In just the past month, three major developments have tested the cohesion of the MAGA movement and its loyalty to President Trump. First, Trump authorized U.S. support for Israeli airstrikes on Iran’s nuclear facilities, dashing the hopes of MAGA’s isolationist wing that had expected him to avoid new military entanglements in the Middle East. (Since returning to office, Trump has ordered nearly as many airstrikes as President Biden did in four years, if operations against Yemen’s Houthi forces are taken into account.)
Next, Trump approved new military aid for Ukraine to be routed through NATO allies, a major shift in policy toward a conflict that MAGA critics have long warned could spark World War III. Finally, the Trump administration appeared to retreat from an earlier promise to release all records related to convicted sex offender Jeffrey Epstein, prompting cries of “coverup” from across the MAGAverse. Initially, Trump’s handling of the Epstein issue drew sharp criticism from his base. But after The Wall Street Journal published an exposé detailing the lengthy association between the two men, Trump’s supporters quickly rallied behind him, dismissing the report as yet another hit piece from the mainstream media.
While Trump’s recent moves have raised concerns (including among MAGA-leaning groups like younger men, a key part of his 2024 coalition), there is little evidence that these issues are creating a lasting rift between the president and his supporters. His net approval on foreign policy stands at -20 percentage points, with 60% of Americans critical of his approach, but net support among Republicans has actually risen five points since March. Similarly, although 48% of the public are seriously dissatisfied with Trump’s handling of the Epstein records, just 36%, including 11% of Republicans, say the issue weighs heavily in their view of his presidency. By contrast, 61% cite immigration and 56% name inflation as issues that matter “a lot” in judging Trump’s performance; among Republicans, those figures are 51% and 43%, respectively.
For now, the Epstein saga remains a political inconvenience rather than a serious threat, distracting from the administration’s efforts to promote its landmark tax and spending package while giving Democrats an opening to portray Trump as protective of elite interests. Barring new revelations, it is unlikely to erode his support within the MAGA movement or emerge as a defining issue in the 2026 midterms, where kitchen-table concerns, particularly the cost of living, are again expected to drive voter behavior, just as they did in 2024.
Six months into President Trump’s second term, the economic fallout many economists feared from his tariff-heavy trade agenda is yet to materialize. Tariff revenues surged to record highs in June, helping produce the first monthly budget surplus since 2017 — a fiscal bright spot that belies the mounting deficit pressures unleashed by Trump’s sweeping tax and spending package. Major U.S. trading partners, except for China and Canada, have so far refrained from retaliating. (The EU is weighing a wide-ranging response to a proposed 30% U.S. import tax, though it could take months to implement in full.) Global brands appear to be absorbing some of the costs, softening the impact on American consumers and helping contain inflation, even as prices on staples like coffee climb.
Trump has touted a wave of manufacturing-related announcements as evidence of economic momentum, yet the labor market picture is more complicated, in part due to his administration’s aggressive immigration enforcement agenda. Market analysts argue that Trump’s tariff policy runs counter to his industrial ambitions: If the goal is a manufacturing revival and AI dominance, raising costs on steel, aluminum, and other materials critical to building factories and data centers is an unlikely place to start.
Amid persistent economic uncertainty, public sentiment is measurably turning against the president’s economic policy. During Trump’s first term, confidence in his economic stewardship rarely dipped into negative territory. Today, his net approval on the issue stands at -12.3 percentage points, according to an average of recent polls. Three-in-five Americans disapprove of his tariff policy, and 57%, including two-thirds of independents, believe he lacks a clear plan on trade. Majorities say the tariffs are hurting rather than helping the economy, both in the short term (65%) and the long term (52%). Even among Trump’s own 2024 voters, only half believe that tariffs on China will benefit U.S. companies — a key premise of the administration’s protectionist approach — while 25% expect them to cause damage.
