Tariff Whiplash
More of President Donald Trump’s tariffs took effect today, with Bloomberg Economics estimating that the average rate is now 15.2%, well above last year’s 2.3% and the highest level since the World War II era.
If you’re keeping score of winners and losers, put Apple on the happy-face side of the ledger, log Switzerland with the losers, and keep watching your news feed to learn where Brazil and big drug-makers end up. Here’s a quick rundown:
- Today’s the day a wide range of new tariffs take effect — the ones announced last week, ranging from 10% to 40%.
- A special tariff rate — 50% — will apply in three weeks to India as punishment for buying oil from Russia.
- Trump’s proposing a 100% semiconductor tariff that he says wouldn’t apply to companies investing in US operations like Apple.
- The president of the country that exports chocolate and Rolex watches tried for a last-minute tariff deal but went home to Switzerland empty-handed. Swiss politicians now want to cancel an order for US fighter jets.
- As the US imposes tariffs on coffee-growing Brazil, China has started emphasizing the joys of caffeinated beverages. As CNN reported, China authorized coffee imports from 183 Brazilian companies and highlighted that the beverage “has been gaining a place in the daily lives of the Chinese.”
And we’re on standby for a White House announcement about tariffs on imported medicine.
It can take years to build new plants to make good on promises to increase US manufacturing capacity, and Trump has decided to use tariffs to encourage speed. In a CNBC interview, he said there’d be an announcement as soon as this week on plans for a series of pharmaceutical tariffs.
“We’ll be putting an initially small tariff,” he said. “But within one year, one-and-a-half years maximum, it’s going to go to 150%, and then it’s going to go to 250% because we want pharmaceuticals made in our country.” Read More
See also:
- Japan Jolted by US Tariff ‘Stacking’ as Trade Confusion Mounts
- Toyota Braces for $9.5 Billion Hit From US Tariff Turmoil
- Apple Expands 18-Year-Old iPhone Glass Deal to Avoid Tariffs
- What’s a ‘Secondary Tariff’ Like the One Trump Imposed on India?
- Bloomberg’s Tariff Tracker
Trump-Putin-Zelenskiy Meeting
Trump said there’s a “very good chance” he’ll meet soon with Russian President Vladimir Putin and Ukrainian President Volodymyr Zelenskiy, and the Kremlin said there’s an agreement on a venue for a summit with Trump next week.
The developments followed a nearly three-hour meeting between Putin and Trump’s envoy Steve Witkoff over Russia’s war on Ukraine.
Trump has already ordered a doubling of India’s tariffs and threatened to hit other purchasers of Russian oil with secondary tariffs unless Putin agreed to a truce by tomorrow. Read More
See also:
- Trump Floats Possible Tariffs on China for Buying Russia Oil
- India’s State Refiners Pause Russia Oil Buys as US Adds Pressure
BLS Firing Fallout
It’s Thursday, which means the Labor Department will provide its weekly update of unemployment statistics — the latest new and continuing claims for benefits.
The numbers are coming out as the department deals with a reputational risk that’s out of its control: Trump’s decision to fire the head of the Bureau of Labor Statistics.
Rebecca Rainey takes a deep dive into an action no other president has taken and its consequences. The move potentially puts at risk the credibility of the the agency in charge of measuring the health of the US labor market.
“When leaders of other nations have politicized economic data, it has destroyed public trust in all official statistics and in government science,” former BLS commissioners William Beach and Erica L. Groshen as well as economist Paul Schroeder said in a statement. Read More
See Also: Meet the Guy Being Pushed as a MAGA-Friendly BLS Option
Temp for the Fed
Fed Governor Adriana Kugler’s decision to leave her position early is giving Trump an option he can’t resist: naming someone to serve until January.
“We’re probably going to go with the temp and then a permanent,” Trump told reporters. “I think the temp is going to be named, I’d say, over the next two, three days, and then we’re going to go permanent.”
