On The Money: Trump eyes new auto tariffs in response to GM layoffs | GM’s 2020 threat to Trump | Stocks soar on hopes of slower Fed rate hikes | Mnuchin deletes tweet, points to possible breach

Happy Wednesday and welcome back to 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 floats new auto tariffs in response to GM layoffs: President Trump on Wednesday hinted he may support new tariffs on auto imports as his latest response to General Motors’ decision to shutter U.S. factories and lay off workers.

In a series of tweets, Trump argued that a longstanding 25 percent tariff on light trucks has boosted U.S. auto manufacturers and that the same approach could work for cars.

“If we did that with cars coming in, many more cars would be built here and G.M. would not be closing their plants in Ohio, Michigan & Maryland. Get smart Congress,” Trump wrote.

The president said major auto exporting countries “have taken advantage of the U.S. for decades” and warned “that the president has great power on this issue.”

“Because of the G.M. event, it is being studied now!” he wrote.

The Hill’s Jordan Fabian tells us more here. 

The background: Trump has mulling auto tariffs for a while now and has gradually moved close to actually implementing them. The president has floated slapping a 25 percent tax on foreign cars, which could pose devastating blows to crucial allies Germany and Japan.

As we wrote earlier today, Ohio and Michigan are crucial proving grounds for the president’s economic agenda and political viability. The closures could pose devastating consequences for some of Trump’s most ardent supporters as the mounting costs of the president’s trade agenda threaten to derail the region’s economy.

2020 impact: GM’s moves have also put a new spotlight on Trump’s economic policies, in particular tariffs, which many critics say have hurt the Midwestern economy. I’ve got more on how that dynamic could impact the economy and Trump’s re-election right here.

LEADING THE DAY

Stocks soar after Fed chair hints at fewer rate hikes: U.S. stocks skyrocketed Wednesday afternoon shortly after the Federal Reserve chairman pointed toward an imminent end to interest rate hikes.

The Dow Jones Industrial Average rose more than 300 points while the Nasdaq Composite and S&P 500 index both shot higher about noon, moments after the Fed released remarks from Chairman Jerome Powell he’s set to deliver this afternoon.

Powell told the Economic Club of New York that the Fed is “just below” a neutral interest rate range, hinting that the central bank would issue fewer rate hikes than expected. 

“Interest rates are still low by historical standards, and they remain just below the broad range of estimates of the level that would be neutral for the economy — that is, neither speeding up nor slowing down growth,” Powell said.

The Fed chairman ceded that “things often turn out to be quite different from even the most careful forecasts,” and the bank did not have a “pre-set” policy course. 

I’ve got more here.

Why it matters: Powell’s comments appear to be a significant walk back from when the chairman said in October that the Fed was “a long way” from reaching a neutral range.

Wall Street took Powell’s language to the bank and ended the day with major gains across the three big indexes. The Dow closed over 617 points for the day.

But some Fed watchers and analysts emphasized the broad range Powell referred to.

“Some were cautious to point out that the wide 2.5% to 3% range Powell alluded to could yet accommodate as many as 3 or more rate hikes after the now seemingly certain next quarter point on Dec 19th,” wrote Capital Alpha Partners president Charles Gabriel.

“But the ‘just below’ comment seemed a marked departure from the chairman’s early-October comment that the Board was ‘a long way’ from neutral.”

Mnuchin deletes tweet, suggests account was breached: Treasury Secretary Steven Mnuchin on Wednesday suggested his Twitter account was breached after his account retweeted a post bashing General Motors.

“A retweet was posted last night on @stevenmnuchin1 by someone other than the Secretary or an individual with authorized access to his account,” Mnuchin said Wednesday on Twitter.

“As such, the retweet is being deleted.”

Mnuchin appeared to be referring to a post retweeted by his account that blasted GM for announcing the impending layoff of roughly 15,000 workers and closure of up to four U.S. plants.

The tweet from a pro-Trump account read, “If GM doesn’t want to keep their jobs in the United States, they should pay back the $11.2 billion bailout that was funded by the American taxpayer.”

Mnuchin’s retweet has since been deleted. Treasury is looking into whether the secretary’s Twitter account was breached from outside the department, according to a spokesman for Mnuchin.

GOOD TO KNOW 

• Ford Motor Co. is cutting shifts at factories in Kentucky and Michigan, but doesn’t plan on eliminating any jobs, according to a report that comes as General Motors faces widespread criticism for announcing the closure of multiple U.S. plants.
• Business groups are praising the new tax package from House Ways and Means Committee Chairman Kevin Brady (R-Texas) for including fixes to the 2017 tax-cut law.
• Trade tensions between the U.S. and its allies constitute one of the major near-term risks to the U.S. financial system, and could lead to a “particularly large” drop in markets, according to the Federal Reserve.
• A special congressional committee tasked with proposing changes to reform the budget and appropriations process hit a political roadblock just days before a statutory deadline and after eight months of work.
• Sen. Sherrod Brown (D-Ohio) said Wednesday he believes the government has not done a sufficient job of enforcing antitrust laws, but was noncommittal about breaking up tech giants.

ODDS AND ENDS

• President Trump reportedly decided against reappointing Janet Yellen as Fed chair due in part to her short height.
• A bipartisan pair of senators is asking the White House to look into whether the Chinese telecommunications firm ZTE violated U.S. sanctions by helping Venezuela track and monitor its citizens.