The week begins with continued uncertainty over the global tariffs that President Donald Trump imposed last week. During the Sunday talk shows, some Trump administration officials said that 50 nations have approached the United States Trade Representative to ask to start talks on trade. Cabinet members appeared on the Sunday talk shows expressing support for the Trump trade policy and to caution that there is no quick end to the turmoil, but the President does like to surprise even his own staff sometimes.
The President returns to Washington as the nation looks to Congress for possible action on the President’s tariff policy, and officials will be keeping an eye on markets that were hammered last week over growing fears of a recession precipitated by trade policy.
Several Republicans in Congress have joined Democrats in sponsoring legislation that would give Congress authority to act on tariffs, but with Republicans firmly in control of the flow of legislation in the House and Senate, it is doubtful that the legislation can come to either chamber for a vote.
Today, Trump meets with Israeli Prime Minister Benjamin Netanyahu. Trade and Gaza will be discussed. The two leaders are expected to have a press conference in the afternoon that could give the President to opportunity to make headlines on tariff policy.
Fed and tariffs
Fed Chair Powell spoke last week and indicated that the central bank would take a wait-and-see posture on the impact tariffs may have on the economy. The Fed Chair withheld any statements or action that might help the equity markets as they open this week.
The Fed’s next meeting will be on May 6/7 with the traditional statement release on the 7th at 2:00 and the Chair’s press conference at 2:30. With a month to go before the scheduled event, Chair Powell is sending a clear message that the Fed’s decisions are data driven. There will be a lot to watch in the coming weeks.
Budget Resolution
Early Saturday morning, the Senate approved the revised Senate/House Budget Resolution. The Resolution is a broad outline of the measure Congress hopes to enact under the Budget Reconciliation process that will approve President Trump’s agenda.
The Budget Resolution maintains different approaches that the House and Senate have taken to approve the President’s program. The main point of compromise is that the Senate has relented to both the House and the White House and is supporting the “one big beautiful” bill approach. However, beyond the resolution of the one vs. two bills debate, much remains in dispute.
Both Chambers appear ready to permanently approve the Trump first-term tax cuts that are due to expire at the end of the year. Both Chambers also seem ready to provide more money for defense and immigration policy. However, there appear to be significant differences on how much funding will be slashed to pay for the tax cuts and how to deal with the approaching debt-ceiling crisis that the President wants resolved the Budget Reconciliation Bill.
The original House Budget Resolution increased the debt ceiling by $4 trillion, but Senate leaders and the White House have moved the increase to $5 trillion to make sure that the issue is resolved past the 2026 elections. Republican leaders don’t want a fight over the debt ceiling in the middle of the 2026 Congressional elections, when control of the House and Senate will be up for grabs.
The Senate is looking to cut billions from various government budgets, and the House is aiming at over $1.5 trillion in cuts. While election victories last week helped increase the House Republican count to 220, with 213 and two vacancies on the Democratic side, Speaker Johnson still has a very narrow majority and little room for error.
While President Trump is anxious to avoid a crisis by increasing the debt ceiling, he is faced with fiscal conservatives in the House who have never voted to increase the debt ceiling. To support the President and increase the ceiling without Democratic support, they are insisting on big spending cuts, bigger than many Senate Republicans are willing to support.
Finding a middle ground on spending cuts, increasing the debt ceiling, and approving the Trump tax cuts and program initiatives will require a lot of personal involvement by the President.