Though the Senate vetting and confirmation process normally takes months, under this leadership Trump’s been pretty much able to get what he wants, which in this case would mean a super fast track.
“It’s a lot of trouble to do it for four months, but it’s a critical four months as well, and Trump really wants the Fed to follow through for some of the rate cuts that have been on the table,” said Derek Tang, an economist at LHMeyer/Monetary Policy Analytics.
He added, though, that it could hurt the Fed’s credibility to have a governor in place who is clearly pushing Trump’s agenda. Read More
Looking Ahead
Lawmakers are planning another attempt to lower drug prices by targeting pharmacy benefit managers, Erin Durkin reports.
They’ll revive a familiar fight with big insurance companies that also run pharmacy benefit managers, the middleman operations between the companies that make medicines and the patients who rely on them.
Past efforts to legislate on that relationship were handled as riders on bigger bills. This time, Rep. Buddy Carter (R-Ga.) is going with a stand-alone bill (H.R. 4317) seeking to delink PBM compensation from drug prices, increase cost transparency, and ban “spread pricing” — where PBMs charge a payer, such as Medicaid, more for a drug than they paid and pocket the difference. Read More
On the $ Front
Negotiations between the House and Senate on fiscal 2026 spending bills may start soon — just don’t expect sunshine and rainbows, Jack Fitzpatrick reports.
Formal outreach came this week in a letter from Senate Minority Leader Chuck Schumer (D-N.Y.) and House Minority Leader Hakeem Jeffries (D-N.Y.) to Speaker Mike Johnson (R-La.) and Senate Majority Leader John Thune (R-S.D.).
Before recess began, senators gave up trying to pass one of their bills because of a fight over relocating FBI headquarters. It also came to halt following the unsuccessful demands from the party out of power for assurances that agreed-upon funding will not be clawed back by partisan rescission proposals.
Still, House Appropriations Chairman Tom Cole (R-Okla.) said he’s hopeful the two chambers can hash out their differences quickly.
Looking at the top-line figures from the Senate, “I think we’re probably higher than they expected, and I think they’re probably lower than we expected,” Cole said. “So we’re a little closer together than I thought we might be.” Read More
Government Spending Spotlight
Just four months after the Army abruptly canceled plans for one of its largest software acquisitions — the $10 billion Modern Software Development contract opportunity — it has a new direction for its information technology.
Bloomberg Government analyst Paul Murphy takes a close look at the Pentagon’s fresh direction: a 10-year contract with Palantir Technologies.
The agreement consolidates 75 of the software company’s prime and subcontracts into a single contract worth as much as $10 billion over the next decade. Read More
Before You Go
Lazy Drivers and Pedestrians Note: The Trump administration has cleared the way for Amazon’s autonomous-vehicle subsidiary to demonstrate self-driving cars that lack traditional driving controls like steering wheels. Read More
More Divided Than Ever: In a new Gallup poll, only 11% of Democrats surveyed said they approve of the job the Supreme Court is doing compared to 75% of Republicans. The previous largest gap was a 61-point margin after the high court’s 2022 decision overturning the constitutional right to abortion, Seth Stern reports. Read More
Planning Ahead: James Walkinshaw, the shoo-in candidate to succeed the late Rep. Gerry Connolly in a district with a Democratic Party tilt, told a BGOV roundtable that he has his eye on the House Oversight Committee. He’d also like to see his party conduct more of its own independent investigations, Ken Tran reports. Read More
New Priority: Dozens of FEMA employees have been reassigned to Immigration and Customs Enforcement to help vet and process new hires for the government’s mass deportation initiative, the Washington Post reports. Current and former FEMA officials told the newspaper that losing that many people, even for a few months, will slow work on ongoing disaster relief, including the historic Texas floods.
Jan. 6: Attack: NPR reports that a trial transcript shows a current Justice Department adviser and former Jan. 6 defendant, Jared Wise, acknowledged that he repeatedly yelled “kill ‘em” as officers were being attacked.
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