“Anything can happen,” President Donald Trump told an interviewer when asked if he thought the U.S economy could enter a recession in the near term. His remark reflected a series of sobering data points, including a Q1 economic contraction, persistent inflation, consumer confidence at a pandemic-era low, and stock market volatility driven by his administration’s ever-changing trade policies.
Even though Trump has sought to shift the blame for the economic malaise on his predecessor, 67% of Americans believe he bears at least some responsibility for the current situation and 46% say he is the only one responsible. Net public approval of the president’s economic performance stands at -15 percentage points, and his overall net approval is down 7 points since April, driven by disillusionment among young voters, Latinos, and independents. A growing majority of U.S. adults, 59%, including 22% of Republicans, say his policies have worsened the domestic economic conditions. Fifty-four percent are skeptical of Trump’s ability to negotiate favorable trade deals with other countries, cutting to the core of his public image as a businessman and dealmaker.
Trump is urging patience on tariffs and restraint on consumption as U.S. manufacturers and retailers brace for a drop-off in Chinese imports and Americans worry about a higher cost of groceries (87%), product shortages (74%), and retirement savings (69%). Sixty-four percent of adults, including 33% of Republicans, believe their cost of living is on the wrong track. For many, inflationary concerns are exacerbated by uncertainty around federal funding for public health, food assistance, and other programs that the Trump administration and conservative Republicans in Congress are aiming to cut significantly in next year’s federal budget. Against this backdrop, public trust in the Republican Party’s ability to manage the economy has declined and voters’ preference for a Democrat to represent them in Congress (a measure known as a generic congressional ballot) has been trending upward.
As details emerge of the administration’s trade deal with the UK and talks with China begin later this week, we are curious to see if the president’s aggressive messaging of these “wins” helps persuade the roughly 20% of Republicans that oppose many of his economic and trade policies and do not identify with the MAGA movement. We are also watching to see if Democrats, whose public image is yet to recoverfrom their 2024 losses, seize the moment to present an alternative vision for the economy — one that resonates with the disaffected and first-time Trump voters, potentially bringing them into the fold.
This month, various U.S. House committees are working to finalize their respective sections of the federal budget package that Republicans hope will produce enough savings (or find new ways to raise funds) to extend President Trump’s 2017 tax cuts and fund his administration’s other priorities. The White House has just made their job considerably harder by releasing an FY2026 budget request that calls for a historic increase in funding for border security and defense (by 65% and 13% from 2025), combined with a 23% reduction in “discretionary” spending on education, infrastructure, climate, and foreign aid. The Environmental Protection Agency and the National Science Foundation would lose more than half of their funding, hampering their ability to conduct climate and clean energy research. A national program to install electric vehicle chargers along major highways, funded by a 2021 infrastructure law, would end (barring a successful legal challenge). Further savings are expected from shifting federal spending on public assistance onto state governments, impacting economically vulnerable voters many of whom backed Trump in 2024.
Typically, a president’s budget request outlines his spending priorities and political goals, then undergoes significant changes as Congress translates it into legislation. During Trump’s first term, Congress largely sidestepped his requests for bold cuts to approve bipartisan budgets that increased both defense and non-defense spending. The level of cuts the president is proposing for 2026 is unprecedented, amplifying tensions between the White House and congressional Republicans as well as among individual lawmakers who disagree on reducing funding for entitlement programs or eliminating clean energy tax breaks (more on that below). Unlike prior years, Republican leaders fully expect to pass their party-line budget package without any Democratic votes, as long as their own ranks remain united — which could be a challenge in the House, where the Republican Party currently holds a five-seat majority. But a strong sense of loyalty to Trump among Republicans in both chambers makes major challenges to his agenda less likely than during his first term. And if such challenges do arise, the administration has indicated it is prepared to use impoundment — a process in which the president could take over Congress’ spending powers — to withhold and redirect funds that lawmakers approve, potentially pushing the issue into uncharted legal waters.
Republicans in Congress are exploring creative ways to tax electric vehicles as the fate of clean technology tax incentives created by the Inflation Reduction Act hangs in the balance. House lawmakers are looking to create two annual fees, $250 for EVs and $100 for hybrids, to boost highway and infrastructure funding and help offset some of the cost of extending President Trump’s tax cuts in next year’s budget package. A $20 fee on gasoline-powered cars was voted down as debates about raising the fuel tax or overhauling the funding mechanism for the Highway Trust Fund continue. The chances of the fees making it into the final budget bill are unclear, but an appetite for taxing EVs is clearly there: A Republican proposal in the Senate aims to impose a one-time tax of $1,000 or more for each EV sold. (Hybrids would not be affected.) If enacted, the fees — which far exceed what drivers of the least fuel-efficient ICE vehicles pay in gasoline taxes — would add to EV registration fees already in place in at least 39 states ranging from bright-red Texas and Arkansas to blue states like California and New Jersey.