Importantly, most voters think the president is focused on the wrong priorities: 70% believe he is not doing enough to reduce prices, and 64% disapprove of his handling of inflation, his worst rating on that issue to date. Approval among Republicans is also eroding, with 75% now saying he has the right priorities, down from 87% in March. Taken together, the data point to a widening disconnect between Trump’s trade posture and public opinion — underscoring a growing demand for a shift in focus, away from rectifying trade deficits and achieving a manufacturing boom and toward the everyday economics of affordability.
President Trump is increasingly expected to delay the August 12 deadline to reach a trade deal with China (at which point U.S. tariffs on Chinese imports could snap back to 145%, last seen in April), a move that reflects both tactical flexibility and uncertainty about his administration’s long-term strategy. While early second-term rhetoric pointed to a broad structural overhaul of U.S.-China trade via blanket tariffs linked to currency policy and national security considerations (known in conservative circles as the Mar-a-Lago accord), recent signals suggest Trump may be reverting, at least partially, to a more transactional approach resembling his first term. Reports indicate that he is now prioritizing quick wins with Beijing, such as loosening export restrictions on less advanced AI chips, instead of addressing deeper trade imbalances or technology decoupling. This shift appears motivated by a desire to secure a summit with Chinese President Xi Jinping later this year (possibly ahead or on the sidelines of an APEC meeting in South Korea in late October) and avoid escalation ahead of the 2026 midterm election season.
Trump’s changing approach to China (complete with praise for its efforts to tighten control on fentanyl, an issue he used to justify his initial 20% tariff on Chinese goods) appears to be out of sync with some of his administration’s recent actions targeting Chinese drones, graphite, undersea telecommunications cables, and purchases of American farmland. In Congress, several proposals, some of them bipartisan, seek to crack down on the smuggling of AI chips and other advanced U.S. technology to China and other adversaries. This is taking place as China’s exports to the U.S. are beating expectations as businesses are rushing to capitalize on the tariff truce (which could now be extended for another three months, just like the TikTok sale deadline). Elsewhere, Beijing is moving aggressively to fill the vacuum left by the Trump administration’s budget cuts to foreign aid and soft power programs like Voice of America, undercutting the U.S.’s influence across much of the Global South. All in all, whether Trump is biding time for a broader realignment or settling into a Phase-One-style reset remains unclear, but for now, the U.S.-China relationship seems to be gliding toward a more stable, if fragile, diplomatic window.
“Promises made, promises kept” was a central theme of President Donald Trump’s July 4 speech in Iowa where he touted his signature tax and spending package that contains the majority of his legislative priorities, including a permanent extension of his 2017 tax cuts. The new law is expected to add $3.3 trillion to the national debt over the next ten years, cut more than $1 trillion in social spending, and dramatically reduce incentives for clean energy manufacturing and generation.
Passed with Republican-only votes, the legislation drew sharp criticism from across the party: Moderates warned the social spending cuts would harm vulnerable constituents, populists feared a backlash from working-class voters central to Trump’s political base, and fiscal conservatives argued the cuts did not go far enough. Yet in the end, nearly all Republicans rallied behind it — underscoring the president’s enduring dominance over his party.
Polls show that Americans, aside from hardcore MAGA supporters, see relatively little that is “beautiful” about Trump’s bill. Opposition outweighs support by a wide margin (anywhere from 21 to 31 percentage points), which is even greater among independents and Democrats. Almost half of voters (49%, including 54% of independents) believe it will hurt their families, although 23% say it will help. Republicans are split: While 61% like the new law, two-thirds of non-MAGA Republicans view it unfavorably — a relatively small group that could still be critical in close races during next year’s midterm elections.
Both parties believe they have a compelling narrative heading into the mid-terms. Democrats aim to spotlight the law’s regressive tax cuts and deep reductions to social safety net programs, mindful that Republicans lost the House in 2018 after attempting to repeal then-President Obama’s healthcare reform. Republicans, meanwhile, contend that tax cuts and increased border security funding enjoy broad support while other provisions could be framed as efforts to eliminate waste, fraud, and abuse.
