- Global finance ministers come to Washington
- Trade talks proceed with key partners
- Powell and Trump tensions grow
- Congress remains on recess
This week, finance ministers from around the globe will descend on Washington, as the IMF holds its annual spring meeting. The U.S. administration’s tariff policy and move towards a global trade war is likely to be in the spotlight during the sessions. The administration has said that over 70 countries have contacted them expressing interest in trade talks. To date, no final agreements have been announced. With senior finance and trade officials attending the IMF spring meeting, perhaps some deals can be agreed to and announced.
Reportedly Japan, England, South Korea, Australia, Vietnam, India, Mexico, and Canada are first in line in the trade talks. Any of these nations could announce an agreement this week, except for China, which appears to be in its own category. These are the nations that have been pushing for an agreement during President Donald Trump’s 90-day pause for most tariffs. If several can come to an agreement, their plans may become a template for other U.S. trading partners.
In addition to the nations currently in talks with the administration, much of the spotlight is focused on potential U.S.-China talks. Trump has put maximum pressure on Beijing with a 145% tariff on many Chinese imports. The Chinese government has responded with high tariffs of its own and, perhaps most consequential, limits on key minerals such as rare earth that can be exported to the U.S.. With limited U.S. mining of these minerals and the large deposits that China holds, access to rare earth minerals could become a key leverage point as the talks move forward.
As I have written before, Trump and Xi have developed a good personal relationship and direct talks between the two may hold the key to resolving trade differences.
Fed
Last week, tensions escalated between the Federal Reserve Chair Jerome Powell and Trump. In a speech last week before the Economic Club of Chicago, Powell emphasized the central bank’s commitment to fight inflation regardless of the current political environment and tariff policy. “Our obligation is to keep longer-term inflation expectations well-anchored and to make certain that a one-time increase in the price level does not become an ongoing inflation problem.” He made no commitment to lower rates as Trump has demanded.
In response to the hard line taken by Powell, Trump responded that he has been slow to lower rates. When asked about Powell’s statements that his role is protected by law, in response to press questions the president said, “If I want him out, he’ll be out of there real fast, believe me.” Clearly tensions between the White House and the Fed have been elevated in recent weeks. The Fed’s FOMC rate-setting meeting is scheduled in a few weeks on May 6-7 with the much-anticipated meeting announcement and the chair’s post-meeting press conference at 2:30 p.m. on May 7.
Congress out
The House and Senate continue their Easter/Passover break this week. Washington stories often decrease when Congress is out of town. There are many fewer opportunities for Senators and House Members to rush to a microphone and try to make news. The president and cabinet members have more opportunities to lead the news cycles, and they are likely to push the president’s tariff and immigration agendas in the coming week.
