China Weekend Talks, Big Week for Big Bill

This weekend, Treasury Secretary Scott Bessent heads to Switzerland along with U.S. Trade Representative Jamieson Greer for talks with Chinese Vice Premier He Lifeng, a member of the Chinese Communist Party’s ruling Politburo and China’s top economic official. In statements over the last two days, President Trump has expressed a willingness to lower tariffs on Chinese imports, but obviously that action needs to be part of the broader discussions that may get jump-started over the weekend with the bilateral talks.

This past week also saw a major Oval Office development on trade, when the president announced initial progress towards a broad trade agreement with the United Kingdom.  From British cars to U.S. agricultural products, there appears to be a framework for a bilateral agreement.  The President and his team seem ready to address issues that have been raised by his tariff policy, and the weekend talks with China are obviously key.

House Big Bill

The House leadership has announced that three key committees will meet next week to start work on the Budget Reconciliation Bill that has taken on the President Trump label of a “Big Beautiful Bill.”  With a paper-thin majority, Republicans can only lose three votes when there is a partisan divide.  There appear to be at least two issues that threaten Republican unity: the deductibility of state and local taxes (SALT) and how much to reduce Medicaid benefits.  Representatives from high-tax states such as NY, CA, and NJ have more than enough Republican House members to stop the bill if SALT relief is not provided.  On the issue of Medicaid benefits, there is a substantial intraparty split with some more moderate Republican Representatives opposing the most dramatic Medicaid cuts, while the most conservative Republicans, led by the Freedom Caucus, are demanding deep cuts.  In the end, the House leadership will likely need help from President Trump to bridge the divides.

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