Adding unpredictability is Elon Musk’s decision to form a new political party, expected to reflect his strong criticism of Trump’s fiscal approach. Grok, the AI chatbot developed by Musk’s company xAI, suggests that a right-leaning third party could shift tight House or Senate races toward Democrats in 2026 and divide the Republican vote in 2028 — if it can achieve ballot access in key states and secure funding. Despite Tesla’s ongoing challenges, Musk still has the resources to disrupt America’s two-party system, even if his party fails to gain any real power.
President Trump’s signature bill includes roughly $170 billion to fund his immigration and border security agenda for the rest of his term, including $46.5 billion to fortify the U.S.-Mexico border wall, $45 billion to expand a network of detention centers (including one in Florida dubbed Alligator Alcatraz), and $30 billion to hire additional law enforcement staff. This comes at a time when Americans outside Trump’s MAGA base increasingly question his aggressive policies, pushing net approval of what remains the president’s strongest issue into a negative territory (currently at -3 percentage points).
Among Democrats, who shifted right on immigration since 2020, support for Trump’s approach is down 16 points since February. Among independents, the decline is 25 points, and 56% of independents in swing congressional districts say the Trump administration’s hardline tactics are a bridge too far. To be sure, most Republicans back Trump on immigration, including 61% that support large-scale deportations, but 31% favor a pathway to legal status for undocumented immigrants, up 9 points since December 2024.
Americans are concerned that Trump’s immigration policies will weaken the economy (46%) and create additional costs for taxpayers (53%), contributing to a downward trend in the president’s net approval rating on the issue (currently at -13 points). Economists predict a slowdown in industries historically reliant on immigrant labor, especially when an enforcement windfall in Trump’s new law is factored in.
Still, Trump and his party remain ahead of Democrats on immigration, 41% to 34%, and are performing even stronger on border security, a less-partisan issue where the president’s approval stands at 53%, bolstered by a steep decline in illegal border crossings since he took office. But among Democrats, there is a growing will to push back against what they view as the administration’s enforcement overreach while supporting more commonsense measures like deporting immigrants who committed violent crimes. Time will tell whether the party manages to harness popular discontent with Trump’s punitive immigration policies as a central theme in its 2026 midterm strategy — possibly by playing up his disregard for civil rights and the rule of law that could threaten U.S. citizens and noncitizens alike.
Instead of “90 deals in 90 days” White House officials promised after President Trump’s announcement of a steep round of tariffs in April, we are looking at a protracted, disjointed process that may, or may not, gain momentum before the Trump administration’s new deadline, August 1 — which may, or may not, be firm.
As of this writing, the administration is working to finalize loose framework agreements it has reached with the UK, China, and Vietnam. More than 20 other nations, including Japan and South Korea where trade talks have stalled, could be subject to a new tariff of 20% to 40% beginning August 1 if they fail to negotiate in good faith. Brazil could be hit with a 50% duty over its alleged censorship of U.S. social media platforms. Others, like the EU, Canada, and India, seem close to reaching an interim agreement, although possible exemptions for sensitive sectors, such as European autos, spirits, and aircraft, remain to be ironed out. One proposal would allow EU automakers that produce and export cars from the U.S., or make additional investment stateside, to import more of their own vehicles at tariff rates below the current 25%, but no decision on autos (or steel and aluminum that are subject to a 50% tariff) has been made.