The House is also moving closer to eliminating a $7,500 EV consumer tax credit as Republicans argue whether to preserve other IRA clean energy incentives (such as technology-neutral clean electricity tax credits or nuclear power production tax credits) or repeal them altogether ahead of their 2032 expiration date. The tax breaks have increasingly benefitted Republican congressional districts, but a number of conservatives, including members of the House Freedom Caucus, are keen to fulfill Trump’s pledge to end the “green new scam.” The next couple of weeks should give us a better idea of which tax credits could ultimately get cut as parts of the budget legislation move through House committee votes. The complete package is expected to pass in the late summer or early fall — all but ensuring that most other legislative activity will remain at a standstill until then.
President Donald Trump vowed to end the war in Ukraine within 24 hours of taking office, a timeframe later extended to within the first 100 days of his second term. With that milestone in sight, his goal remains elusive as Russia’s President Vladimir Putin shows no genuine interest in ending the hostilities as long as his forces maintain momentum on the battlefield — despite U.S. recognition of Russian control over Crimea and the removal of sanctions imposed since 2014 being offered as incentives.
Trump now appears to be losing patience both with Putin (“Vladimir, STOP!”) and Ukraine’s President Volodymyr Zelensky (“GET IT DONE”). He may be preparing to shift the full burden of the peace process onto the EU, which would likely have to lift its own Russia sanctions to secure a durable agreement and step up its defense spending to provide credible security guarantees for Ukraine once a ceasefire is reached. It is unclear if the U.S. would continue intelligence sharing or military aid for Kyiv if it were to move on from negotiations, or whether Trump would make good on his threat to impose additional sanctions on Russia and secondary tariffs on its oil exports.
To be sure, the Ukraine peace talks occupy relatively little space in the public mind as Americans increasingly worry about the way Trump is managing the economy, inflation, and tariff policy. His net approval is underwater on all three counts (by 11.4 percentage points, 22.4 points, and 18 points respectively, according to an average of recent polls), as the U.S. stock market is headed for some of its worst performance since 1928.
Fifty-four percent of Americans disapprove of the way Trump is handling foreign policy, and 55% feel that way about his approach to the situation in Ukraine. Fewer than half, 47%, believe he is committed to achieving peace between Ukraine and Russia, even though 69% view the issue as important to U.S. national interests. All in all, between an impasse in Ukraine (and in Gaza), Trump’s “no rush” approach to tariff talks, and turmoil in the U.S. national security and diplomatic ranks, some 59% of voters, including a third of Republicans, believe America is losing credibility on the global stage — potentially opening the door to China to fill the gap.
The latest ceasefire proposal out of Moscow may be the clearest sign yet that Putin’s ultimate goal is long-term political dominion over Ukraine and an end to its NATO aspirations, rather than mere territorial expansion. But instead of helping move the ceasefire process forward, Trump’s “final offer” to Ukraine, predictable reactions from Zelensky and European allies, and a lack of progress on the president’s minerals deal with Kyiv provide further evidence that Trump’s foreign policy agenda may be running out of steam.
“There was no Tariff ‘exception’,” President Trump insisted on Truth Social after news emerged that smartphones, computers, semiconductor chips, and other electronics had been excluded from the China duties announced days earlier. (They remain subject to a 20% duty related to the U.S. fentanyl crisis.)
Those category-specific levies were “just moving to a different Tariff ‘bucket’” by way of a new investigation into the national security implications of importing semiconductors and chipmaking equipment. The probe, which also covers pharmaceuticals and drug ingredients, could result in tariffs under Section 232 of the Trade Expansion Act, the mechanism already in use to justify duties on imported steel, aluminum, and autos. Other Section 232 investigations currently underway are focused on lumber, copper, critical minerals and the products that use them, such as electric vehicles, batteries, and wind turbines.
