Playbook PM: Trump's last-minute tariff hurdles

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6 days ago

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THE CATCH-UP
TRADE WARS: There are just hours to go before President Donald Trump's deadline for scores of countries to strike trade deals with the U.S. or face steep tariffs. The president has managed to bend many trading partners to his will with lopsided (if vaguely sketched) agreements — and largely sidestepped, so far, the negative economic fallout that experts had predicted. But as the clock ticks down, Trump's protectionist agenda is also facing some fresh headwinds.
Inflation nation: The Personal Consumption Expenditures price index, a crucial inflation data point and the Fed's preferred metric, rose to 2.6 percent annually in June, per Bloomberg. That was up from 2.4 percent in May and a tick higher than economists expected. And it indicates that the fallout from Trump's tariffs is starting to push up prices for American consumers, even before his most sweeping levies take effect. Inflation remaining stubborn even as the labor market cools will make the central bank's task more difficult.
In the courts: At the same time, Trump's tariff regime faces a serious legal threat. Federal appellate judges today sounded dubious of the administration's arguments that Trump has the authority to impose tariffs under the International Emergency Economic Powers Act, per CNBC's Kevin Breuninger and Dan Mangan. Judges pointed out that the law doesn't mention tariffs and that Trump is claiming essentially unbounded power to declare an emergency and impose tariffs, regardless of legal restrictions on his authority. The U.S. Court of International Trade has already struck down Trump's tariffs, but that decision is paused as the legal proceedings — which could go up to the Supreme Court — play out on the merits.
Not so firm: After Trump insisted there would be no extensions of his Aug. 1 deadline, Mexican President Claudia Sheinbaum managed to secure one nonetheless. The two leaders spoke this morning, and Trump announced afterward that the U.S.-Mexico status quo will be extended another 90 days to allow for more in-depth talks. That means 25 percent tariffs on Mexican cars and 50 percent tariffs on Mexican metals will remain in place, but Mexico avoids broader 30 percent tariffs that were due to take effect tomorrow. Trump said Mexico agreed to lower trade barriers.
Still struggling for deals: South Africa's trade minister said the country was trying one more last-minute offer to reach a deal and avoid 30 percent tariffs, per Reuters. And Indian PM Narendra Modi's government is reeling from Trump's hard line on tariffs despite Modi's efforts to build a relationship with him, NYT's Mujib Mashal reports from New Delhi.
The devil in the details: For industry, the specifics of how the tariffs will be implemented remain a question mark, with companies eagerly waiting for the fine print and struggling with chaos in the meantime, Bloomberg's Laura Curtis reports. And there's a corresponding lack of detail on foreign countries' pledges to make big investments in the U.S. and buy American natural gas.
Also happening today: Trump will meet with Goldman Sachs CEO David Solomon to talk about the economy and geopolitics, Bloomberg's Todd Gillespie and Josh Wingrove report.
Good Thursday afternoon. Thanks for reading Playbook PM. Drop me a line at [e-mail].
9 THINGS YOU NEED TO KNOW
1. FITNESS FOR OFFICE: The Presidential Fitness Test is returning to American public schools. Trump plans to make the announcement as he builds out a presidential sports, fitness and nutrition council in an executive order this afternoon, CNN's Alayna Treene and Kyle Feldscher scooped. He'll be joined at the White House by Harrison Butker, Bryson DeChambeau, Annika Sörenstam, Lawrence Taylor and other pro athletes. HHS Secretary Robert F. Kennedy Jr. will lead the revival of the fitness challenge, as part of an effort to bolster children's health.
2. THE PEACEMAKER: Trump's involvement was pivotal in getting Thailand and Cambodia to back down from a deadly border clash, Reuters' Panu Wongcha-um and Poppy Mcpherson scooped. It was Trump's call to acting Thai PM Phumtham Wechayachai that managed to break through a deadlock where Malaysian and Chinese efforts had fallen short. (Cambodia had already gotten on board with ceasefire talks.) Trump urged Thailand to meet with Cambodia and threatened to stall progress on trade deals if they didn't stop the conflict. The truce is holding for now, though tensions remain high.
3. NO PEACE HERE: As Gaza's humanitarian catastrophe worsens, special envoy Steve Witkoff is in Israel for talks, but Trump still hasn't gotten Israel and Hamas to agree to a ceasefire. Ninety-one more Palestinians have been killed while trying to get aid within just the past day, the Gaza Health Ministry said, per the AP. But Trump made clear that he places the onus on Hamas: 'The fastest way to end the Humanitarian Crises in Gaza is for Hamas to SURRENDER AND RELEASE THE HOSTAGES!!!' he wrote on Truth Social this morning. And the U.S. slapped new sanctions on Palestinian officials, saying they were obstructing peace, per Reuters.
4. THE CHILLING EFFECT: 'How Trump's crackdown on law firms is undermining legal defenses for the vulnerable,' by Reuters' Mike Spector and colleagues: '[T]he aftershocks threaten lasting damage to America's tradition of mobilizing free lawyers to challenge government actions on behalf of the vulnerable. … Dozens of major law firms, wary of political retaliation, have scaled back pro bono work, diversity initiatives and litigation that could place them in conflict with the Trump administration, a Reuters investigation found. Many firms are making a strategic calculation: withdraw from pro bono work frowned on by Trump, or risk becoming the next target.'
5. STAT OF THE DAY: The number of federal employees who took the Trump administration's deferred resignation offer — and are now getting a salary not to work — is greater than 154,000, WaPo's Meryl Kornfield and colleagues scooped. That's about 6.7 percent of the workforce. They'll leave government at the end of the fiscal or calendar year, a pivotal piece of Trump's drive to significantly shrink the civil service. Critics say this is government inefficiency in action, though the administration argues that it will save money on salary costs in the long run.
