Stocks Muted; Trump's Tariffs Win Reprieve; US-China Talks Stalled
US equity futures hover as President Trump's tariff regime wins a reprieve from a court order which blocked country-specific levies. Treasury Secretary Scott Bessent says trade talks between the US and China have stalled. An obscure item in the "Big Beautiful" tax bill is alarming Wall Street. Wei Li of BlackRock suggests not to predict the next stop of policymaking but rely on immutable laws for certainty instead. Cayla Seder of State Street says the consumer still looks okay in aggregate. 'Bloomberg Brief' delivers the market news, data and analysis you need to set your agenda. (Source: Bloomberg)
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35 minutes ago
New South Korean President Lee faces crucial challenges at home and abroad
SEOUL, South Korea (AP) — Winning a tense election that capped off months of political turmoil, new South Korean President Lee Jae-myung described his victory as the start of the country's return to normalcy following the crisis sparked by then-conservative leader Yoon Suk Yeol's imposition of martial law in December. But the outspoken liberal, who assumed office immediately on Wednesday without a transition period, takes the helm during a highly challenging time for the country, which has struggled mightily to revive a faltering economy battered by months of political paralysis and compounded by U.S. President Donald Trump's tariff hikes. Lee also inherits from Yoon the escalating threat of North Korea's nuclear ambitions, now further complicated by Pyongyang's deepening alignment with Moscow over Russian President Vladimir Putin's war on Ukraine. Here's a look at the key challenges facing Lee's government: In his inauguration speech, Lee identified the economy as his top priority, vowing to immediately launch an emergency task force to wage a 'head-on battle' against the looming threat of recession and to boost government spending to jumpstart economic activity. South Korean economic institutions have repeatedly sounded the alarm in recent months over the state of the economy, citing sluggish business investment, weak consumer spending, a deteriorating job market and a trade environment worsened by Trump's tariffs and other America-first policies. Despite the country's strikingly high household debt, the central bank last week lowered borrowing costs in a desperate bid to inject more money into the economy and slashed its 2025 growth forecast to 0.8%, which would be the weakest since a 0.7% contraction during the COVID-19 crisis in 2020. Lee won't have much time to negotiate with Washington before July 9, when Trump's 90-day pause in global reciprocal tariffs is set to expire, potentially exposing South Korean products to 25% tax rates. Although a U.S. federal court recently ruled that Trump lacks authority to impose his planned tariffs, the White House has appealed, leaving the outcome uncertain. Trump has also pushed for product-specific tariffs on key sectors like autos and semiconductors, which make up a major share of South Korean exports. Trump could also seek a broader deal requiring Seoul to pay significantly more for the 28,000 U.S. troops stationed in South Korea to deter North Korean threats. While Seoul's previous government had aimed to reach a 'package' deal with Trump by early July, Lee has preached patience on tariffs, saying it would be against national interests to obsess with an early agreement. In his inaugural address, Lee promised to reopen a communication channel with North Korea to ease tensions. But prospects for the early resumption of dialogue between the rival Koreas are dim, as North Korea has been constantly rejecting dialogue offers by South Korea and the U.S. since 2019, when talks between Washington and Pyongyang collapsed over disagreements on economic sanctions. North Korea's priority in foreign policy is now firmly Russia, which has received thousands of North Korean troops and large amounts of military equipment in recent months for its warfighting in Ukraine. During campaigning, Lee acknowledged that it would be 'very difficult' to arrange a summit with North Korean leader Kim Jong Un anytime soon, though it's something he will seek. Lee said he would support Trump's efforts to restart nuclear diplomacy with Kim, saying that improved ties between Pyongyang and Washington could allow aid projects for the impoverished North that will likely require South Korean support. Lee nominated former Unification Minister Lee Jong-seok, a dove who espouses reconciliation with North Korea, as his spy chief. The nomination