“I don’t change my mind, but I’m flexible” is a sentiment Trump has voiced more than once when discussing tariffs. He has previously ruled out sector and category-specific carve-outs as something that could be viewed as weakening the thrust of his tariff agenda. Now he seems open to exempting made-in-China car parts from 20% fentanyl-linked duties and 25% duties on steel and aluminum, although a separate 25% levy on all auto components is still due to take effect from May 3. He has floated additional exemptions for autos, semiconductors, and other sectors — essentially opening up his administration’s rulemaking to direct input from industry. Automakers speculate that a permanent reprieve from tariffs could hinge on an expanded definition of “U.S. content” in USMCA-produced cars and parts, but a formal process for taking advantage of a U.S. content deduction could take weeks to develop.
The White House has cited plans by Nvidia, Honda, and others to expand production in the U.S. as evidence that Trump’s policies are having an impact — even though other companies are pausing spending out of concern that tariffs could result in higher input prices. But the Trump administration’s impromptu approach to tariffs and carve-outs can also be understood — especially when viewed from China’s perspective — as a sign of its relatively weak position that is pushing it to grant exemptions to U.S. manufacturers dependent on global (especially Chinese) supply chains while at the same time undermining its own goal of bringing more manufacturing stateside. An eventual de-escalation with Beijing over tariffs, a possibility of which is being broached by Trump officials and Trump himself, would be one way to square that circle.
After weeks of speculation, it’s official: Elon Musk is dialing down his business hours as an informal head of DOGE (Department of Government Efficiency) following a bruising quarter for Tesla and concerns about an impact of President Trump’s China tariffs on the company’s fast-growing energy storage segment. His decision is good news for the automaker, which has faced political backlash in multiple markets that is far from being offset by the brand’s uptick in popularity among Republicans.
For DOGE, a potential impact from Musk’s semi-retirement (he still plans to spend a day or two per week on “government matters”) is harder to gauge. On the one hand, his popularity is on the decline, driven almost entirely by Democrats and independent voters, which negatively affects the quasi-government agency’s public image. In fact, Democratic strategists are looking to position Musk and his work at DOGE as a lightning rod to stoke voters’ anti-Trump sentiment ahead of next year’s midterm elections. From a political standpoint, DOGE could do well seeing less of Musk.
On the other hand, judging from other Musk ventures, most notably Tesla and X, a decline in his day-to-day involvement could lead to operational inefficiencies and weaker performance. Americans like the general idea of DOGE but not necessarily its performance to date, and have mixed feelings about its pace of operations (33% want it to work at its current pace, 28% to slow down, and 33% to stop entirely). Less micromanagement from Musk could allow DOGE to reassess its tactics and potentially deliver the savings its supporters expect.
Conversely, a lack of daily oversight could make it even more prone to errors and inaccuracies and likely to mishandle Americans’ personal data, an area of bipartisan concern. We are curious to see how Musk’s partial retreat from DOGE could affect the agency’s ability to help congressional Republicans identify areas of potential savings as their efforts to craft a party-line package that makes President Trump’s 2017 tax cuts permanent shift into high gear.
A week after President Donald Trump’s “liberation day” tariff announcement, radical uncertainty roiling the global markets and lobbying from Treasury Secretary Scott Bessent, Elon Musk, and Trump allies in the U.S. Senate have convinced the president to put most non-sector-specific duties on a 90-day pause with a 10% baseline global tax and move on to a negotiating table — all the while insisting he is not changing course.
Some 75 trading partners have reportedly reached out to try to soften the blow of the most punitive U.S. tariff regime in a century — but not China, which now faces a levy of 145%, all but ensuring that market turmoil will continue. It is unclear how serious Trump is about negotiating in good faith after consistently framing tariffs as a direct mechanism to revive domestic manufacturing and reverse U.S. trade imbalances. But a proposed exporter tax credit designed to counter the impact of the tariffs on outbound shipments strongly suggests that at least some of the duties are here to stay.
Trump’s inner circle appears confident in his ability to message his way around a threat of widespread price increases. His claim that tariffs will make America “rich again” is resonating with Republicans, 87% of whom believe Trump’s tariffs will help the U.S. economy in the long run, although they are less certain of the duties’ near-term impact (46% say they will help vs. 44% thinking they will hurt).
Among all voters, 39% are hopeful the tariffs would help U.S. manufacturing (vs. 35% saying they would hurt), but an overwhelming majority, 72%, expect short-term economic pain, and 53% expect hardship to last. Net approval of the way Trump is managing the economy is down 11 percentage points from February, pushing his overall job approval rating into a negative territory — including among Black, Latino, younger and independent voters that formed his 2024 winning coalition. These voters oppose the tariffs by a wide margin, spelling an end to Trump’s brief honeymoon and suggesting a possibility of a further erosion in his support if he stays the course.
