Morning Report — Trump’s tariffs deepen US economic uncertainty     ...0

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President Trump’s rollout of steep tariffs aimed at allied trading partners on Wednesday sparked international head-shaking and renewed warnings at home about lasting U.S. economic damage.

The president, who says the U.S. is the victim of “economic warfare,” imposed what he called reciprocal tariffs on dozens of countries, to be anchored with a new, universal 10 percent tariff floor, applied to longtime trading partners, including the United Kingdom. 

Among major economies considered by the administration to be bad actors and therefore hardest hit were the European Union, which will face 20 percent tariffs under the plan, and China, facing an additional 34 percent on top of existing U.S. levies. 

A 25 percent tariff on autos manufactured outside the U.S. took effect at midnight.

“Today’s tariff announcement is truly mind-boggling. It is so much larger, faster and more poorly thought out than anything I could ever have imagined Trump doing,” Harvard economist and former chair of the White House Council of Economic Advisers Jason Furman told Morning Report on Wednesday night. 

“The good news is that it will be so destructive to wealth and employment while turbocharging inflation that [the administration] will be forced to pare it back,” Furman, who advised former Presidents Clinton and Obama, added. “I am truly stunned.”

▪ The Hill: Tech firm analysts react to Trump’s tariff details: “Worse than the worst case scenario.”

▪ The Hill: Trump gambles on tariffs as the nation braces for economic fallout. 

Trump said his aim is to rectify inequities with competing nations and international companies, which he said could erase new U.S. tariffs if they choose to manufacture products in the U.S.

“We’re going to take care of our people first,” the president said during a Rose Garden event with top administration officials, auto and steel plant employees, and a large chart serving as his visual aid. “These tariffs are going to give us growth,” he added before signing an executive order that describes foreign trade as a “national emergency.”

Trump for weeks teased what he called “Liberation Day” changes by first taking aim at Canada and Mexico, plus China. A tariff exemption for those two North American trading partners expired Wednesday. The total U.S. levy on Chinese imports now exceeds 50 percent.

The president’s announcement of new, double-digit U.S. tariffs applied globally reached beyond what many economists, industry insiders, investors and members of Congress said they anticipated.

Economists and tax experts expressed bewilderment over the administration’s methodology for calculating what it portrayed as current tariffs against the U.S. Critics predict prices will rise for U.S. consumers and for manufacturers as retaliatory levies land in this country. 

Former Vice President Pence, reactingon social media, objected to the announcement and predicted Trump’s changes would cost American families more than $3,500 annually. Former Treasury Secretary Larry Summers predicted the resulting cumulative U.S. loss could exceed $300,000 per family of four.

Trump says his strategy will lead to negotiated concessions that will benefit the U.S. and his supporters insist his moves are long overdue.

Shortly after the announcement, financial indexes fell sharply and European markets continued reeling today.

"One of the messages that I'd like to get out tonight is everybody sit back, take a deep breath, don't immediately retaliate, let's see where this goes,” Treasury Secretary Scott Bessent told CNN. “Because if you retaliate, that's how we get escalation."

PUBLIC OPINION since January has swung against the president’s trade stance, in part because consumers and investors have been wary of inflation, a slowing economy and the new administration’s on-again-off-again tariff presentations, which Trump has tied to immigration, border security and fentanyl, plus assertions that a windfall of tariff revenues would make America “rich” and perhaps be rebated to citizens or used to offset lost revenues from GOP-backed tax cuts. 

In a February Gallup poll, Americans by a margin of 81 percent to 14 percent called foreign trade more of an economic opportunity than a threat.

Here’s a summary of reactions country by country.

▪ European Commission chief Ursula von der Leyen, in a statement today, vowed a unified response to the U.S. tariffs, including preparation of countermeasures. "If you take on one of us, you take on all of us,” she said. Negotiations among EU member states are to begin next week (BBC).

▪ Israel had said it would lift all duties on U.S. imports. The move was an apparent bid to try to ensure that Israel was exempt from new tariffs, which it is not (The New York Times).