likely reflects Lee Jae-myung's hopes to revive inter-Korean dialogue, given the behind-the-scene roles of the National Intelligence Service played to reach out to Pyongyang under the past liberal governments. However, many experts also note that Lee Jae-myung does not share the same level of Korean nationalist zeal as his liberal predecessors, and they question how firmly he would stick to his appeasement approach if provocative actions by North Korea, such as high-profile missile tests or border incursions, undermine public support for his policy at home. Lee was previously accused by his critics of tilting toward Pyongyang and Beijing and away from Washington and Tokyo. He once slammed a U.S. missile defense system in South Korea as a source of tensions and likened strengthening U.S.-Japan ties to a 1905 Washington-Tokyo agreement that he said eventually helped Japan colonize the Korean Peninsula. But Lee has recently refrained from making similar contentious comments, instead repeatedly pledging to pursue pragmatic diplomacy. He has vowed to enhance South Korea's alliance with the U.S. and their trilateral cooperation with Japan, while also emphasizing the need to reduce tensions with North Korea and avoid frictions with China and Russia. While Lee may eventually take steps to improve ties with North Korea and China — relations that deteriorated under Yoon, who prioritized the U.S. and Japan — experts say Lee is unlikely to take drastic actions that might undermine the alliance with Washington or negatively impact South Korea's financial markets. Lee has stated that he will address thorny historical disputes with Japan separately from matters of security, trade, and other issues. However, many experts believe he is unlikely to completely reverse the progress made in Seoul-Tokyo relations in recent years. Japanese Prime Minister Shigeru Ishiba said Wednesday that he hopes to hold summit talks with Lee 'as early as possible' and expressed a desire to further strengthen bilateral ties. Long accused by critics of being a divisive populist, Lee pledged unity throughout his campaign, vowing not to target conservatives and calling for an end to South Korea's deep political polarization and a return to dialogue and compromise. However, he has also pledged a thorough investigation into the circumstances surrounding Yoon's martial law stunt — a saga that could continue to overshadow Lee's presidency and spark tensions with conservatives, especially as the ousted conservative faces a high-stakes criminal trial on rebellion charges punishable by death or life imprisonment. While Yoon defended his martial law decree as a necessary response to what he called the Democratic Party's abuse of its legislative majority to obstruct his agenda, that same majority now gives Lee a far more favorable environment to advance his policies. Conservatives have voiced concern that this could give Lee partially unchecked power and enable him to advance legislation that shields his presidency from his own legal troubles. Lee faces five separate trials on corruption and other charges, but the hearings were suspended ahead of Tuesday's election. While South Korea's constitution shields sitting presidents from most criminal prosecution aside of rebellion or treason, it doesn't clearly state whether this protection extends to preelection indictments. The Democrats have been pushing to revise the criminal procedure law to keep Lee's trials suspended during his term, drawing criticism from conservatives.
Politico
37 minutes ago
- Politico
The tax fights Trump has to settle
IN TODAY'S EDITION:— The tax disputes that could come up today— Russ Vought hits the Hill— Senate finally takes up Trump's judges Senate Majority Leader John Thune and his tax writers will huddle with President Donald Trump at the White House today as Republicans race to resolve a growing list of tax policy disputes in their megabill. Thune detailed what to expect in an exclusive interview with our Jordain Carney: BUSINESS TAX PERMANENCE: Thune emphasized that one of the biggest tax issues for him and other Finance Republicans is making key business tax incentives, such as full expensing for research and development costs, permanent. 'There's a lot of interest in growth in the economy among our caucus,' Thune told Jordain. 