| | | | |  | | By Sam Sutton | Presented by Financial Technology Association | Editor’s note: Morning Money is a free version of POLITICO Pro Financial Services morning newsletter, which is delivered to our subscribers each morning at 5:15 a.m. The POLITICO Pro platform combines the news you need with tools you can use to take action on the day’s biggest stories. Act on the news with POLITICO Pro. PROGRAMMING NOTE: We’ll be off for Thanksgiving on Thursday and Friday but back to our normal schedule on Monday, Dec. 2.
| | If his campaign rhetoric didn’t provide you enough indication, all signs point to President-elect Donald Trump following through on plans to use tariffs as a multipurpose battering ram to achieve objectives that typically fall outside the realm of traditional economic policy. Trump’s Monday night missive on Truth Social threatened to hit Canada, China and Mexico — America’s top three trading partners — with punishing new tariffs unless they stem the flow of illegal drugs and migrants into the U.S. The response from Mexico, Canada and China was immediate: — Mexican President Claudia Sheinbaum said her government would retaliate if Trump followed through on his threat to impose a 25 percent tariff on imports from the country, Ari Hawkins reports. — In Ottawa, Prime Minister Justin Trudeau told reporters that he spoke with Trump to convey “how the intense and effective connections between our two countries flow back and forth,” per Mickey Djuric’s report. — “China-US economic and trade cooperation is mutually beneficial in nature. No one will win a trade war or a #tariff war,” Liu Pengyu, a spokesperson for the Chinese embassy in Washington, posted on X. The global uproar over Trump’s broadside stands in direct contrast with how Wall Street investors and industry leaders had been heartened by his recent personnel decisions. The selection of hedge fund executive Scott Bessent to lead Treasury was interpreted by many as a sign that Trump might listen to more moderate voices on economic policy in his second administration. Kevin Hassett — a widely respected economist who was a top adviser in the first term — is now slated to return to the White House as NEC director, Trump announced on Tuesday. That appointment would likely be viewed similarly, given Hassett’s recent commentary to Wall Street analysts. Cantor Fitzgerald CEO Howard Lutnick — Trump’s Commerce pick — has also spoken favorably about how the U.S. economy would benefit from “balanced tariffs” and has described Trump’s threat to impose universal tariffs as a “bargaining chip.” To be sure, there are going to be protectionist voices in Trump’s ear. Trump also named Jamieson Greer — a protege of his longtime trade adviser Robert Lighthizer — as his pick for U.S. Trade Representative. And as Adam Cancryn, your host, Doug Palmer and Ari Hawkins report, Trump’s recent posts are a clear signal to foreign leaders that he “still plans to leverage American markets and foreign trade to try to force countries to give in to his demands on everything from immigration to economic policy.” Put another way, as former Trump administration economist Joseph LaVorgna told MM, Trump views tariffs as “a means to an end, they’re a tool.” “They could be a tool to raise revenue and, in this case, it’s a tool to extract a concession,” he added.“It’s carrot-and-stick.” IT’S WEDNESDAY — Have a happy Thanksgiving and see you on Monday. As always, you can reach Sam at ssutton@politico.com and @samjsutton.
| | | | A message from Financial Technology Association: How do shoppers stay Smarter than Scams this holiday season? They can recognize and avoid the latest trends that fraudsters use to entice shoppers to send money or share personal information. The Financial Technology Association (FTA), Cash App, PayPal, and Venmo are bringing awareness to the most common scams shoppers face during the holiday season – pet deposit, charity, gift card, invoicing, imposter, phishing, and romance scams. Visit smarterthanscams.com to learn how to spot these scams. | | | | | | The first revision to third-quarter GDP will be released at 8:30 a.m. … The Commerce Department will release the Personal Consumption Expenditures Index for October at 10 a.m. Fed file — Minutes from the Federal Reserve’s November meeting suggest that officials support moving “gradually” to lower interest rates, given the economy is solid and concerns about the labor market are fading, according to The FT’s Colby Smith. Fed Chair Jerome Powell earlier this month said central bank policymakers were in no hurry to lower rates further. More on tariffs — Iowa Sen. Chuck Grassley downplayed Trump’s threats of broad tariffs against major U.S. trading partners as a “negotiating tool” while acknowledging he was concerned about the “potential” for another trade war, Meredith Lee Hill reports. — Two people familiar with Trump’s plans told Ben Lefebvre that the president-elect would not exempt crude oil shipments from any new tariffs on Canada or Mexico. “If it really is legitimate, then it is extremely self-destructive for the U.S. to be targeting the largest crude supplier to the country,” Matt Smith, oil analyst at KPLER, said of Trump’s tariff threats against Canada. “There needs to be more details to rule that out. You have to act based on what information is out there.” — Meanwhile, Rep. Debbie Dingell called for Congress to reopen a trade agreement between the U.S. and Mexico before imposing hefty tariffs on imports from Mexico and Canada, Chris Marquette, Sam Ogozalek and Cassandra Dumay report. “I think we need to strengthen USMCA is where we really need to take this on. For starters, we’re not going to let China build plants in Mexico and then bring their cars into the U.S. and say they're made in Mexico. It sounds like this is one of [Trump’s] immediate issues,” the Michigan Democrat said.