▪ China restricts companies from investing in the United States as tensions rise (The Wall Street Journal).

“The president is risking a recession with this national sales tax he calls tariffs — while needlessly alienating our closest allies,” Sen. Dick Durbin (D-Ill.) warned in a statement. “When American families see what this does to the price of goods, such as cars, groceries, and gas, it is going to create a negative economic force across this country and cost a lot of American jobs.”

The Hill: Five takeaways from Trump’s reciprocal tariff policies. 

Exemptions to the new tariff regime include energy, if not available in the U.S., and certain unspecified minerals. U.S. farmers are not exempted, and the president made no mention Wednesday of specific federal aid to soften the impact on U.S. agriculture.

SMART TAKE with NewsNation’s BLAKE BURMAN:  

I had an interesting interview last night with Premier Doug Ford of Ontario, one of Canada’s loudest critics of President Trump’s tariff policy.  

Canada was not on the list the president held up in the Rose Garden, though tariffs the administration has already announced against Canada still stand. Ford told me he’s “cautiously optimistic” about Wednesday’s announcement. 

“We have great trade back and forth,” Ford said. “It’s been that way for many years. Let’s continue that. If we continue tariffing each other, it’s not going to be good for either country. It’s not going to be good for the American people.” 

Here’s what I noticed with Ford: He wasn’t launching a full attack on the administration, like he had in the past. It makes you wonder about potential negotiations behind the scenes and where they might stand.  

Burman hosts “The Hill” weeknights, 6p/5c on NewsNation.

3 THINGS TO KNOW TODAY:

▪ Amazon submitted a bid to buy Chinese-owned TikTok ahead of a Saturday sales deadline.  

▪ The administration’s admission this week that it mistakenly sent a Maryland man to a Salvadoran prison underscores a need for independent oversight, according to critics of Trump’s deportation rush.  

▪ An asteroid is projected to miss the Earth (whew!) but it could strike the moon in 2032. Uh-oh.

LEADING THE DAY

© The Associated Press | J. Scott Applewhite

TARIFF PRESSURE: The Senate on Wednesday narrowly passed a Democratic resolution, introduced by Sen. Tim Kaine (D-Va.) that would nullify the presidential emergency on fentanyl he is using to implement tariffs on Canada. Just hours after Trump announced his tariffs from the Rose Garden, the Senate passed the resolution 51-48, offering Republicans an off-ramp to the import taxes on Canada.

Sen. Susan Collins (R-Maine) on Wednesday became the latest Republican to support the resolution. She joined Republican Sens. Rand Paul (Ky.), Lisa Murkowski (Alaska) and Mitch McConnell (Ky.). The resolution is almost guaranteed to fail in the House, where it isn’t required to be introduced.

"Mr. President, the price hikes that will happen for Maine families, every time they go to the grocery store, they fill their gas tank, they filled their heating oil tank, if these tariffs go into effect, will be so harmful,” Collins said on the Senate floor. “And as price hikes always do, they will hurt those the most who can afford them the least. Therefore, I will support this resolution, and I urge my colleagues to do so likewise.”

▪ Fox News: In a joint appearance, Kaine and Paul said they found “common ground” over Canadian tariffs.

▪ The Wall Street Journal: Trump pressured Senate Republicans to limit defections on the tariff vote.

BUDGET: Senate Republicans on Wednesday unveiled a 70-page budget resolution that they say would give Senate Budget Committee Chair Lindsey Graham (R-S.C.), a staunch ally of Trump, the power to determine whether extending the 2017 Trump tax cuts officially adds to the federal deficit. Republicans say the bill empowers Graham to use a “current policy” budget baseline to score an extension of the 2017 Tax Cuts and Jobs Act as not adding to the deficit, neither in the 10-year budget window from 2025 to 2034 nor in the years beyond that window.

