- Trump places tariffs on Canada and China, while Mexico’s are paused for a month
- Tariffs focused on drugs and migration, and risk higher prices and reprisals as talks begin
- Congress works on strategy for CR, budget, and debt ceiling
- Israeli and Japanese PMs visits DC
This past weekend, President Donald Trump turned his campaign promises to place tariffs on Canada, Mexico, and China into policy. The White House announced that via executive orders, the president will use existing legal authority to place a 25% tariff on many items coming into the U.S. from Canada and Mexico and a 10% tariff on imports from China. According to press reports, the tariffs will be effective on Tuesday and are focused on policies related to illegal drugs and migration.
On Monday morning, Mexico’s President Claudia Sheinbaum announced that Mexico’s tariffs would be paused for a month. She wrote in a tweet that she would reinforce the northern border with 10,000 members of the National Guard to prevent drug trafficking from Mexico to the United States, particularly fentanyl.
In his first week in office, Trump has used the threat of a tariff on Columbia to get the government to reverse policy and receive undocumented immigrants who had been arrested in the U.S. The tariff, while threatened, was never implemented.
Before he was the president, Trump wrote a best-selling book on his approach to decision making, titled the “Art of the Deal”. The president believes that negotiations require real threats, and that can lead to good policy.
Some countries have threatened retaliatory action, and the executive order raises the possibility of higher tariffs if the nations retaliate. All three nations represent the largest U.S. trading partners with imports that range from food and energy to clothing and electronics. The coming days will be a test of the new administration’s negotiating posture and implementing a new foreign policy designed to achieve the goals of a tougher image of America and encourage domestic production.
Budget and Congress
Last week, House Republicans met in Florida looking to develop a strategy to deal with the complex series of legislative initiatives they need to deal with in the coming months. The first deadline is March 14, when the current Continuing Resolution (CR) expires and needs to be extended to avoid a government shutdown. By June, the Congress is likely going to have to increase the debt ceiling ─ always a tough vote for many Republicans.
The question being asked in Washington is what other issues can ride along with the CR, and if the Republican Congress will need Democratic help to get the CR and an increase in the debt ceiling over the finish line.
Overhanging the talks is the need for Republicans in Congress to deal with President Trump’s broad agenda that includes renewing his first-term tax plan, funding for border protection and arresting illegal immigrants, energy development, and money to strengthen the U.S. military.
This package is unlikely to get any Democratic support, and Republicans are looking at the Budget Reconciliation process to get the Trump agenda passed. Reconciliation is one of the few Congressional bills that has a pathway which avoids a Senate filibuster.
With only 53 Senate Republicans, the president’s party is well short of the 60 votes that would be required to stop a Democratic filibuster. Additionally, for February and March, the Republican majority in the House will be down to one seat. With two House Republicans joining the administration and the Florida vacancy created by the resignation of Matt Gaetz, the majority has shrunk from 220 Members to 217, while Democrats hold 215 seats. Under the constitution, House vacancies can only be filled via elections, so the Republican majority will remain narrow at least early April.
Israel and Japan PM visits
This will be a week of foreign policy in focus as Israeli Prime Minister Benjamin Netanyahu comes to Washington, D.C., on Tuesday and on Friday, Japanese Prime Minister Shigeru Ishiba will meet with Trump. Obviously, the Netanyahu meetings will focus on the Middle East and current ceasefire with Hamas. For the Japanese prime minister, the focus is likely to be on the tariff actions of this past weekend. The prime minister wants to shore up the special relationship between the U.S. and Japan.
The Japanese government has made a point of emphasizing the large investments it has made in the US. The two leaders may also discuss the proposed acquisition of U.S. Steel by Japanese steelmaker Nippon. Before leaving office, Biden blocked the deal but left the official denial of the transaction open for 90 days, and Nippon and U.S. Steel have gone to court trying to reverse the decision. PM Ishiba is likely to raise the issue with President Trump.