With the U.S. economy under stress and the odds of a recession relatively high, signs (albeit small) are emerging of dissent within the president’s own party — arguably for the first time since Nikki Haley ended her campaign for the 2024 Republican presidential nomination. Several bipartisan pieces of legislation are seeking to reassert congressional authority on trade and tariffs, including an ability to strike them down with a simple majority vote. None has a chance of passing (and will be vetoed by Trump if it does), but we expect dissenting voices to grow louder once Republican congressional districts experience the full brunt of the U.S. trade restrictions and China’s retaliation.
Since starting his second term, President Trump has moved swiftly to reverse some of his predecessor’s signature climate and energy policies, pausing federal funding for wind and solar projects, revoking offshore wind permits, and pushing to unwind key pollution and climate regulation. Tariffs on critical components and raw materials — including wind turbine parts, lithium-ion batteries, steel and aluminum — are set to increase the cost of power generation, undermining wind and solar’s position as the cheapest, most readily available solution (when paired with storage, grid upgrades, or backup plants) to America’s surging AI data center energy needs.
These policies are already slowing the record-level expansion of wind, solar, and battery storage, which are projected to make up 93% of new power capacity to come online this year. At least $56 billion in clean energy investments have been postponed or called off since last November, and more electric vehicle and battery plants were canceled in the first quarter of 2025 than in the past two years combined, raising questions about the future of America’s homegrown EV supply chain.
The Trump administration is betting that new regulations incentivizing fossil fuel production would deliver a meaningful boost in output despite market dynamics and existing industry conditions suggesting otherwise. In reality, while deregulating methane emissions and fast-tracking natural gas pipeline approvals could help lower costs for fossil fuel companies, tariffs on steel and aluminum would make it more expensive to build LNG terminals and drill oil wells. Tariff-induced shortages of key power grid components are likely to translate into higher costs for data centers needed to maintain an edge in AI over China, curtailing AI industry growth.
From a political standpoint, rolling back climate grants and tax incentives disproportionally impacts states that backed Trump in 2024, creating challenges for Republicans in the states and congressional districts that rely on renewables for energy generation and jobs. Ultimately, rather than usher in a manufacturing renaissance and halve consumer energy costs, as Trump pledged to do in his first 18 months in office, his policies carry risks for energy production across the board while ceding dominance in renewables (and possibly AI) to China — an outcome hardly consistent with the president’s America First agenda.
As of this writing, U.S. tariffs on roughly $450 billion worth of Chinese imports stand at 145%, and a de minimis duty on shipments worth less than $800 is 90%, targeted toward Chinese retailers Temu and Shein. Chinese tariffs on about $145 billion in U.S. exports, dominated by oilseeds and grains, stand at 84%. There is no sign that either side is ready to offer concessions. China watchers indicate that Beijing is actively considering non-tariff retaliation beyond trade blacklists and export controls on critical materials, possibly including suspended cooperation on fentanyl and precursor chemicals, curbs on U.S. soybeans and poultry, further restrictions on exports of rare earths, and targeted actions against Apple, Tesla, or American legal and consulting firms operating in China. The Bank of China has been gradually devaluing the yuan to offset the impact of the tariffs, but this tactic has its own risks and could invite additional U.S. penalties for alleged currency manipulation.
The current level of tariffs is much higher than the 60% President Trump promised on the campaign trail, and could lead to a breakdown in bilateral trade unless an off-ramp of some sort is negotiated in the near future. (A possible timeframe? 75 days until a new deadline for ByteDance to sell TikTok’s U.S. operations.) The Trump administration has additional levers it could use against Beijing, including targeting Chinese-origin goods transshipped through third countries, or goods produced by Chinese-owned companies in those countries, via trade deals it is negotiating with Mexico, Vietnam, and others. The Chinese side’s most effective lever could be the widespread hardship from disrupted agricultural shipments, component shortages, and increased costs of inputs and finished goods that could eventually translate into palpable political pressure on Republican Party leaders. But in the meantime, a tough posture against China coupled with a reprieve (albeit temporary) on the rest of the world puts Trump in a strong position to make a deal once the market pressure becomes unbearable — and claim that as a win.