Trump’s hardline use of tariffs as leverage, often to secure concessions on issues loosely related to trade, has yielded mixed results. It succeeded in pressuring Canada to abandon its proposed digital services tax targeting major U.S. tech firms, but efforts to push Japan, India, and South Korea into reforming their agricultural policies have stalled negotiations. Meanwhile, Trump’s strategy to isolate China by threatening tariffs on goods rerouted through third countries in Asia is heightening tensions just as both sides begin easing some trade restrictions, including Chinese curbs on rare earth exports and U.S. limits on sales of semiconductor design software, ethane, and aircraft engines. Rising friction with BRICS nations may further solidify their alliance and drive U.S. trading partners toward alternative markets. Yet despite the new deadline, uncertainty persists — both over Trump’s next moves and over how he might define a “deal” when another win is needed to showcase on Truth Social.
President Donald Trump, an avowed peacemaker who has struggled to quickly end the wars in Ukraine and Gaza, now has the first successful manifestation of his doctrine of “peace through strength.” A brand-new (and still fragile) ceasefire between Iran and Israel, which followed U.S. airstrikes on Iran’s nuclear facilities, likely puts an end to a putative rift between hardcore MAGA isolationists and those who subscribe to Trump’s new, hawkish definition of America First.
Even before the ceasefire was announced, Republicans in Congress overwhelmingly supported Trump’s decision to strike Iran’s nuclear sites. So did the Republican voters across the country, 68% of whom approved of the strikes, compared to 16% of Democrats and 27% of independents. The latter, a key swing group that backed Trump in 2024, seemed receptive to his rationale for bombing Iran (their support rose 16 percentage points after it took place) despite being less interventionist overall. Time will tell whether this translates into a measurable boost in support for the controversial items on the president’s domestic agenda that independents view negatively, such as immigration enforcement (net approval of -18 points), inflation (-50 points), or his signature tax and spending package currently making its way through Congress (-51 points).
The White House is planning a “victory tour” to mark Trump’s first major foreign policy achievement of his second term, beginning with the NATO summit in the Netherlands this week and ramping up domestically to serve as an unofficial start of the 2026 midterm campaign. In the meantime, Democrats in Congress continue to grapple with internal divisions as they try to push thought a resolution to bar the Trump administration from taking further military action without congressional approval. Several are circulating in the U.S. Senate and House, but none are likely to pass as the Republican leaders hunker down for a final series of votes on the tax and spending legislation which the president expects to be on his desk by July 4. Amid last-minute disagreements to be ironed out and reported ceasefire violations on both sides, the coming days and weeks could come to define Trump’s second presidency while ushering in a fundamentally new era for the Middle East, its security, and its dominant powers.
Rare earth minerals remain at the center of the ongoing trade talks between Washington and Beijing. The “London framework,” which reinforces the “Geneva consensus,” has reset the trade relationship roughly to where it was before a tit-for-tat tariff escalation in April. U.S. duties on Chinese imports have been reduced to 55% from 145% for 90 days, and possibly longer (although certain product categories remain subject to tariff stacking), while some export controls have been relaxed in exchange for a six-month loosening of restrictions on Chinese rare earth minerals and magnets.
To date, China has granted export permits to select suppliers, including those serving Detroit’s Big Three, but the approvals are narrow in scope, time-limited, and strategically controlled, preserving Beijing’s leverage. Many American companies are still waiting for permits while others face restrictions on selling to China (which the U.S. has been similarly slow to relax and could expand in the future), underscoring an urgent need for alternative sources and domestic production capacity.
In absolute terms, U.S. rare earths imports are small, about $170 million in 2024, but they are essential for manufacturing critical auto components and weapons systems, which remain outside the scope of the tentative trade deal with China. If no firm agreement is reached within six months, these and other industries would face serious disruption, including higher component costs and production halts due to shortages of critical materials (like neodymium and dysprosium used in EV motors).
The Trump administration is exploring ways to use the Defense Production Act to tap financing and other support for domestic rare earths-related projects, mandated under an executive order signed in March, although a specific course of action is yet to be determined. Trump officials are also reviving Biden-era efforts to create a domestic supply chain for rare earth magnets, soliciting proposals to bolster domestic supplies of the magnets within the next six to 12 months. But even though domestic production efforts are growing and supply diversification is underway, they are insufficient to fully offset risks to the U.S. economy in the near-term, positioning the issue as a major irritant in the U.S.-China relations at least through the rest of Trump’s presidency.