'Permanence, I have been told by a number of our members, is a red line for them.' But it's a costly ask, and senators have been cagey on how they'll make the numbers work. TAXES ON TIPS: One long-shot idea that could come up is from Sen. Thom Tillis, who suggested to our Brian Faler that the $40 billion 'no tax on tips' proposal could drop out of the bill and get passed later on a bipartisan basis. Don't expect Trump to jump at the idea. Trump campaigned on making tips tax-free, and it's one of his top priorities in the megabill. CLEAN-ENERGY CREDITS: Tillis could also use the White House visit to escalate his concerns about House Republicans' plan to gut clean-energy tax credits. Tillis and Sens. Lisa Murkowski, John Curtis and Jerry Moran previously warned GOP leaders that a full-scale repeal won't fly in the Senate. Democrats are working to drive a wedge on the issue. SALT: Some GOP senators are pushing back against the deal House GOP leaders struck with blue-state moderates to quadruple the state-and-local-tax deduction cap to $40,000. Thune signaled to Jordain that the Senate is likely to scale it back. 'It would be very, very hard to get the Senate to vote for what the House did,' Thune said. But SALT Republicans are digging in. Rep. Nick LaLota told Lisa Tuesday that such a move could 'unwind many of the other connected policies' in the many interlocking deals Speaker Mike Johnson negotiated to muscle the first draft of the megabill through his narrower majority. 'It would likely stall the bill,' LaLota warned. Meanwhile, Thune seems optimistic as he works to douse other flare-ups within his conference (Medicaid, food aid) and outside of it (hello, Elon Musk). The majority leader also told Jordain he expects every committee to release its bill text by the end of next week as he pushes toward a pre-July 4 vote. Armed Services kickstarted that process Tuesday with draft text that increases funding for nuclear weapons, munitions production and new technology beyond what the House GOP proposed. POLITICO Pros can dive deeper into the full Thune Q&A. GOOD WEDNESDAY MORNING. We see the Longworth mural we heard about in April is finally installed. It was probably a good call to leave the speaker's face off this time — wouldn't want to risk a curse, now. Follow our live coverage at the Inside Congress blog at and email your Inside Congress scribes at lkashinsky@ mmccarthy@ and bleonard@ THE SKED The House is in session and voting on legislation fighting the opioid crisis at 1:30 p.m. and 4:30 p.m. — Republicans and Democrats will hold their separate weekly conference meetings at 9 a.m. — GOP leaders will hold their post-meeting news conference at 10 a.m. — Appropriations will have a hearing on the presidential budget request for the FAA, with acting Administrator Chris Rocheleau testifying, at 10 a.m. The committee will have another hearing on the presidential budget request for OMB with Director Russ Vought testifying at 2 p.m. — Armed Services will have a hearing on the Army's fiscal 2026 posture with testimony from Army Secretary Daniel Driscoll at 10 a.m. — Agriculture will have a hearing on digital assets at 10 a.m. — Financial Services will have a hearing on digital assets at 10 a.m. — Oversight will have a hearing on fraud risk within the Defense Department at 10 a.m. and a hearing on NGOs at 2 p.m. — Foreign Affairs will have a hearing on NATO challenges at 10 a.m. — Small Business will have a hearing on the presidential budget request for the SBA with testimony from Administrator Kelly Loeffler at 10 a.m. — Education and Workforce will have a hearing on the policies and priorities of the Education Department at 10:15 a.m. — Energy and Commerce will have a hearing on illegal robocalls and robotexts at 10:15 a.m. — Democratic leaders will hold their post-meeting news conference at 10:45 a.m. — Blockchain Association will have its inaugural Summer Series event featuring Financial Services Chair French Hill and Reps. Dusty Johnson and Bryan Steil this afternoon. — The Welcome PAC will host the day-long event 'WelcomeFest' featuring centrist Democrats, including Sen. Elissa Slotkin and Rep. Jared Golden. The Senate is in session and voting to end debate on Michelle Bowman's nomination to be vice chair for supervision of the Board of Governors of the Federal Reserve System and Edward Walsh's nomination to be ambassador to Ireland at 11:45 a.m. The Senate will then vote to end debate on James O'Neill's nomination to be deputy secretary of HHS at 2 p.m. and vote on Bowman and Walsh's nominations at 6 p.m. — Appropriations will have a hearing on the president's fiscal 2026 budget request for Commerce with Secretary Howard Lutnick testifying at 10 a.m. — Foreign Relations will have a hearing on transnational criminal organizations at 10 a.m. and another hearing on China's influence in Africa at 1 p.m. — HELP will have a hearing on the