A week before what President Donald Trump has heralded as a “liberation day” for the American economy, a precise scope of his administration’s anticipated April 2 wave of tariffs remains a mystery. As of this writing, the tariffs are shaping up to be more targeted than Trump’s earlier rhetoric would suggest, potentially impacting about 15% of countries that have persistent trade imbalances with the United States, including Canada, China, Germany, the European Union, Switzerland, South Korea, Japan, Mexico, and Vietnam. The Trump administration has considered grouping trading partners into three tiers of high, medium and low tariffs, but is now leaning toward giving each nation an individualized tariff rate that takes into account any existing levies on U.S. goods as well as value-added taxes charged within its borders.
A 25% tariff on fully assembled vehicles is coming into effect April 3, taxing cars from Mexico and Canada based on the amount of their non-U.S. content and adding parts like engines and transmissions by May 3. (The UAW welcomed the tariff but dealers expect it to raise the average price of a car by $3,000 to $10,000, hitting Volvo, VW, and Hyundai-Kia the hardest.) Additional sector-specific duties could be imposed in the near future.
So far, Trump is ruling out industry exemptions (ostensibly because he thinks too many were granted in his first administration), while allowing himself “flexibility” on other aspects of his reciprocal tariff plan. Importers are responding by becoming USMCA-certified or accelerating shipments to the U.S. — causing a significant increase in shipments of autos and components from the EU (by 22%) and Japan (by 14%) compared with a year ago.
At the same time, the president has said he might soften reciprocal tariffs for specific countries, and some, like Switzerland, India, and the UK, are reportedly lobbying for a reprieve. One country unlikely to get much of a break is China, which is a top target for Trump’s 25% “secondary tariff” on countries that buy oil from Venezuela, also due April 2. For China, this could mean a combined tariff rate of 45% on top of duties imposed by the two prior U.S. administrations, plus any additional levies that could arise from an investigation into its compliance with a 2020 “phase one” trade deal, the results of which are expected by April 1.
Barring major changes, Trump’s tariff plans are slated to impact a significant portion of U.S. imports, raising consumer prices and compounding economic uncertainty. But when it comes to his stated goal of expanding domestic manufacturing, Trump’s approach is having an impact: Since November 2024, companies like Apple, Nvidia, and Hyundai have pledged at least $1 trillion combined to build manufacturing facilities across the U.S. We are curious to see how the “liberation day” plays out in practice — and how its aftermath impacts already declining public approval of Trump’s economic policies.
Democratic Party leaders in Congress and state governments are grappling with an imperative to develop a coherent counterstrategy to President Trump’s brand of authoritarian populism and strengthen the party’s political standing ahead of the 2026 midterm elections. At 27% favorable, public perceptions of the party stand at an all-time low, with the decline driven largely by independents and historically left-leaning groups among which Trump made significant gains in 2024, including Black, Latino, younger voters and immigrants. Voters in competitive House districts are skeptical that congressional Democrats have the right priorities or are looking out for the working people. Rank-and-file Democrats show profound disillusionment with the party’s direction and tactics. A plurality, 45%, want it to become more ideologically moderate, and a majority, 57%, want Democratic leaders in Congress to do more to oppose the Trump agenda, even at a cost of advancing their own legislative priorities.
To be sure, partisan soul-searching is to be expected following an electoral defeat. Prominent Democrats like Gov. Gavin Newsom of California and Gov. JB Pritzker of Illinois are testing out contrasting visions for the party’s future direction — a shift to the right on economic and cultural issues to appeal to moderates and disenchanted Trump voters, or a doubling-down on progressive messaging to energize the Democratic base. Congressional Democrats in vulnerable seats are charting their own course on the economy and trade, supporting some of Trump’s tariffs and calling for a Democratic pro-tariff agenda to win back working-class voters. In a sign that their approach has merit, Democratic incumbents in battleground districts are more popular with their electorates than their Republican counterparts are with theirs.
Overall, voters are split on whether they want Democrats or Republicans in control of Congress (48% vs. 47%), indicating a competitive electoral landscape ahead of the midterms. In this environment, Democrats’ ability to offer a compelling alternative to Trump’s policies — perhaps by addressing cost of living concerns or proposing a muscular yet balanced approach to border security — will be crucial to winning back the voters they lost last year.