The big question is whether Senate Majority Leader John Thune (R-S.D.) can keep members of his conference in line and block amendments that would make the vehicle unacceptable to House conservatives. The bill will not include the instructions to committees calling for massive entitlement cuts, something that would impact Medicaid.  

The Senate will take its first vote to advance the budget blueprint today, Thune said. The step will kick off hours of debate and culminate in a marathon amendment voting session, known as a vote-a-rama, set to start on Friday. Senate Republicans are hoping to vote on the final passage as late as Saturday morning.

UPPER VS. LOWER CHAMBER: The budgeting and tariff processes have exposed divides between Republicans in the House and Senate. The Senate and House GOP are split over the size of the debt-limit increase in the Senate’s budget plan, setting up an arduous process for budget reconciliation.

Before the budgeting process, cracks were showing among congressional Republicans. From differences on tariff policy to Ukraine aid and a potential U.S. exit from NATO, not all Republican lawmakers are unequivocal supporters of Trump’s agenda.

A handful of senators — including McConnell, Murkowski and Collins — expressed criticism of certain Cabinet nominees, voting against the likes of Defense Secretary Pete Hegseth.

Other congressional Republicans have been privately back-channeling with the Trump administration to try to shield their constituents from the fallout of Elon Musk and the Department of Government Efficiency’s wide-ranging staff and programming cuts.

Trump recently told his inner circle that he will part ways with Musk soon. The tech billionaire recently complained during a Wisconsin political rally about his businesses taking a hit. Tesla’s recent sales slump is 13 percent.

The New York Times analysis: For Trump, Musk is a scapegoat and a liability. But for now, he’s still useful.

Members of Congress, including conservatives, questioned Trump administration officials, including CIA Director John Ratcliffe and Director of National Intelligence Tulsi Gabbard, about their use of Signal to plan sensitive military operations against the Houthis in Yemen.

Then there’s the issue of proxy voting. Speaker Mike Johnson (R-La.) is scrambling to break the internal impasse over the highly divisive push to allow proxy voting for new parents, as the standoff between GOP leadership and Rep. Anna Paulina Luna (R-Fla.) hardens. A band of nine Republicans, led by Luna, joined with Democrats and torpedoed a procedural vote on Tuesday — which included language to thwart the proxy voting effort — halting key legislative business on the House floor and prompting leadership to send lawmakers home for the week. To reopen the floor, Johnson must advance a procedural rule, a crucial step that is shaping up to be an uphill battle as Luna digs in her heels. Johnson told The Hill’s Mychael Schnell on Wednesday that his team has not yet found a solution to the stalemate, but they are looking at a number of options. 

“[We’re looking at] lots of things,” Johnson said. “We’ve got some ideas.” 

With the House at a standstill, a sense is growing that Trump might have to weigh in to get them out of the chaos. With the dispute threatening to derail messaging bills Trump supports and hold up the House floor indefinitely, it seems that the only thing that has reliably held the fractious, razor-thin House Republican majority together this year is Trump. The Hill’s Emily Brooks reports that the key question if he does weigh in is: Which side will Trump choose? 

▪ The Hill: Johnson on Wednesday said he is “working on every possible accommodation” to make it easier for mothers to serve in Congress amid the impasse.

▪ Politico: Congressional Republicans are mulling the sale of some public lands to help pay for a massive bill to enact Trump’s domestic agenda, according to lawmakers aware of the discussions.

WHERE AND WHEN

ZOOM IN

© The Associated Press | Rod Lamkey Jr.

COURTS & LAW: A judge on Wednesday dismissed federal corruption charges against New York City Mayor Eric Adams (D) at the request of the Justice Department. The decision ended the first criminal case against a New York City mayor in modern history who now faces a steep uphill climb for reelection this year.

A federal judge in Northern California on Tuesday ordered the restoration of legal funds for migrant children who enter the United States alone, temporarily reversing a Trump administration decision last month that had left children at risk of deportation.

