Tariffs and Debt Ceiling

With President Donald Trump’s tariff date of April 2 just days away, there is a great deal of attention to what exactly the administration will announce on Tuesday. This week, the administration moved early on auto tariffs making a big pitch to strengthen the U.S. domestic manufacturing market. Leaders around the globe are anxious to find a path forward with the president to lessen the impact of tariffs, and next week, we should get an idea of how much has been accomplished with behind-the-scenes talks and what exactly will be hit with the reciprocal tariffs.

On Capitol Hill, the House and Senate are busy trying to mesh their different approaches to the Budget Resolution designed to open the door for a Budget Reconciliation Bill which will allow Congress to pass the Trump program without the threat of a Senate Democratic filibuster. There are reports that Senate Leader John Thune and House Speaker Mike Johnson are close to an agreement, and that a vote on a way forward may occur as early as next week.

One big issue that needs to be resolved is whether to include an increase in the debt ceiling in the Reconciliation package. Trump has made it clear he wants the debt ceiling issue resolved quickly, and the Reconciliation Bill is likely the best way to accomplish this goal.

In the House, where the Republicans are working with a two-seat majority, it is not certain that the most conservative deficit hawks will support a debt ceiling increase without very large spending cuts, which could have some serious opponents among Senate Republicans. Again, the difference in spending cut levels to date has been a big difference between the House and Senate on Reconciliation and only Trump can bring all the Republican members together. If the leaders want a vote as early as next week, a great deal of behind-the-scenes talks will need to take place over the weekend.

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