Clean energy tax credits created by the Inflation Reduction Act remain a point of contention as Republicans in the House and Senate work to put together a budget resolution to advance President Trump’s policy agenda. Among House Republicans, there is a mounting push to preserve some of the incentives, including 45X (advanced manufacturing of clean energy components), 45Y (clean electricity production), 45Q (carbon sequestration), and 45Z (clean transportation fuels). Lawmakers argue that the tax breaks are critical to boosting manufacturing and energy production in their districts, meeting the growing AI power demand, and achieving Trump’s goal of “energy dominance.”
Their claims are borne out by data, which suggests that a wholesale repeal of the IRA could cut short an emerging battery and EV manufacturing boom unfolding mostly in states that voted for Trump in 2024, cause job losses of nearly 790,000 in 2030, and reduce America’s GDP by more than $160 billion. On a separate note, rolling back IRA tax incentives for EV purchases (30D), which remain unpopular with Republicans, is projected to slow America’s EV transition, leading to a 40% decrease in new light-duty EVs sold by 2030, to a total of 4.2 million compared with 7 million projected under current policies.
At this time, a full IRA repeal appears unlikely. Speaker Mike Johnson, a Republican whose district is home to several IRA-funded clean energy projects, has characterized his IRA strategy as being “between a scalpel and a sledgehammer.” The number of House lawmakers voicing support for the tax breaks is far larger than the narrow Republican majority in the chamber. But it is unclear how many of them would be willing to defend the incentives against Trump’s push to dismantle the law and their leaders’ efforts to use its clean energy tax provisions, worth an estimated $870 billion in revenue, to fund a permanent extension to the 2017 Trump tax cuts. Compounding the uncertainty for companies dependent on the IRA funds for their growth, key staff reductions at the Treasury and Energy departments could create significant delays and inefficiencies in implementing those tax incentives that remain in place, potentially deterring investors from committing to new clean energy projects.
“There’ll be a little disturbance,” President Donald Trump cautioned during a recent high-profile speech in Congress when discussing potential near-term impact of his America First trade policy. Indeed, his decisions to announce tariffs on allies and adversaries alike one day and pull them back the next are shaking up the stock market (and erasing any gains since November 2024), muddling the U.S. economic outlook, and pushing down consumer confidence to an eight-month low.
Most Americans now expect inflation to rise and their finances to deteriorate, a far cry from the president’s campaign promise to “make America affordable again.” Globally, intentional uncertainty lies at the core of Trump’s approach to Ukraine, the EU, NATO, Israel, and China — while arguably leaving an opening for Beijing to position itself as guarantor of stability.
Earlier this week, Trump did not rule out a recession as he spoke about a “period of transition” while his aggressive economic policies were coming into effect. Opinion polls indicate a downward trend in public support for his economic performance: Most voters, 56%, disapprove of his handling of the economy, more than at any point during his first term in office. At 31%, Americans are 5 percentage points less likely to say the economy is on the right track than they were in January. At 22%, they are 4 points less likely to say the same about their cost of living.
Among Republican voters, concerns about the cost of living are 6 points higher than they were two months ago, although their support for other Trump policies has grown. Overall, the economy and inflation remain top-of-mind issues for voters (at 82% and 80%), but many believe Trump does not sufficiently prioritize them — which could offer a clue to a 6-point decline in his net job approval since inauguration, which currently stands at 0.2%.
With new tariff announcements coming at a regular clip, industries that broadly support Trump’s tariffs — including steel, aluminum, and lumber — are raising concerns about retaliation from trading partners and potential disruption of global supply chains for products like auto components and construction materials. Detroit’s big three automakers have secured a one-month exemption for USMCA-compliant vehicles and parts, but steel tariffs alone could add up to $800 to the price of mainstream models and 15% to the production cost of some electric vehicle components. Inflationary pressures could in turn lead to reduced consumer demand and slower economic growth — which, coupled with a softening job market, could make a Trump recession a reality.
Recent Trump administration policy and personnel moves are doing little to dispel uncertainty about President Trump’s near-term objectives in China. On the one hand, the administration is ratcheting up pressure with another wave of 10% tariffs (on top of an earlier 10% and other duties imposed by the two prior administrations), investment rules, export restrictions, and port fees.
Trump’s investment policy memorandum aims to block China-affiliated investments in strategic American sectors like critical technology, infrastructure, and minerals, using CFIUS (which scrutinizes foreign investments in the U.S. for national security risks) to enforce these restrictions. The memo outlines provisions for new or expanded curbs on U.S. investment in sensitive technologies in China, including semiconductors, AI, and advanced manufacturing, while fast-tracking investments into the U.S. from America’s allies to get them to reduce their China exposure. Importantly, many of these measures may require an act of Congress to effect durable change — and legislation to curb American investment into sensitive sectors of China’s economy has stalled for the past year. But a review of the U.S. export control system, due April 1, could lead to a further tightening of the restrictions that are already in place.
