Happy Thursday. We've got the latest on President Donald Trump's federal job cuts and his trade war. Warning: the tariff news may leave you with whiplash.
Trump Says He Wants His Cabinet to Lead the Way on Job Cuts
President Donald Trump said Thursday that he wants his Cabinet secretaries to take the lead in efforts to scale back the federal workforce — and to use a scalpel rather than a hatchet in making cuts, suggesting a shift from the approach being taken by the Elon Musk-led DOGE effort.
"I want the Cabinet members to keep good people. I don't want to see a big cut where a lot of good people are cut," Trump told reporters in the Oval Office. He said he told his Cabinet to decide on cuts first and keep the people they need. "If they can cut, it's better," he said. And if they don't cut, then Elon will do the cutting."
Trump's comments come after he held his second cabinet meeting earlier in the day, with Musk, who is not a Cabinet member, also in attendance — and after Musk met with Republican lawmakers on Wednesday and reportedly heard several call for him and his team to work more closely with Congress on making and codifying the cuts.
The Trump administration's mass firings and the DOGE infiltration of federal agencies has sparked controversy and concerns that the effort to downsize the government has cut too deep or too indiscriminately - that following the Silicon Valley mantra of "move fast and break things" doesn't work for essential government programs.
Musk may have proudly wielded a chainsaw recently, but Trump on Thursday indicated he wants a bit more precision in making federal job cuts. In a social media post, he wrote that "DOGE has been an incredible success" but added that he has instructed his team to work with DOGE and get more involved in decision-making. "As the Secretaries learn about, and understand, the people working for the various Departments, they can be very precise as to who will remain, and who will go. We say the 'scalpel' rather than the 'hatchet,'" he wrote. "It's very important that we cut levels down to where they should be, but it's also important to keep the best and most productive people. We're going to have these meetings every two weeks until that aspect of this very necessary job is done."
Trump preparing order to dismantle Education Department: Even as Trump talks about a seemingly more judicious approach to federal job cuts, White House officials have reportedly prepared an executive order to start the process of dismantling the Department of Education, which was created by Congress in 1979.
A draft of the Trump order reportedly instructs McMahon to "take all necessary steps to facilitate the closure of the Education Department" in accordance with "the maximum extent appropriate and permitted by law." Shuttering the department would also require an act of Congress, as newly confirmed Education Secretary Linda McMahon has acknowledged.
Trump said recently that he wants McMahon to put herself out of a job. He reportedly wants Congress to eliminate her department via legislation.
"The experiment of controlling American education through Federal programs and dollars — and the unaccountable bureaucrats those programs and dollars support — has failed our children, our teachers, and our families," the White House draft order reads, according to The Wall Street Journal.
Any move to close the department would undoubtedly be met with legal challenges, as the American Federation of Teachers has pledged to fight any effort to slash funding for states and students.
"The Department of Education, and the laws it is supposed to execute, has one major purpose: to level the playing field and fill opportunity gaps to help every child in America succeed. Trying to abolish it — which, by the way, only Congress can do — sends a message that the president doesn't care about opportunity for all kids," said Randi Weingarten, president of the union. "Any attempt by the Trump administration or Congress to gut these programs would be a grave mistake, and we will fight them tooth and nail."
Quote of the Day
"The Executive's categorical freeze of appropriated and obligated funds fundamentally undermines the distinct constitutional roles of each branch of our government. ... Here, the Executive put itself above Congress. It imposed a categorical mandate on the spending of congressionally appropriated and obligated funds without regard to Congress's authority to control spending. Federal agencies and departments can spend, award, or suspend money based only on the power Congress has given to them—they have no other spending power. The Executive has not pointed to any constitutional or statutory authority that would allow them to impose this type of categorical freeze."
– Judge John J. McConnell Jr. of the Federal District Court in Rhode Island, in a new order extending his temporary injunction preventing the Trump administration from freezing potentially trillions of dollars in grants and loans approved by Congress. The judge's order came in a lawsuit filed by nearly two dozen Democratic-run states in response to a January 27 memo from the White House Office of Management and Budget ordering a sweeping halt of federal funding to ensure the programs involved complied with Trump's executive orders. The administration then rescinded the memo but said that the review remained in effect.
