Trump Ramps Up Trade War

(Reuters)
By Yuval Rosenberg and Michael Rainey

Happy Monday! Congratulations to the Super Bowl LIX champion Philadelphia Eagles. We're also here to remind you that pitchers and catchers report to spring training this week. Meanwhile, President Donald Trump continues to test the limits of his authority via ongoing efforts to slash the size of government and entirely dismantle large portions of it. Trump's actions have set up a series of legal fights - and questions about whether the administration will abide by court rulings. And he's also plowing ahead with more tariffs. Here's the latest:

Trump Ramps Up Trade War With 25% Tariffs on Steel, Aluminum

President Trump on Monday imposed a 25% tariff on steel and aluminum imports. The tariff will apply to all steel imports, including those from Canda and Mexico, the U.S.'s biggest foreign suppliers.

The tariffs come on top of a new 10% tariff on goods from China, as well as 25% tariffs on goods from Canada and Mexico that have been temporarily paused.

Trump said this weekend that he also plans to roll out "reciprocal tariffs" against countries that impose duties on U.S. imports. "If they are charging us 130% and we're charging them nothing, it's not going to stay that way," he told reporters.

National Economic Council Director Kevin Hassett told CNBC Monday morning that the new tariffs are intended to boost the tariffs on steel imposed during the first Trump administration. An array of exemptions to those tariffs weakened them over time, Hassett said, allowing more foreign-made steel to enter the country.

Hassett noted that the original tariffs were based on Section 232 of the Trade Expansion Act, which empowers the president to restrict trade for national security reasons. Trump was seeking to ensure the U.S. had enough steel capacity "to fight a war," Hassett said, and the new tariffs are based on the same authority.

Trump Administration Violated Order to Unfreeze Funds, Judge Says

A federal judge said Monday that the Trump administration violated his order temporarily blocking a White House freeze on federal grants and loans.

In a case brought by 22 states, Judge John J. McConnell Jr. in Rhode Island late last month blocked a White House pause on some federal funding. McConnell on Monday ruled that the administration continued to improperly freeze some funds in keeping with a broad White House directive. The broad categorical and sweeping freeze of federal funds is, as the Court found, likely unconstitutional and has caused and continues to cause irreparable harm to a vast portion of this country," the judge wrote. "These pauses in funding violate the plain text of the [temporary restraining order]."

McConnell rejected an argument by the Justice Department that the administration's actions had not run afoul of his injunction, suggesting that there may have been some ambiguity in his order and that some of the funding in question was paused under Trump orders issued before the White House funding freeze at the heart of the lawsuit.

The judge ordered the government to immediately restore the frozen funding and emphasized that the administration must comply with his order even if it is intent on challenging it and believes it will ultimately be reversed.

Trump Admin Takes Aim at Consumer Protection Agency

Russell Vought was confirmed as the director of the Office of Management and Budget last week and soon picked up another job title: acting director of the Consumer Financial Protection Bureau, an independent agency founded in the wake of the 2008 financial crisis to protect consumers from financial fraud and abuse.

Over the weekend, Vought made his presence known as he sent an email to CFPB employees telling them to stop working. "Effective immediately, unless expressly approved by the Acting Director or required by law, all employees, contractors and other personnel of the bureau shall ... cease all supervision and examination activity," the email read, per CNN.

Vought's email came on the heels of a message to employees from Adam Martinez, CFPB's chief operating officer, saying that the agency's building in Washington would be closed this week.

On Monday morning, Vought reiterated his orders, telling employees that they need clearance from the agency's top legal officer to do any work. "Otherwise, employees should stand down from performing any work task," he said.

DOGE attacks: Vought's lightning-fast assault on the bureau appears to be part of the broader administration effort to radically shrink the federal government. Late last week, Elon Musk signaled that his DOGE team was coming for the consumer protection agency, tweeting, "CFPB RIP." Some critics have complained that CFPB has unfairly targeted conservatives and the banking industry, though those claims are disputed.

One of the key architects of the controversial Project 2025 governing plan produced by the Heritage Foundation ahead of the election, Vought made it clear that the agency was in his crosshairs as he accused it of being "woke," the charge Republicans have used to justify a whole range of actions against federal agencies, from blocking payments to closing offices. "The CFPB has been a woke & weaponized agency against disfavored industries and individuals for a long time," Vought said on social media. "This must end."

Democrats, though, question the legal basis for shuttering the agency. "Congress created the Consumer Financial Protection Bureau, and no one - not the President, not Musk, not Vought - can illegally shut down its work," Sen. Elizabeth Warren, who helped launch CFPB, said on social media.

Warren also warned of the potential repercussions of eliminating the agency. "President Trump campaigned on lowering costs. But he's letting billionaire Elon Musk and Project 2025 Architect Russ Vought kill the Consumer Financial Protection Bureau," she wrote. "If they succeed, CEOs on Wall Street will once again be free to cheat you out of your savings."