| | | | Want to know what's really happening with Congress's make-or-break spending fights? Get daily insider analysis of Hill negotiations, funding deadlines, and breaking developments—free in your inbox with Inside Congress. Subscribe now. | | | | | | | | | MOU — The Trump transition has signed a memorandum of understanding with the Biden White House, clearing the way for more coordination with agency officials as the incoming administration prepares to take power, Alice Miranda Ollstein reports. Critically, the president-elect’s transition will not be signing a separate agreement with the General Services Administration, instead opting to use its own funding and infrastructure to manage sensitive data. — Incoming White House Chief of Staff Susie Wiles has pledged to reveal donors to the transition but, as Alice reports, there’s “no legal mechanism to enforce those promises of transparency.” DOGE — One of the biggest hurdles Elon Musk and Vivek Ramaswamy will face as they attempt to cut $2 trillion from federal budgets are the big-ticket entitlement programs Trump has promised to protect, The WSJ’s Justin Lahart and Rosie Ettenheim report. More on Bessent — The NYT’s Maureen Farrell reports that Bessent’s former colleagues “didn’t see him as a Trump loyalist, but he has been publicly supportive of the president-elect’s plans.” They also noted that managing a bureaucracy like Treasury could be a challenge: “Bessent was known to spend more time diving into financial data, books and periodicals than actively managing or holding meetings with employees. He often blocked out Fridays for reading, the people who worked with him said, and many former colleagues hailed his one-on-one mentorship.” ICYMI – WaPo’s Isaac Arnsdorf and Josh Dawsey report that Boris Epshteyn, a top lawyer to Trump who has extensive sway in the transition, approached people who sought access to Trump — including Bessent — and offered “help if they would give him monthly consulting fees, creating conflicts of interest … Bessent did not agree and told an aide that Epshteyn shook him down.” A top adviser to Trump asked potential administration nominees to give him monthly consulting fees in exchange for advocating for them to Trump, a written review by Trump’s legal team concluded.
| | | | A message from Financial Technology Association:   | | | | | Waters introduces AI transparency bill — House Financial Services ranking member Maxine Waters (D-Calif.) on Tuesday introduced a bill that would direct banking regulators to scrutinize disclosures around AI in financial services, Eleanor Mueller reports. Specifically, the legislation would direct the Fed, SEC and others to study how firms describe the data they use in their AI models — and report to Congress on whether additional regulation is needed. That way, "consumers can recognize how AI is being used to make a specific decision, the quality of such data, and how their data may be used in the process," per a press release shared with MM. First in MM: Hill, Foster press regulators over check fraud — Reps. French Hill (R-Ark.) and Bill Foster (D-Ill.) are pressing banking regulators to do more to address check fraud scams, Jasper reports. In a letter to five banking regulators that was signed by more than two dozen other House members, the lawmakers expressed “significant concern over the alarming rise in physical mail theft-related check fraud across the United States.” “These sophisticated attacks underscore the need for a coordinated, cross-agency response,” the letter said. “While some isolated efforts have been made, individual actions taken by departments are insufficient to combat the growing problem of mail theft-related check fraud.” — Hill also appeared on Rob Blackwell’s “Banking with Interest” where he praised Trump’s selection of Bessent, talked up his “Make Community Banks Great Again” plan and labeled check and debit fraud “one of the biggest concerns out there in America today.”
| | | | Policy Change is Coming: Be prepared, be proactive, be a Pro. POLITICO Pro’s platform has 200,000+ energy regulatory documents from California, New York, and FERC. Leverage our Legislative and Regulatory trackers for comprehensive policy tracking across all industries. Learn more. | | | | | | | | | Uh-oh — A budget quirk could cost the Internal Revenue Service roughly $20 billion in Inflation Reduction Act funds, Benjamin Guggenheim reports. “It really is a budget issue,” said Deputy Treasury Secretary Wally Adeyemo in a Tuesday briefing with reporters. “And our concern right now is that, because of this risk to the IRS and the uncertainty of it, the IRS is going to have to potentially make dramatic decisions about stopping hiring.” For starter homes in Scarsdale — Katy O’Donnell reports: “The government will back mortgages of up to $1.2 million in 2025, the nation’s top housing regulator announced Tuesday. The Federal Housing Finance Agency said the ceiling for most loans on one-unit properties acquired by Fannie Mae and Freddie Mac next year would be $806,500, a 5.2 percent increase from 2024.”
| | | | A message from Financial Technology Association: The Financial Technology Association (FTA), Cash App, PayPal, and Venmo encourage shoppers to be Smarter Than Scams this holiday season by recognizing the latest schemes:
● Scammers often play on emotions with tactics like showing off cute pets, promoting fake charities, or sending flattering messages. Be cautious; these methods are designed to manipulate kindness or goodwill to trick people into sending money.
● Suspicious emails or invoices could be phishing attempts. Scammers will pose as legitimate companies, sending fraudulent invoices or links to get personal information or prompt a fake payment.
● Imposter scams often target people through personal relationships. Scammers pretend to be someone they’re not—often refusing to meet in person but convincing victims to transfer money electronically. Protect yourself by staying informed and verifying identities.
Remember these steps to stay ahead of scams: Pause before you pay. Trust your gut. Only send money to people you know. | | | | | | | Follow us on Twitter | | | | Follow us | | | | |
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