On the other hand, there are indications that both Washington and Beijing are leaving the door open for talks, possibly in the form of a summit in June between Trump and Chinese leader Xi Jinping. Trump is reportedly looking to revive and expand his 2020 trade agreement with Xi, aiming for a deal that goes beyond adjusting trade dynamics to include some Chinese investment in the U.S. (particularly in clean tech sectors like solar, EVs, and batteries), nuclear security, and cooperation on ending the war in Ukraine. Some aspects of this plan, like strengthening nuclear security, are uncontroversial, but others, like Chinese investments in U.S. manufacturing, are politically divisive and have vocal opponents within Trump’s cabinet, the White House, Congress, and Republican-led state governments. To be sure, the sides first need to improve coordination on U.S. priorities such as fentanyl before preparations for trade talks could begin in earnest. In the meantime, we expect some softening in Trump’s China rhetoric if the Xi summit planning goes ahead — and further tightening of the screws if it does not.
After more than three years of war, the American political establishment’s response to a 30-day, unconditional ceasefire proposed by the Trump team and accepted by Kyiv has been that of “cautious optimism” tempered by doubts about Russia’s willingness to negotiate in good faith. Despite President Trump’s threats of expanded sanctions, his leverage over President Putin is limited. It is unclear if any of the escalatory measures that may be up his sleeve (like banning Russian energy transactions or “arming Ukraine to the teeth”) could persuade Putin to back off his demands that Ukraine give up its territorial integrity and hopes of a NATO membership in exchange for peace. The Russian leader’s notional support for Trump’s “great and correct” ceasefire idea is just the first step in a process that is expected to play out over the coming days, weeks, and possibly months.
Polls conducted since Trump’s Feb. 28 televised confrontation with Ukraine’s President Zelensky show that 44% of Americans disapprove of the way he is handling the war in Ukraine while 41% approve, including 73% of Republican voters. The share of Republicans that sympathize with Ukraine is at 41%, down 18 percentage points from January. (Another 44% sympathize with neither Ukraine nor Russia, and sympathy for Russia is unchanged at 5%.) They are also more likely than not to say the U.S. should push Ukraine to give up some of its territory if that means ending the war, 37% to 34%, marking a notable shift from December when Republicans were more likely to say Ukraine should hold its ground, 39% to 28%. (By contrast, voters overall are as likely to prefer not to push Ukraine to let Russia keep its territory as they were in December, 48% vs. 47%.)
More generally, though, between the nascent peace process in Ukraine and a fragile one in Gaza, polling data points to growing doubts about Trump’s aggressive approach, with net approval of his foreign policy performance down 15 points since January among all voters and down 14 points among Republicans. As the ceasefire talks continue, we will be watching for significant policy developments in Washington, Kyiv, and Moscow — but will not be holding our breath for a quick resolution.
A tense exchange between President Donald Trump and Ukrainian leader Volodymyr Zelensky, and other meetings and statements that preceded it in recent weeks, underscore Trump’s increasing willingness to question, and reject, the existing transatlantic alliance structure in favor of normalization with Russia — evidently deemed more consistent with his administration’s America First foreign policy doctrine.
Trump’s harsh words to Zelensky point to a shift in U.S. policy toward Ukraine from unconditional support to a more transactional approach, making it clear that the speed with which the U.S. extricates itself from its commitments to Kyiv outweighs both the terms of that exit and any damage America’s relationship with its historic allies may sustain as a result. Taken together, Trump’s repeated refusals to offer security guarantees to Ukraine, or a clear pledge of support to NATO allies against a potential Russian threat, suggest a diminished U.S. commitment to European security — leaving European allies to take greater responsibility for their own defense as the Trump administration’s focus shifts to China (aside from issue-specific engagements in the Middle East that could be leveraged to net the U.S. president a Nobel Peace Prize).
For all his promises to end the war in Ukraine quickly and decisively, Trump has offered little clarity on how he would pursue either a ceasefire or an enduring peace agreement, and expressed limited optimism about his chances: “If it doesn’t happen quickly, it may not happen at all.” Following his contentious exchange with Zelensky, further military aid to Kyiv is in serious doubt — but a proposed deal to establish a “reconstruction investment fund,” to be jointly managed by the U.S. and Ukrainian governments, could still be on the table.