The Senate portion of President Trump’s tax and spending package is coming together amid a push by moderate Republicans to preserve some clean energy subsidies and industry lobbying to protect projects across the U.S. battery belt and ensure sufficient energy supply to power America’s AI growth.
The latest draft by the Senate Finance Committee follows the U.S. House lead in proposing a tight phaseout period for wind and solar projects that begin construction by 2028, but extends tax incentives for nuclear, hydropower and geothermal projects that start construction as late as 2035.
Consumer tax credits for new electric vehicles would now phase out within 180 days after the bill becomes law, and for used vehicles within 90 days. The Senate Finance version preserves a tax break for car loan interest for U.S.-assembled vehicles first introduced in the House, but omits a provision to establish EV and hybrid vehicle annual registration fees, which could still be included at a later stage.
Business-friendly proposals include bringing back transferability, a policy that allows energy project sponsors to transfer their credits to a third party, and loosening some anti-China rules by narrowing the scope of what would be blocked from claiming the credits.
Any changes passed in the Senate would require approval in the House, where hardline conservatives advocate for an end to any future spending under the Inflation Reduction Act, potentially upsetting the delicate balance of support that allowed Speaker Mike Johnson to force the all-Republican bill through last month. (To be clear, the tax and spending package, which on the whole is largely unpopular, includes provisions that are even more divisive, such as cuts to public health insurance and nutrition support programs that serve low-income Americans.)
Republican leaders are operating under a tight deadline, hoping to pass the bicameral compromise legislation and deliver it to President Trump’s desk by July 4, but that may have to be pushed further into the summer as they grapple with intra-party disagreements and procedural hurdles. We look forward to reviewing the final bill and will let you know of any important developments.
Coming off a Middle East tour marked by royal-grade splendor, President Donald Trump is intent on positioning his statesmanship as singularly transformative, regardless of whether the reality matches his rhetoric. To be sure, his message of “commerce, not chaos” yielded anywhere between $700 billion and $4 trillion in investment commitments for U.S. tech companies (concerns about possible spread of advanced AI chips to China notwithstanding). His meeting with Syrian leader Ahmed al-Sharaa set in motion a process of lifting sanctions on Syria, reaping bipartisan praise.
Domestically, inflation numbers are cooler than expected, tariff revenues are on the rise, the job market remains strong, and unauthorized border crossings are at a historic low (following a trend that began under the Biden administration). Despite an “excellent” phone call with Russia’s President Vladimir Putin, Trump is stepping back from the Ukraine ceasefire talks as his focus shifts toward Iran, leaving a bipartisan package of sanctions on buyers of Russian energy to languish in the Senate.
Rather than rely on Congress with its slim Republican majority, Trump has been using executive power to advance major policy changes, such as overriding trade deals (including those signed by his first administration), dismantling federal agencies, or imposing sweeping immigration restrictions. Few of his actions have been codified into law and many have been postponed, scaled down, subject to legal pushbacks, or moving far slower than he expected.
At their current level, Trump’s tariffs are unlikely to replace income taxes as the main source of government funding, which he said they would. Instead, his officials have acknowledged that tariff costs would be borne by U.S. consumers, to the tune of $2,300 per household per year. Setbacks to the president’s tax-and-spending bill are pushing it off course from what Republican leaders in Congress have pledged to deliver, threatening to expand the budget deficit further and precipitating a downgrade to America’s last AAA credit rating.