6. WHAT HAPPENED AT CECOT: ''Welcome to hell': Inside the mega prison where the U.S. deported migrants,' by WaPo's Samantha Schmidt and colleagues: '[Sixteen] Venezuelans, rounded up in President Donald Trump's mass deportation campaign, told The Post they were subjected to repeated beatings that left them bruised, bleeding or injured. They said prison staff restricted medical care for detainees suffering from diabetes, high blood pressure or kidney failure.' The Salvadoran government didn't respond for comment. One attorney said this 'may have violated U.N. conventions against torture,' and an international jurist said the International Criminal Court should investigate.
7. GOING NUCLEAR: Amid clashes with Democrats over stalling tactics to confirm Trump's picks, more and more Senate Republicans want to use a nuclear option to limit debate time for nominees, Semafor's Burgess Everett scooped. Regardless of whether the parties reach a deal to confirm some nominees before the August recess, the GOP could go there in the fall, as Trump and Republican senators grow frustrated with the hold-ups. Senate Majority Leader John Thune said Republicans would prefer to make rules changes with Democrats, with considering nominations en bloc as one potential idea, per POLITICO's Jordain Carney.
8. 2026 WATCH: Gallup has more data confirming the strange contradiction for the Democratic Party these days: More Americans consider themselves Democrats or Dem-leaning than Republican/GOP-leaning for the first time in more than a year. But at the same time, perceptions of the Democratic Party have hit a record low, and Americans believe the GOP is better suited to bring changes the U.S. needs. At the same time, Americans for Prosperity is launching a $6 million ad campaign to promote the One Big Beautiful Bill Act, POLITICO's Andrew Howard scooped.
Golden State warriors: In the end, Kamala Harris opted against a California gubernatorial run for the simple reason that her 'heart wasn't in it,' POLITICO's Melanie Mason reports. With Harris out, the Democratic primary is now wide open — and our California Playbook colleagues Dustin Gardiner and Blake Jones break down where it stands at the outset. Former Rep. Katie Porter could be a top beneficiary of Harris' decision, having performed strongly in some initial polling. But many other contenders, including Lt. Gov. Eleni Kounalakis, could mount strong bids, and Rick Caruso remains a wild card.
9. SIGN OF THE TIMES: The country's beliefs about race and diversity look significantly different now than during the 2020 racial reckoning, AP's Terry Tang and Amelia Thomson-DeVeaux report from a new AP/NORC center survey. 'The new poll finds 45% of U.S. adults think Black people face high levels of discrimination, down from 60% in the spring of 2021. There was a similar drop in views about the prevalence of serious discrimination against Asian people, which fell from 45% in the 2021 poll … to 32% … [L]ess than half of Americans think DEI has a benefit for the people it's intended to help.'
TALK OF THE TOWN
Josh Hawley said Donald Trump opposed his stock trading ban because other senators told him the bill would make him sell Mar-a-Lago.
BOOK CLUB — Kamala Harris is publishing a memoir, '107 Days,' about her abbreviated presidential campaign, per AP's Hillel Italie. Simon & Schuster is putting the book out Sept. 23. In an announcement video, Harris said, 'I've spent a lot of time reflecting on those days and with candor and reflection, I've written a behind-the-scenes account of that journey.' Harris will also appear on 'The Late Show with Stephen Colbert' tonight for her first interview since leaving office, per POLITICO's Melanie Mason.
PLAYBOOK METRO SECTION — 'Sneaking Into the Spy Museum's New Vault,' by NYT's Sopan Deb: 'For years, the more than 10,000 items in the International Spy Museum's collection were stored at a location outside Washington. That changed this summer.'
OUT AND ABOUT — Mike Davis and Otto and Mia Heck hosted a celebration honoring newly confirmed U.S. Circuit Judge Emil Bove last night at Butterworth's. SPOTTED: Sarah Samis, Sens. Jim Banks (R-Ind.), Marsha Blackburn (R-Tenn.), Mike Lee (R-Utah) and Eric Schmitt (R-Mo.), Todd and Kristine Blanche, Chad Mizelle, John Sauer, Elliot Gaiser, Jeanine Pirro, Aakash Singh, Ed Martin, Brendan Chestnut, Paul Perkins, David Warrington, Sergio Gor, Gineen Bresso, Steve and Gabi Kenny, Gary Lawkowski, Jacob Reses, Sean Cooksey, Mark and Tricia Paoletta, Jeff Clark, Andrew Ferguson, Gary Barnett, Lucas Croslow, Brendan Carr, Megan Owen, Jennifer and Nick Davis, Ryan Giles, Katie and Bill Lane, Laura Ingraham, Steve Bannon, Jack Posobiec, Alex Swoyer, Caroline Wren, Rachel Brand and Jonathan Cohn, Jill Kozeny, Jason Van Beek, Kat Nikas, Michael Thielen, Bill McGinley, Don McGahn, Rob Luther, James Burnham, Derek and Liz Lyons, Will Levi, Rob Zink and Lanny Davis.
TRANSITIONS — Goldman Sachs' top lobbyist, Michael Paese, is leaving the role and will be a senior adviser to the firm, as Republican Michael Thompson replaces him as chief global lobbyist, Bloomberg's Todd Gillespie reports. … Melissa Winter will be a senior adviser to the Obamas' family foundation as the Obama Presidential Center gets ready to open, POLITICO's Shia Kapos reports. She previously was the longtime chief of staff for Michelle Obama. … Raffetto Herman Strategic Communications has added Pheniece Jones as a principal consultant and Christiaan Brown as an SVP. Jones most recently was VP and head of media at the Curley Company. Brown previously was VP of corporate comms and brand at Accolade.
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