The Supreme Court unanimously overturned a lower court ruling Wednesday and found the Food and Drug Administration acted lawfully when it blocked two vaping companies from marketing fruity and dessert-flavored liquids for their electronic nicotine products. 

▪ The Hill: The Supreme Court on Wednesday grappled with a case testing whether South Carolina was legally allowed to cut off Medicaid funding for Planned Parenthood, with justices leaning toward supporting the organization.

▪ The Hill: Trump announced Wednesday that he reached another deal with a major law firm, Milbank LLP, as he seeks to punish organizations with ties to his political critics.

EMBATTLED DEMOCRATS watched the political pendulum swing a bit in their favor this week, The Hill’s Mike Lillis reports. In Wisconsin, the party easily won a hard-fought and expensive battle for a coveted seat on the state Supreme Court, despite Musk’s hefty spending to try to buoy the GOP candidate. In Florida, Republicans' anticipated edge in two open House contests sagged in comparison with November’s election returns, and Trump in the eleventh hour weighed in to boost the GOP candidate in the state’s 6th Congressional District. 

▪ The New York Times analysis: A “big psychological boost” for Democrats in a string of elections.

▪ NBC News: Sen. Cory Booker's (D-N.J.) record-breaking Senate floor speech ignites a Democratic base “'desperate” for a fighter. 

CALIFORNIA: Former California state Attorney General Xavier Becerra, who served for decades in Congress and was former President Biden’s secretary of Health and Human Services, announced he’s a gubernatorial candidate in the Golden State. Rep. Katie Porter (D) launched her own bid last month, and other contenders have taken increasingly pointed swipes at former Vice President Kamala Harris and her drawn-out decision timeline. Becerra’s campaign insists he would not drop out of the race even if Harris, the Democrats’ nominee for president in 2024, declares her candidacy for governor.

ELSEWHERE

© The Associated Press | Tsafrir Abayov 

GAZA: Israel announced a major expansion of its ground operations in Gaza on Wednesday, saying large areas of the enclave would be seized and added to its security zones. Prime Minister Benjamin Netanyahu said troops would control an area he called the Morag Axis, close to the southern border. He said the move, which would cut off Rafah from Khan Younis, would give Israel control of a second axis in southern Gaza in addition to the so-called Philadelphi Corridor along the border with Egypt, which Israel sees as a key line preventing the smuggling of weapons into Gaza.

▪ The New York Times: Desperation is growing in Gaza as the United Nations shutters bakeries.

▪ The Washington Post: Amid Netanyahu’s visit to Hungary, the country announced it will withdraw from the International Criminal Court. Netanyahu — who is sought under an ICC arrest warrant that accuses him of crimes against humanity and war crimes in Gaza — arrived in Budapest today for a state visit.

UKRAINE: While the Trump administration is barreling ahead in an effort to broker peace between Russia and Ukraine, the two countries are adopting a similar strategy. Keep calm and take it slow. Russia is putting wrenches in Trump’s ceasefire push, playing for time as it presses its gains on the battlefield. All the while, Moscow insists it wants peace. Kyiv, on the brink of signing a minerals deal with the U.S., is working with European allies to ensure continued military support and its sovereign borders.

▪ Reuters: Amid tenuous U.S. aid, the European Union is already providing 50 percent of Ukraine’s ammunition needs.

▪ CNN: Senior Russian negotiator Kirill Dmitriev is expected to visit Washington this week to meet with Trump negotiator Steve Witkoff for talks as governments seek to end the war in Ukraine.

▪ Defense News: Defense Secretary Pete Hegseth will not attend a gathering of 50 countries to coordinate military support for Ukraine — the first time the coalition will gather without America’s secretary of Defense participating.

▪ The New York Times: The war in Ukraine has caused extreme environmental damage.

OPINION

■ Trump’s new protectionist age, by The Wall Street Journal editorial board.

■ Slashing the public health workforce hurts the U.S. economy, by The Washington Post editorial board.

THE CLOSER

© The Associated Press | Mark Elias

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