| Happy Tuesday and welcome back to Overnight Finance, where we wish you many happy tax returns. I'm Sylvan Lane, and here's your nightly guide to everything affecting your bills, bank account and bottom line. See something I missed? Let me know at slane@thehill.com or tweet me @SylvanLane. And if you like your newsletter, you can subscribe to it here: http://bit.ly/1NxxW2N. THE BIG DEAL: President Trump's top economic aides spent Tuesday walking back and clarifying the president's comments on trade tensions with China. White House economic adviser Larry Kudlow on Tuesday downplayed the possibility that the U.S. would rejoin the Trans-Pacific Partnership (TPP) trade pact that President Trump pulled out of last year. "On the American side at the moment, it's more of a thought than a policy," Kudlow told reporters. He said there "are discussions and considerations" about re-entering TPP talks, but cautioned "there is nothing at all concrete." Trump stunned Washington last week when he directed Kudlow and the U.S. trade representative to look into rejoining the TPP. The president gave the instructions during a meeting with GOP officials from agricultural states who are worried about a possible trade war with China. Trump later insisted in a tweet following last week's trade meeting that the U.S. would only join the TPP "if the deal were substantially better than the deal offered to Pres. Obama." "We already have BILATERAL deals with six of the eleven nations in TPP, and are working to make a deal with the biggest of those nations, Japan, who has hit us hard on trade for years!" Trump tweeted. Treasury Secretary Steven Mnuchin also tamped down talk of entering the TPP in a CNBC interview this morning. "It is not a question of if we are in or not in. The real question is will we make the progress on trade that we want, and I'm confident that we will," Mnuchin said.
Mnuchin also said Tuesday that Trump's Tuesday tweet targeting China's "unacceptable" currency devaluation was a "warning shot," even though his own staff cleared Beijing of wrongdoing last week.
Mnuchin said Trump's tweet was meant to prevent China and Russia from reverting to efforts to devalue their currencies. He said that while China and Russia had devalued their currencies throughout the Obama administration, they reversed course after Trump's election. "They've used a lot of their reserves to actually support the currency, so, you know, the president wants to make sure they don't change these plans and he's watching it," Mnuchin said. In a (somewhat) surprise, Mnuchin wasn't asked about and did not address whether Trump's tweet was meant to criticize the Federal Reserve. The central bank is aiming to raise historically low interest rates toward a neutral level without upsetting the economy as the recovery from the 2008 recession enters its final stretch. Why it matters: We've seen Trump's deputies walk back, modify or downplay the president's comments plenty of times in the past year and change. Trump's frequent attacks on China, its trade policy and currency manipulation are the core of his economic agenda. But today's events show how important it is to tread carefully before assuming Trump's comments will translate into action.
ON TAP TOMORROW
LEADING THE DAY
Russia sanctions snag pits Kudlow against Haley: U.S. Ambassador to the United Nations Nikki Haley responded Tuesday to claims she "got confused" when she said the U.S. would impose additional sanctions on Russia in the wake of a chemical attack in Syria. "With all due respect, I don't get confused," Haley told Fox News' Dana Perino. The statement was read on-air at Fox News, and quickly spread on Twitter. Top White House economic adviser Larry Kudlow explained Tuesday morning that Haley "got ahead of the curve" in announcing the sanctions. "There might have been some momentary confusion about that," Kudlow told reporters in West Palm Beach, Fla., ahead of President Trump's meeting with Japanese Prime Minister Shinzo Abe. Haley said Sunday that the U.S. planned to impose sanctions on Moscow as early as Monday. But the White House walked back her announcement the next day, saying no decision had been made. Here's more from The Hill's Brett Samuels. Update: Kudlow told The New York Times' Julie Davis that he spoke to Haley and apologized. Supreme Court weighs future of online sales taxes: The Supreme Court on Tuesday appeared to be grasping for answers on how to resolve a dispute on online sales taxes, with no clear indication on how the justices will rule. The court heard oral arguments in the case of South Dakota v. Wayfair, which centers on a South Dakota law that requires certain out-of-state online retailers to collect the state's sales taxes.
South Dakota asked the Supreme Court to uphold its law and to overturn a 1992 ruling, Quill v. North Dakota, that prevents states from compelling businesses to remit their sales taxes unless they have a physical presence in the jurisdiction. Some of the justices seemed sympathetic to South Dakota's argument that their law helps small brick-and-mortar businesses compete with online retailers. But others asked questions that were sympathetic to Wayfair's concerns that if Quill were overturned, thousands of jurisdictions could require online businesses to collect their sales taxes -- potentially even retroactively, creating a compliance nightmare. The Hill's Naomi Jagoda takes us inside the courtroom.
Quarles defends Fed's path on rule rollbacks, oversight: The Federal Reserve's first vice chairman of supervision faced a slew of questions on Tuesday from lawmakers concerned with how he'd reshape the ways it regulates and oversees U.S. banks.
Randal Quarles, the Fed's lead on regulation and oversight, faced lawmakers for the first time since his July confirmation hearing. Quarles told members of the House Financial Services Committee that the central bank was making progress on several efforts to loosen Dodd-Frank Act rules, which were passed in 2010 to stabilize the financial system. "We at the Federal Reserve intend to maintain the core elements of the post-crisis framework that have been put in place to protect the financial system's strength and resiliency, while also seeking ways to enhance its effectiveness," said Quarles in prepared testimony. I've got the highlights from the hearing here. Senate targets CFPB auto-loan guidance: The Senate will vote to repeal controversial regulatory guidance on how auto dealers finance loans to customers meant to curtail discriminatory lending, said Senate Majority Leader Mitch McConnell (R-Ky.). McConnell said Tuesday the Senate will vote on a measure to repeal guidance from the Consumer Financial Protection Bureau (CFPB) targeting auto loan "dealer markups," a practice in which additional interest is added by the dealer to a customer's third-party car loan as compensation to the seller. The measure, filed by GOP Sens. Pat Toomey (Pa.) and Jerry Moran (Kan.), would repeal the CFPB's 2013 guidance warning that the bureau would penalize dealers who issue discriminatory markups. The Senate voted to begin debate on the measure by a 50-47 margin, with Sen. Joe Manchin (D-W.Va.) the only Democrat to support the motion. The repeal only needs a simple majority of votes to pass, and a final vote is scheduled for Wednesday at noon. I take you inside the battle here. MARKET CHECK: Stocks enjoyed another strong day. The Dow Jones Industrial Average rose 213 points (0.87 percent), while the Nasdaq and S&P 500 increased 1.74 percent and 1.07 percent each. GOOD TO KNOW - How broken is the congressional budget process? The chairman of the Senate Budget Committee is floating the idea of getting rid of the Budget panel altogether.
- China's government announced a new tariff on U.S. grain Tuesday morning while simultaneously bowing to U.S. demands on automobile imports, according to CNBC.
- The Internal Revenue Service's electronic system had a partial failure on Tuesday, the last day Americans can file their taxes, and will delay the tax filing deadline for those affected by the malfunction.
- There's a 'tsunami' of companies applying for relief from Trump's steel and aluminum tariffs, according to the Washington Post.
ODDS AND ENDS - Cambridge Analytica sought an initial coin offering before it became the subject of controversy for improperly obtaining the data of 87 million Facebook users.
- Trump's tariffs will make TVs more expensive, according to a new study.
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