"In light of the unrebutted evidence that the States and their citizens are currently facing and will continue to face a significant disruption in health, education, and other public services that are integral to their daily lives due to this overly broad pause in federal funding, the Court finds that the public interest lies in maintaining the status quo and enjoining any categorical funding freeze," McConnell wrote.
Another district court judge in Washington, D.C., has also blocked the Trump funding freeze.
Trump Flip-Flops on His Trade War With Canada and Mexico
President Trump said Thursday he is delaying until April 2 a 25% tariff on goods imported from Mexico and Canada that are covered by the trade pact he signed in his first term.
The announcement comes one day after he suspended the tariff on automotive products imported from both Canada and Mexico — and just two days after his tariffs took effect.
Trump initially said the delay would apply to Mexico, without mentioning Canada. "After speaking with President Claudia Sheinbaum of Mexico, I have agreed that Mexico will not be required to pay Tariffs on anything that falls under the USMCA Agreement," Trump said in a social media post. "This Agreement is until April 2nd. I did this as an accommodation, and out of respect for, President Sheinbaum."
Before the White House announced that Canada would also be included, Trump criticized Canadian Prime Minister Justin Trudeau, repeating his accusation that the leader in Ottawa is the source of the problem and is trying to use it to his advantage. "Believe it or not, despite the terrible job he's done for Canada, I think that Justin Trudeau is using the Tariff problem, which he has largely caused, in order to run again for Prime Minister," Trump said. "So much fun to watch!"
Trudeau said he welcomed any delay in the tariffs but indicated that Canada's retaliatory tariffs against the U.S. would likely remain in place until Trump's threatened trade war is ended. The Canadian leader said he feared the disruption could continue for the foreseeable future.
Ontario Premier Doug Ford, who has announced a 25% export tax on electricity provided to roughly 1.5 million Americans in a handful of northern states, said he would reverse course only when all planned tariffs are rescinded. "This whole thing with President Trump is a mess," Ford said. "This reprieve, we've went down this road before. He still threatens the tariffs on April 2."
Canadian Foreign Minister Mélanie Joly spoke out against the tariff threat, as well, saying that Canada is not interested in going "through this psychodrama every 30 days."
Record deficit: Trump reacted to a report Thursday that the total U.S. trade deficit rose to a record high of $131.4 billion in January, with imports rising 10% to $401.2 billion and exports climbing by 1.2% to $269.8 billion.
Economists are attributing the 34% increase in the trade deficit from the month before to Trump's threat of a trade war, which has spurred U.S. firms to import key goods and manufacturing inputs before tariffs rise. Trump, though, blames his predecessor. "Massive Trade Deficit with the World, just announced, compliments of Sleepy Joe Biden!" he said. "I will change that!!!"
Messaging Wall Street: Commerce Secretary Howard Lutnick appeared on CNBC earlier in the day, reassuring viewers that the tariffs would likely be delayed. Lutnick talked up the tariffs, saying they are part of a larger plan to make America great again — a plan that will make it possible to rebuild the country and reduce the deficit and "balance the budget for the United States of America," paid for by tariff revenues.
But the news of the tariff delay later in the day did little to ease concerns on Wall Street, and stocks fell sharply again, with the S&P 500 down 1.8%, adding to the damage done to investors by the ongoing threats of a trade war.
As Jessica Riedl, a fiscal expert at the conservative Manhattan Institute, wrote Thursday, "The Dow has now fallen 2,000 points in the 15 days since the trade war was expanded. The S&P is also down 6.5% over that period." Riedl sarcastically noted the effects of the trade war: "But at least we can cushion the blow with higher prices, deepening job cuts, falling business investment, and export industry devastation."
As he signed the order delaying the tariffs, Trump dismissed investor concerns entirely, admitting to reporters in the Oval Office that "globalist" companies may suffer under his new trade regime. "I'm not even looking at the market, because long term, the United States will be very strong with what is happening here," he said. "This is very much about companies and countries that have ripped off this country, our country, our beloved United States. And they're not going to be ripping us off anymore. So, you know, I think that has an impact on the market."
