December.
• In the deal, China committed to increasing purchases of U.S. goods and services by $200 billion over two years, including $32 billion of agricultural purchases, 77.7 billion in manufactured goods, $52.4 billion in oil, gas, and coal, and $37.9 billion in services.
• The deal made also makes limited progress on intellectual property, forced technology transfer, agriculture, financial services and currency, but agreed that significant issues remain for future negotiations.

Reactions:

• “Together we are righting the wrongs of the past and delivering a future of economic justice and security for American workers, farmers and families.” — President Trump
• “I believe the stunning lack of substance and long-term reform achieved will harm American workers and industry.” — Senate Minority Leader Charles Schumer (D-N.Y.)
• “It doesn’t achieve the big picture goals of what the administration said they wanted to achieve from the start, but the administration doesn’t claim that it did.”  — Tim Keeler, a former U.S. Trade Representative chief of staff.
• Speaker Nancy Pelosi (D-Calif.) panned Wednesday’s signing as a “showy television ceremony to try and hide the complete absence of concrete progress.”

What comes next: Top White House economic adviser Larry Kudlow told reporters prior to the signing ceremony that the U.S. got about “half” of what it was looking to achieve with China in the Phase One deal. Still, he portrayed the initial pact as “historic.”

“The other half, it’s not that we didn’t get it, it’s just incomplete,” Kudlow said. “The heavy lifting here was getting Phase One. Make no mistake about that. Nothing like this has ever happened before in history.”

ON TAP TOMORROW:

• The Senate votes on a bill to implement President Trump’s U.S.-Mexico-Canada Agreement (USMCA)

LEADING THE DAY

Senate to vote on Trump’s Canada, Mexico trade deal Thursday: The Senate will vote on President Trump’s trade deal with Mexico and Canada on Thursday.

“I’m hopeful that we can get it voted out of the Senate tomorrow and get it to the president’s desk,” Sen. John Cornyn (R-Texas) said during a Senate floor speech on Wednesday.

Sen. Roy Blunt (Mo.), the No. 4 Republican senator, and a Democratic aide confirmed that the Senate will vote on the agreement, known as USMCA, on Thursday morning. 

The vote will let the Senate sign off on the agreement before they descend into a weeks-long impeachment trial.

Senate Majority Leader Mitch McConnell (R-Ky.) had hinted earlier that he expected the deal to be taken up before impeachment, though he didn’t specify when. 

“Before the Senate shifts into the trial, we hope to complete an enormous accomplishment for this administration, and most importantly for American families,” McConnell said from the Senate floor. 

Read more: Sen. Bernie Sanders (I-Vt.) was the only candidate in Tuesday’s Democratic debate to oppose the United States-Mexico-Canada Agreement (USMCA), an update to the North American Free Trade Agreement.

IRS provides tax relief for those with discharged student loans: The IRS and Treasury Department on Wednesday released guidance that will allow more people with discharged student loans to receive tax relief.

Under the guidance, certain taxpayers with discharged student loans will not have to report the amount of the loan as gross income on their federal tax returns. The Hill’s Naomi Jagoda tells us who this is supposed to help, how it works, and the genesis of the guidance. 

GOOD TO KNOW

• U.S. consumer confidence rose in December amid a November hiring surge and strong holiday sales, according to survey results released Wednesday.
• White House National Economic Council Director Larry Kudlow said Wednesday that President Trump will unveil a new tax cut proposal later this year, “perhaps sometime later in the summer.”
• Senate Democrats on Wednesday are vowing to force a third vote aimed at ending President Trump’s national emergency declaration amid reports that the White House is shifting more money from the Pentagon to the border wall.

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ODDS AND ENDS

• Treasury Secretary Steven Mnuchin said that negotiations between the U.S. and China over issues around telecommunications giant Huawei are “ongoing,” stressing the Chinese company will not be used as a “chess piece” in the trade deal being signed Wednesday.
• Op-Ed: Scott Sumner, an emeritus professor of economics at Bentley University, argues why “Trump’s policies are increasing, not decreasing, the trade deficit.