More recent versions of the draft agreement have been more favorable to Ukraine, dropping an initial demand of a $500 billion share of its critical minerals and incorporating provisions that would reinforce a sanctions regime against Russia. (Notably, the final draft reportedly included language seeking to prevent Ukraine’s adversaries from benefiting from its reconstruction — potentially including China in addition to Russia.) Regardless, serious questions remain whether a meaningful natural resources deal could be possible without U.S. security guarantees to Ukraine, although Trump clearly thinks European allies should be responsible for Ukraine’s security, and views American companies that would be on the ground exploring for minerals as a security guarantee in itself.
Among many controversial decisions President Trump has made since returning to office, putting Elon Musk in charge of reshaping the U.S. government to suit his political agenda has been one of the most contentious. One month in, Musk’s push to cut costs by pruning federal programs and entire agencies is beginning to raise questions about the government’s future ability to fulfill Trump’s policy objectives and deliver services to a significant portion of the president’s electorate that is reliant on them.
Even though the idea of having a Department of Government Efficiency (DOGE) is broadly popular, Trump’s radical downsizing of the federal bureaucracy has so far resulted in roughly one-third of all legal challengesfiled against his administration. Perhaps more importantly, there has been growing pushback against DOGE, and Musk as its public face, from top administration officials, including Trump loyalists, and conservative lawmakers, including those in safe Republican districts.
Americans generally prefer a smaller government with fewer services, but they are skeptical of Trump’s specific moves to reduce its size and scope. A majority, 53%, disapprove of his attempts to shut down entire federal agencies, and a plurality, 48%, say he has gone too far in changing the way the government works. Fifty-five percent think that Musk, who has no formal role at DOGE, holds too much decision-making power, and 54% are critical of the prominent part he plays in the Trump administration.
Crucially, only 31% of voters say government reform should be Trump’s top priority — while 62%, including 47% of Republicans, believe he has not done enough to reduce inflation, which remains a major concern. This discrepancy suggests a mismatch in priorities that could put pressure on Republican lawmakers in districts that are highly dependent on federal jobs, services, or benefits, potentially hampering the implementation of Trump’s larger agenda in a closely divided Congress.
At this point, opposition to Trump comes mainly from Democrats. Just 16% of Republicans oppose shutting down government agencies, and 12% say Republicans in Congress are doing too much to back the president’s agenda. Greater risks to Trump’s party could come from potential cuts to federal health spending to pay for the extension of his first-term tax cuts, or a surge in inflation that 53% of Republicans expect to result from his tariffs. Time will tell whether any provisions in Trump’s package of tax and spending cuts, which is currently taking shape — and which aims to permanently reduce the U.S. government’s size and reach — can reverse a steady erosion in the president’s net approval rating since his inauguration, or ease a growing sense of pessimism and fear across the political spectrum about what the rest of his term might bring.
As congressional Republicans search for savings to fund the extension of President Trump’s 2017 tax cuts that would otherwise expire in December, some clean energy tax credits under the Inflation Reduction Act (IRA) appear safer than others. The U.S. Senate budget resolution, passed February 20, includes instructions for unspecified spending cuts but does not delve into tax issues. The U.S. House resolution, approved February 25, leaves IRA tax credits in place, ostensibly because a lion’s share of IRA spending on clean energy manufacturing has gone to Republican congressional districts. But once House Republicans start looking for specific programs to offset as much as $2 trillion in proposed spending cuts, or later, once the House and Senate Republicans begin work on a joint budget reconciliation package, electric vehicle consumer tax credits are virtually certain to come into play — although any savings from their elimination will do very little to help avert potential cuts to public health programs like Medicaid.
In the meantime, two Republican bills in the Senate, one of them cosponsored by Senate Majority Leader John Thune, seek to end the consumer tax credit for purchased and leased EVs, eliminate federal incentives for EV charging infrastructure, and impose a new $1,000 tax on EVs to pay for road repairs. In the House, there is a similar proposal from Budget Committee Chair Jodey Arrington, who led the development and passage of the House budget resolution and will be instrumental in ensuring that President Trump’s fiscal agenda is advanced through the reconciliation process. While these are messaging bills unlikely to pass in their current form, they make it clear that the pressure on EV tax credits is on. Based on the current timeline, the budget reconciliation package is not expected to be ready until May at the earliest, and we will be watching developments in this space.