The bottom line: Trump delayed tariffs against Mexico and Canada, but the threat of a trade war continues to roil markets as foreign leaders scramble to find a way to satisfy unclear U.S. demands.
Chart of the Day
This chart from Ontario's London Free Press may help explain why automakers are so worried about President Trump's burgeoning trade war with Canada and Mexico. After the North American Free Trade Agreement (NAFTA) was signed in 1992, manufacturers built a complex and highly integrated production system stretching across all three countries, in which auto parts cross borders without paying taxes. A transmission module, for example, may cross borders multiple times as it moves through a production process that starts with scrap metal in Canada, adds parts made in Mexico and the U.S., and ends up in a car assembled back in Canada. Trump's tariffs threaten to introduce significant new costs into that system, which one analyst said could add as much $12,000 to the price of a new car.
Number of the Day: 172,017
As concerns about the economy grow, American employers announced more than 172,000 job cuts in February, the highest total for the month since 2009, when the U.S. economy was in recession, and the highest for any month since July 2020, during the Covid-19 pandemic, according to a new report from outplacement firm Challenger, Gray & Christmas. The government led all sectors in cuts, as Challenger tracked more than 62,000 reductions announced by 17 federal agencies last month. Retail (nearly 39,000 cuts) and technology (about 14,500) were next in size.
The announced February cuts represent the 12th highest monthly total in the 32 years Challenger has been tracking layoff plans, CNN reports, adding that all 11 others came when the US was in a recession.
The Bureau of Labor Statistics jobs report for February is due out on Friday. Economists expect nonfarm payrolls to have risen by 160,000, but the data won't yet reflect the bulk of the DOGE-driven federal cuts.
Fiscal News Roundup
- Trump Delays Some Tariffs on Mexico and Canada for One Month – CNN
- US Trade Deficit Surged to a Record Ahead of Trump Tariffs – Bloomberg
- How Talks to Avert Tariffs on Mexico and Canada Fell Apart – Wall Street Journal
- Trump Stresses Cabinet Secretaries Lead Agency Cuts, but Keeps Musk as Threat – The Hill
- Second Federal Judge Extends Block Preventing the Trump Administration From Freezing Funding – Associated Press
- Trump's CHIPS Demand Creates a $52 Billion Headache for Congress – Politico
- US Employers Cut More Jobs Last Month Than Any February Since 2009 – CNN
- DOGE Cuts, Spending Freezes Starting to Ripple Through Job Market – Bloomberg
- USDA Employees Fired En Masse by Trump Administration Reinstated, Workers' Board Says – CNN
- Republicans Can't Meet Their Own Budget Target Without Cutting Medicare or Medicaid, Budget Office Says – NBC News
- House GOP Stopgap Funding Bill Expected to Avert Pay Cuts to Doctors, Extend Telehealth Access – Politico
- As Trump Goes After Education Department, Staff Cuts Leave Student Loan Borrowers in the Dark – CNBC
- Trump's Trade War Reignites Fed's 'Transitory' Inflation Question – Bloomberg
- This Charter School Superintendent Makes $870,000. He Leads a District With 1,000 Students – ProPublica
Views and Analysis
- They Saved Taxpayers Billions. Trump Fired Them Anyway – New York Times
- A Trump Recession Has Become a Real Possibility – Heather Long, Washington Post
- Elon Musk and the Useless Spending-Cut Theater of DOGE – David French, Washington Post
- How DOGE's Cuts to the IRS Threaten to Cost More Than DOGE Will Ever Save – Andy Kroll, ProPublica
- Jobs Lost in Every State and Lifesaving Cures Not Discovered: Possible Impacts of Research Cuts – Lauran Neergaard and Kasturi Pananjady, Associated Press
- If Musk Wants to Find Waste, Here's Where He Should Look – Karen Tumulty, Washington Post
- The World Is Beginning to Tire of Trump's Whiplash Leadership – Stephen Collinson, CNN
- 'Transgender' Mice Aside, Here's the Truth About 'Silly Science' – Benjamin Ryan, Washington Post
- Making Corruption Great Again – Eduardo Porter, Washington Post