reauthorization of the over-the-counter monograph drug user fee program at 10 a.m. — Judiciary will have a hearing on nominees to fill vacancies across federal courts at 10:15 a.m. — Republicans will have a conference meeting at 2:30 p.m. — Veterans Affairs will have a hearing to consider the nominations of Cheryl Mason to be inspector general and Donald Bergin III to be an assistant secretary, both of the Department of Veterans Affairs at 4 p.m. — Finance will meet with Trump at the White House to discuss tax policy disputes in the GOP megabill at 4 p.m. The rest of the week: The House will consider SBA legislation related to immigration. The Senate will continue to take up nominations. THE LEADERSHIP SUITE Rescissions to 'test' appetite for codifying DOGE cuts House Republicans are getting ready to vote next week on the $9.4 billion rescissions request Trump just sent over. House Appropriations Chair Tom Cole says it'll be 'a big test case' of Congress' appetite for codifying DOGE cuts, our Jennifer Scholtes writes in. The Oklahoma Republican said the clawbacks package is expected to go straight to the floor, bypassing his panel, since top GOP appropriators privately negotiated the request with the White House. 'We feel like we were included and don't feel the need to run it through the committee,' Cole told reporters Tuesday night. Johnson and his deputies urged their members to 'support this commonsense measure' in a statement late Tuesday. What we're watching: Vought is on the Hill today, testifying in front of House Appropriations on behalf of the OMB budget. Expect plenty of questions about rescissions, impoundments and other cuts to come. Jeffries 'strongly and firmly behind' charged Dem House Minority Leader Hakeem Jeffries voiced support for Rep. LaMonica McIver on Tuesday, two weeks after the New Jersey Democrat was charged with assault in connection with a scuffle at an ICE detention center. 'What's important is that we stand strongly and firmly behind LaMonica McIver,' Jeffries said. 'That's priority No. 1, to make sure that she has the first-rate legal representation that she needs to battle these charges.' Separately, Rep. Jamie Raskin is requesting a raft of documents from the DOJ on the decision to charge McIver. POLICY RUNDOWN MOVEMENT ON MEDICAID — Sen. Jim Justice previously expressed reservations about the House-passed megabill's freeze on new provider taxes that states use to help fund their Medicaid programs. Now, he's on board with the changes. 'I'm fine and dandy freezing it,' Justice told reporters. 'The thing I'm most concerned about is that if we don't watch out, we get running in a direction, then we just think, well we just got to cut more and more, and before you know it, we cut right into the bone.' Others are still working through the issue. Sen. Josh Hawley told reporters he remains worried about the provider tax provisions, while Tillis said he's talking with North Carolina hospitals and Medicaid program administrators across the country to determine what the potential impacts could be. AI MORATORIUM UNDER FIRE — Democrats are itching to challenge a 10-year ban on states enforcing artificial intelligence laws in the House GOP-passed megabill, with Sen. Ed Markey being the first to vow to do so under the chamber's rules, our Anthony Adragna reports. If the provision isn't stripped out first in the Senate version of the package, Markey could challenge it under a point of order on the chamber floor. However, many Republicans are skeptical that it could pass muster with the Senate parliamentarian, who arbitrates the chamber's rules. 'It is going to be clear that this 10-year state AI regulation is a policy change that has no impact on the federal budget,' Markey said. 'That provision cannot be included in a reconciliation bill.' Republicans are also piling on. Rep. Marjorie Taylor Greene said in an X post that she wasn't aware of the provision in the bill — which she voted for. 