As President Trump embarks on a four-day overseas trip and the U.S. advances negotiations with major trading partners, we are monitoring the following:
A breakthrough in negotiations with China, announced early on Monday, has resulted in both nations agreeing to reduce reciprocal tariffs for 90 days. Following weekend talks in Switzerland – led by U.S. Secretary of Treasury Scott Bessent and U.S. Trade Representative Jamieson Greer – both the U.S. and China agreed to cut their reciprocal tariffs by 115% each. This sets the effective base tariff rate on Chinese imports to the U.S. at 30%, and China’s reciprocal tariffs 10%. Sector-specific tariffs on cars, steel, and aluminum will remain in place.
- President Trump indicated he will speak to President Xi “maybe at the end of the week,” and Bessent noted he expects to meet again with Chinese officials in the “next few weeks.”
- Bessent also outlined his vision for the next phase of negotiations: “We don’t want a general decoupling, but we do want a decoupling for strategic necessities…we are going to protect our steel industry, critical medicines and semiconductors.”
- Markets welcomed news of the deal. The Nasdaq rose over 4%, and the Dow completed its recovery from the recent “Liberation Day” selloff.
The U.S. is also pursuing agreements with other trading partners. Most notably, a deal was reached with the United Kingdom last Thursday. The deal preserves the 10% baseline tariffs but eliminates additional tariffs on steel, aluminum and cars. President Trump also announced that the UK would reduce non-tariff trade barriers and increase market access for U.S. agricultural exports.
- Negotiations also continue with Canada, Italy, India, Japan and others. Bessent expressed confidence that “80% or 90% of those [will be] wrapped up by the end of the year.”
- Taiwan is also sending a large delegation to the Department of Commerce’s SelectUSA Investment Summit this week.
President Trump is traveling to the Middle East this week, visiting Saudi Arabia, Qatar and the United Arab Emirates. This is the first foreign trip of his second term, outside of his visit to Vatican City to attend Pope Francis’ funeral on April 26.
- While abroad, President Trump hopes to secure significant investment in the United States, building on commitments already made by Gulf nations.
- Business collaboration will also be a key focus. U.S. industry leaders including BlackRock CEO Larry Fink, Palantir CEO Alex Carp, OpenAI Sam Altman and Nvidia CEO Jensen Huang will attend the Saudi-U.S. Investment Forum in Riyadh this week.
- Trump also said on Monday that he is “thinking about flying over” for a meeting between Russia and Ukraine on Thursday in Turkey – the first direct talks between the two nations since 2022.
Before departing for Saudi Arabia, President Trump signed an executive order aimed at addressing the cost of prescription drugs. The order’s primary objective is to reduce the disparity between what Americans pay for drugs and prices paid in other nations. The administration projects the order will reduce some drug prices by at least 59% in the near term. Specifically, the order:
- Instructs the Department of Health and Human Services to create a mechanism for allowing U.S. patients to buy drugs directly from manufacturers at Most Favored Nation pricing and engage in rulemaking if manufacturers do not comply voluntarily.
- Instructs the U.S. Trade Representative and the Commerce Secretary to ensure that foreign countries are not unfairly manipulating markets to raise drug prices in the U.S.
- “Big Pharma will either abide by this principle voluntarily or we will use the power of the federal government to ensure we are paying the same price as other countries,” Trump said at the EO signing.
House committees are releasing the draft text of their respective portions of the reconciliation bill, with markups planned for this week. This makes this week pivotal in the reconciliation process as internal divisions within the GOP remain.
- Final provisions of the bill are still to be determined, but notable components of the drafts include elimination of many clean energy tax credits in the IRA, extension of expiring TCJA provisions, and cuts to Medicaid.
- The SALT cap remains a major sticking point in negotiations; the latest version increases the cap to $30,000, but is still well below the demands of blue-state Republicans. Other Trump priorities like eliminating taxes on tips, overtime, Social Security and car loan interest for qualified vehicles assembled in the U.S. are included in the latest drafts.
- Markups will start tomorrow in the Ways and Means, Energy and Commerce, and Agriculture Committees. Given the size and scope of the bills the markup process is expected to be lengthy, although the Budget Committee hopes to be able to consider the package in its entirety by week’s end.
- There are just eight legislative days for Speaker Mike Johnson to get the reconciliation bill through the House before the Memorial Day recess, his stated goal for House passage.
- Treasury Secretary Scott Bessent alerted Speaker Johnson on Friday that projections show the debt ceiling will be reached during Congress’ August recess, making mid-July the hard deadline for final passage.