Tariffs, taxes, turmoil: Trump enters fraught two-week run
Donald Trump's frenzied second term enters a crucial stretch in the coming weeks as the president juggles a fragile ceasefire between Israel and Iran, a discordant party that he needs to pass his top legislative priority and a global economy on tenterhooks awaiting his next move on tariffs.
Trump is up against a self-imposed July 4 target to pass his tax and spending bill, and he's two weeks out from the July 9 expiration of the global tariff pause that concussed the economy in April when he first introduced a raft of levies.
These deadlines come amid the tentative détente he brokered between Israel and Iran, days after an unprecedented military strike.
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by Taboola
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The president is on a quick turnaround trip to the Hague for a NATO meeting, where European allies will strive to impress upon him the efficacy of the 76-year-old organization. Ukrainian President Volodymyr Zelenskiy, scheduled to meet with Trump, will likely use the forum to lobby the US president to continue US support in the Russia-Ukraine war — a conflict that Trump has so far been unable to resolve.
Trump's team is moving at a rapid clip to remake trade, global alliances, elite universities and the rules for doing business in Washington. And, it's all happening simultaneously, increasing the odds of potential missteps.
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Republican leadership depends on Trump to corral wayward members with tight margins to pass legislation and trade negotiators say that Trump is the final arbiter on any tariff deals. It's a high stakes to-do list, even for a politician who fashions himself as the ultimate deal maker — 'the closer' on negotiations across the White House's wide remit.
'That is the political cost of excessive presidential power. It is all on you, if Congress is absent, and you are making all of the decisions very visibly,' said Julian Zelizer, a professor of history at Princeton University. 'His popularity on many issues keeps going down. While he is a forceful president, you can see him struggling and reversing course on both the tariffs and the cutting of the federal workforce. He keeps going back and forth.'
Priority Issues
Treasury Secretary Scott Bessent cast Monday's Israel-Iran ceasefire agreement as a point of momentum that will translate into ticking off other priorities.
'He's done a peace deal. I think we will have a tax deal done by July 4 and then we can finish with the trade deals,' Bessent told reporters on Capitol Hill on Tuesday.
Trump surprised — and disrupted — parts of his Make America Great Again, or MAGA, political base when he eschewed public warnings from advisers, including Tucker Carlson and Steve Bannon, to avoid using US military force against Iran's nuclear facilities. On Tuesday morning as he was departing the White House for the Netherlands, Trump flashed anger at Israel and Iran for still exchanging fire after a truce was to be in effect, displaying the fragility of the deal and the deeper entanglement he now has.
'The key to the near-term outlook is not US tariffs or the Iran war, but their geopolitical interplay. These shocks have the potential to feed on each other, threatening a vulnerable world economy that is already at risk of stalling out,' Stephen Roach, former chief economist for Morgan Stanley and a senior fellow at the Yale Law School's Paul Tsai Center China Center, warned in his newsletter on Tuesday. 'But this year's twin shocks make a global recession look increasingly likely.'
Domestically, Trump is trying to push through the Republican-controlled Congress a massive tax and spending bill that would extend expiring tax rates for individuals, offer new tax incentives for businesses, roll back green energy credits and cut to Medicaid by making a greater share of Americans ineligible for the health coverage.
The president has said the legislation will supercharge the lackluster economy he inherited from President Joe Biden. But the tax proposal comes with its own political risks, since it's expected to greatly add to the deficit at a time when the fixed costs of Medicare, Medicaid and Social Security — along with interest cost on US debt — eat up a greater share of the federal budget.
Cutting Medicaid — which is popular in red states given the way it helps low-income workers, the disabled and poor children — could politically harm Republicans in the midterms.
Trade Turmoil
Finally, the next two weeks will see Trump trying to make inroads on his trade agenda. The unveiling of a huge list of tariffs on 'Liberation Day' in April tanked financial markets and he had to temporarily pause his plans to keep the US economy on solid footing. That reprieve ends July 9 and at that point, there may be few new trade deals to show for it.
Trump has said that he can set rates for countries that haven't yet reached a deal with the US by that time.
But Trump allies and advisers expect he could pause the tariffs again — which would be a welcome outcome for the business community and trading partners — but it may not help the climate of uncertainty the tariffs have created.
'It is devastating to anyone trying to make plans,' said Rita McGrath, a professor of management at Columbia Business School. 'Companies are holding off on discretionary spending. Businesses are being very cautious about the investments they're making.'
Trump is the ultimate decision-maker when it comes to any exemptions to the tariffs, and there appears to be no process to secure a reprieve apart from personally persuading him, according to Trump allies and advisers, lobbyists and an executive in touch with other business leaders. Many think even if Trump's reciprocal tariffs aren't left in place, others will remain, including 10% across-the-board levies and duties on steel and aluminum.
The tariffs will last as long as Trump is finding it a useful way to exert influence, predicted McGrath. And across foreign policy, taxes and trade, Trump's ability to keep and exert influence for his end goals will be tested.
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