'It is a violation of state rights and I would have voted NO if I had known this was in there,' she wrote. SENATE'S CRYPTO TURN — Cryptocurrency-friendly senators expect to unveil landmark legislation this month that would divide up oversight of digital assets between regulators, our Jasper Goodman reports. It's a sign that the Senate will soon ramp up the next phase of its push to pass industry-friendly crypto measures after the House introduced a so-called market structure bill. The House measure will be the focus of two separate hearings on Wednesday in the Financial Services and Agriculture committees. Sen. Cynthia Lummis said Tuesday the Senate's product is 'going to look very much like the House bill.' IN THE DOGEHOUSE — A House Oversight subcommittee will scrutinize fraud risk in the Defense Department during a hearing this morning, with testimony from a deputy Pentagon inspector general and an official from the Government Accountability Office, Maia writes in. It comes after a GAO report found $10.8 billion in fraud within DOD for fiscal years 2017 through 2024. Wednesday's hearing aligns with the Department of Government Efficiency's stated goal of eliminating fraud in agencies by slashing federal spending, which the administration plans to continue despite Musk's exit last Friday, our Robin Bravender, Danny Nguyen and Sophia Cai report. TRUMP'S JUDICIARY NOMINEES INCOMING — Nearly six months into Trump's second term, the Senate will finally start to consider his nominees to fill vacancies across federal courts. On Wednesday, Senate Judiciary will consider picks for vacancies in Missouri and on the Sixth Circuit Court of Appeals, our Hailey Fuchs reports. Trump's efforts to apply a conservative tilt to the federal judiciary was a marquee accomplishment of his first term. His administration confirmed hundreds of judges — but so did the subsequent Biden administration, leaving relatively few vacancies for Trump to now fill. Best of POLITICO Pro and E&E: THE BEST OF THE REST When a U.S. senator's husband landed on a travel watchlist, a phone call had him removed, from Jennifer Jacobs at CBS News Gillibrand's dual role: The Republican-friendly Democratic campaign chief, from Burgess Everett at Semafor Can Bruce Pearl run for Senate as a Republican? Seems unlikely after Democrat donations, from Michael Yaffee at Yellowhammer News CAPITOL HILL INFLUENCE Chris Bowman is now director of government affairs at the Carbon Removal Alliance. He previously was a senior professional staff member for the Senate Energy and Natural Resources Committee and is a Joe Manchin, Steny Hoyer, Conor Lamb and Mike Doyle alum. Tara Hupman is now VP of external affairs at the American Clean Power Association. She was most recently general counsel to the House Republican Conference under Chair Lisa McClain and previously served as chief counsel on the House Energy and Commerce and Natural Resources committees. Natalia Díez Riggin, a former top staffer to Senate Banking Chair Tim Scott and Sen. John Kennedy, has been named the SEC's director of legislative and intergovernmental affairs. She's been serving in the role in an acting capacity since January. JOB BOARD Cathy McMorris Rodgers, the former Energy and Commerce chair, is launching a nonprofit aimed at inspiring a new generation of leaders. The Cathy McMorris Rodgers Leadership Institute will be based in Spokane, Washington, and be led by her former district director Kristina Sabestinas, with longtime campaign official Dawn Sugasa serving as senior adviser. It will offer programming, grants (including annual fellowships) and policy advocacy. Former Sen. Jon Tester and former FEC Commissioner Ellen Weintraub are joining End Citizens United as the organization's first senior fellows. Adam Taylor is now Rep. Scott Peters' D.C. chief of staff. He was previously Peters' legislative director. Dillon Cooke is now Peters' legislative director. He was previously Peters' senior legislative assistant for healthcare. Eric Ettorre has joined the Treasury Department as senior adviser to the Office of International Trade and Development. He previously was trade counsel for the Committee on Ways and Means and handled tariffs, customs and China, among other portfolios, for Chair Jason Smith. HAPPY BIRTHDAY Sen. Mike Lee … Reps. Chris Pappas, Marie Gluesenkamp Perez and Jim Baird (8-0) … Colby Itkowitz … Meta's Ryan Daniels … Dentons' Jason Attermann … Mike Murphy TRIVIA TUESDAY'S ANSWER: Joan Kleinman correctly answered that the average age of the newly elected House members of the 119th Congress is 50.2. TODAY'S QUESTION, from Monday's winner Timothy Trent: Which president said, 'When they call the roll in the Senate, the senators do not know whether to answer 'present' or 'not guilty''? The first person to correctly guess gets a mention in the next edition of Inside Congress. Send your answers to insidecongress@
42 minutes ago
Ukraine says only 'strong' US sanctions can break Russia peace talks impasse