MAGA voices contend that the Trump agenda’s make-or-break phase is between now and September, as the federal budget package takes shape and precedent-making legal cases wind their way through courts. After that, tariff-related price increases could begin pushing congressional Republicans into a midterm campaign mode. Judging by the polls, the Trump administration’s trade deals with China and the UK are clearly resonating, driving an uptick in optimism about the economy and cutting into the president’s net disapproval score on inflation and tariffs. Perhaps even more so than tax cuts and legal precedents, Trump’s ability to “rebalance” the U.S.-China trade without upending Americans’ economic fortunes could help determine how much of his agenda he can actually deliver and how “transformative” that might be.
The Trump administration’s goal is not a “generalized decoupling from China” but rather a decoupling for “strategic necessities” like steel, critical medicines, and semiconductors, according to Treasury Secretary Scott Bessent who has been managing President Trump’s tariff policy. Following the May 10 talks in Geneva, the administration’s tariffs on most Chinese goods stand at 30%, far below the 145% “reciprocal” rate that went into effect April 9 but higher than the 12% average rate during the first Trump term.
Analysts predict that the levies will remain at 30% through late 2025, high enough to wipe out 70% of Chinese shipments to the U.S. in the medium run, but no longer constituting a de-facto trade embargo. They also expect the negotiations to continue beyond an initial 90-day timeframe (similar to the 75-day timeframe for TikTok talks that Trump has extended), giving the two countries time to tackle mutual irritants like fentanyl or pre-existing non-tariff trade barriers on both sides.
Bessent has warned that any trading partners that do not negotiate in “good faith” could see a return to the tariff rates initially imposed on April 2. The Chinese government often emphasizes “sincerity” in negotiations, but recent developments raise questions about either side’s commitment to de-escalation.
Rather than pause export restrictions on rare earth minerals, China has simply extended eligibility to some U.S. firms but is said to be too slow issuing export licenses. In the meantime, the U.S. has declared the use of Huawei’s advanced AI chips a violation of American export controls. Both nations are pressing ahead with new, category-specific tariffs, with Beijing imposing anti-dumping duties on certain U.S. plastics and the Trump administration considering anti-subsidy duties on key battery components and levies on pharmaceuticals and active drug ingredients. Time will tell if such actions will be viewed as a breach of the consensus reached in Geneva, or a reflection of deep distrust and longstanding disagreements on trade, national security, and other issues that are unlikely to be significantly eased over the next 90 days.
Despite bipartisan opposition and intense lobbying from affected industries, an early sunset of clean energy provisions in the Inflation Reduction Act seems certain after the 2026 federal budget legislation passed the House with all Republican votes. The final text would phase out consumer EV tax credits at the end of 2025 (except for manufacturers that fall under a 200,000 new EV cap, which would be eligible through 2026). Incentives for clean power projects would phase out as early as 2025 because funds would only be available once a project starts producing energy, as opposed to when construction starts.
As of 2028, most clean energy developers would no longer be able to transfer their tax credits, reducing their ability to raise funds. Credits for wind components would end after 2027, and incentives for all types of clean tech manufacturing would face aggressive “foreign entity of concern” restrictions targeting adversaries like China. All IRA funds for EV, battery, and other clean tech projects not spent by the Energy Department and other federal programs would be reallocated, as would be any leftover EPA diesel emissions reduction funds. (Separately, car loan interest would be tax-free through 2028 for vehicles that are built in the U.S.)
Americans are divided on what should be done about the IRA clean energy provisions, with 44% in favor of removing tax breaks for clean power projects and EV purchases and 39% against. (By contrast, 60% support eliminating taxes on car loan interest.) The issue is just one of several points of contention between conservatives trying to cut spending and reshape federal priorities in line with the Trump administration’s agenda, and moderates pushing to preserve public benefit programs and low-carbon energy jobs their constituents rely on.
The House legislative text is certain to face changes in the Senate, where centrist Republicans, whose votes are critical to passing the package by simple majority, argue that an early phase-out of clean energy tax credits would negatively impact emerging technologies and domestic supply chains. We will be watching the legislation take shape over the next few weeks, and will keep you informed about how the IRA era ultimately ends.
“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.