LONDON -- With U.S.-brokered Ukraine-Russia peace talks still floundering despite another round of negotiations in Istanbul, Turkey, on Monday, Ukrainian President Volodymyr Zelenskyy and his top officials are applying more pressure on President Donald Trump to increase the cost of what they see as Russian obfuscation. Trump returned to office in January having vowed to end the war in 24 hours. But months of failed talks -- with Kyiv and Moscow clearly still far apart on their peace demands -- has left the president and his administration publicly frustrated. Trump has threatened both -- Ukraine with the withdrawal of all aid and Russia with more sanctions -- with punishment if his peace-making efforts fail. Both Ukraine and Russia have sought to frame the other as the main impediment to a peace deal. Ukraine aligned itself with Trump's May appeal for a full 30-day ceasefire, a proposal President Vladimir Putin has refused. In the weeks since, Zelenskyy has pushed Trump to meet Russia's obstinance with sanctions. Following Monday's talks -- which lasted just over an hour -- Kyiv embarked on a renewed push. "I want to thank all Americans, all Europeans who support this approach of pressuring Russia into peace -- it is extremely important," Zelenskyy wrote on Telegram on Tuesday night, following the latest round of deadly Russian drone and missile attacks on his country -- and after two headline-grabbing attacks by the Security Service of Ukraine (SBU) on Russia's strategic bomber fleet and the Kerch Strait Bridge. "Putin does not change his behavior when he does not fear the consequences of his actions," Zelenskyy added. "Russia must feel what war truly means. Russia must bear the losses from the war. They must really feel that continuing the war will have devastating consequences for them." The two sides did agree to further prisoner exchanges during the latest Istanbul talks. But both Ukrainian Foreign Minister Andrii Sybiha and Andriy Yermak -- the influential head of Zelenskyy's presidential office -- pushed back on the notion that the negotiations moved the needle toward a lasting ceasefire agreement. Yermak said in a post to social media that he spoke with Trump's Special Envoy Steve Witkoff about the talks, telling him, "Russia's position remains unconstructive." "I emphasized that Russia is stalling and manipulating the negotiation process in an attempt to avoid American sanctions and has no genuine intention of ceasing hostilities," Yermak said. "Only strong sanctions can compel Russia to engage in serious negotiations. Sybiha said Russia "has not responded to our document outlining Ukraine's vision for ending the war," in a post on X summarizing Ukraine's official conclusions from the second round of talks. "Instead of responding to our constructive proposals in Istanbul, the Russian side passed a set of old ultimatums that do not move the situation any closer to true peace," he said. "This contradicts Russia's previous promises, including to the United States, that it would put forward something realistic and doable this week in Istanbul," Sybiha added, also calling for new U.S. sanctions on Moscow. Trump is also facing pressure at home. Republican Sen. Lindsey Graham -- long influential in advising the president's foreign policy -- is among those pushing a sanctions bill through the Senate that would slap 500% tariffs on any country that buys Moscow's energy products. On Sunday, following a visit to Kyiv with Democratic Sen. Richard Blumenthal, Graham wrote on X, "Russia indiscriminately kills men, women and children. It's time for the world to act decisively against Russia's aggression by holding China and others accountable for buying cheap Russian oil that props up Putin's war machine." The Kremlin urged patience. "It would be wrong to expect any immediate decisions or breakthroughs here," spokesperson Dmitry Peskov told reporters on Tuesday of the latest talks. "But work is ongoing. Certain agreements were reached in Istanbul, and they are important. Indeed, first and foremost, it is about people. These agreements will be implemented." But Dmitry Medvedev -- the former Russian president and prime minister now serving as the deputy chairman of the country's Security Council -- gave a darker read on the negotiations. The talks, he wrote on Telegram, "are not meant to achieve a compromise peace based on some imaginary and unrealistic conditions invented by others, but rather to secure our swift victory and the complete destruction" of Zelenskyy's government. Meanwhile, the long-range strikes that have unsettled Trump continued. Ukraine's air force reported 95 Russian drones launched into the country overnight, of which 61 were shot down or neutralized. Impacts were recorded in seven locations, the air force said. Russia's Defense Ministry, meanwhile, said its forces downed seven Ukrainian drones overnight.