A Battle Over Access to the Treasury Payment System

The Trump administration is pushing back vigorously against a court order Saturday blocking members of Elon Musk's DOGE Services team from accessing the Treasury Department's payments and data systems.

New York Attorney General Letitia James and 18 other attorneys general sued to block Musk and DOGE from having access to Treasury's central payment system and the data it holds, arguing that they are illegally jeopardizing private information, including Social Security numbers and tax records, and could improperly freeze certain federal funding in violation of the constitutional separation of powers.

A federal judge in New York on Saturday granted a temporary restraining order, set a hearing on the issue for Friday and said that any records Musk or his team obtained should be immediately destroyed. "We knew the Trump administration's choice to give this access to unauthorized individuals was illegal, and this morning, a federal court agreed," James said in a statement after the court issued its order.

Lawyers for the administration argued in a court filing yesterday that the court order itself violated the separation of powers, undercutting presidential authority over the executive branch and making an unfounded distinction between civil servants and political appointees. They also wrote that the court order was overly broad and "could be read to cover all political leadership within Treasury," including Treasury Secretary Scott Bessent.

"This is a remarkable intrusion on the Executive Branch that is in direct conflict with Article II of the Constitution, and the unitary structure it provides," they wrote. "To the extent the Order applies to senior political appointees at Treasury, it is an extraordinary and unprecedented judicial interference with a Cabinet Secretary's ability to oversee the Department he was constitutionally appointed to lead."

The administration filing came after Trump on Saturday called the judge's order a "disgrace" and said no judge should be allowed to issue such a decision. Vice President JD Vance then wrote in a Sunday morning post on social media that "Judges aren't allowed to control the executive's legitimate power."

In an op-ed for The New York Times, five former Democratic Treasury secretaries - Robert Rubin, Larry Summers, Tim Geithner, Jack Lew and Janet Yellen - warn that allowing political actors who lack the proper training and experience to access the Treasury payments system risks exposing sensitive information - and presents a threat to American democracy.

"While significant data privacy, cybersecurity and national security threats are gravely concerning, the constitutional issues are perhaps even more alarming," they write. "We take the extraordinary step of writing this piece because we are alarmed about the risks of arbitrary and capricious political control of federal payments, which would be unlawful and corrosive to our democracy."

Why it matters: The Trump administration has said and demonstrated that it is looking to push the constitutional limits on presidential power and test Congress's power over spending decisions. As The New York Times reports: "The lawsuit against DOGE in New York could pose a fundamental test of America's rule of law and the power of the executive against the checks and balances - like the courts and Congress - at the core of U.S. government."

Deficit Hits $838 Billion in First Fourth Months of the Fiscal Year: CBO

The federal budget deficit totaled $838 billion from October 2024 through January 2025, according to an estimate from the Congressional Budget Office Monday.

The total is $306 billion larger than the deficit recorded in the same period a year ago, though a portion of the increase was driven by differences in the timing of payments. Without the variations introduced by the calendar, the deficit would have been $750 billion, or $146 billion larger than a year ago.

Revenues were 1% ($11 billion) higher in 2025 compared to the year before, and outlays were 15% ($317 billion) higher.

CBO's projection for the full-year deficit in fiscal year 2025 is $1.9 trillion, the same as the recorded deficit in 2024.

Quotes of the Day

"There's some internal discussion and debate about exactly how we cover the cost of expanding the tax cuts and achieve the other priorities."

− Speaker Mike Johnson, acknowledging to reporters Monday that an effort by House Republican leaders to advance a budget blueprint that would set up passage of the Trump agenda is being delayed by an intraparty fight over how to pay for proposed tax cuts.

Politico reports that House Budget Committee Chairman Jodey Arrington and Rep. Chip Roy, a hardline leader of the Freedom Caucus, are looking for additional spending cuts and "privately warring" with Ways and Means Chairman Jason Smith and other top Republicans.

Johnson reportedly confirmed to Politico on Monday that the House plan involves work requirements and other changes to Medicaid and certain safety net programs, but he said that Medicare would not be affected.

"For far too long the United States has minted pennies which literally cost us more than 2 cents. This is so wasteful! I have instructed my Secretary of the US Treasury to stop producing new pennies. Let's rip the waste out of our great nations budget, even if it's a penny at a time."

− President Trump, in a Truth Social post, announcing that he has ordered the Treasury Department to stop minting pennies. As CBS News reports: "The U.S. Mint reported losing $85.3 million in the 2024 fiscal year that ended in September on the nearly 3.2 billion pennies it produced. Every penny cost nearly $0.037 - up from $0.031 the year before."

Nickels are also money losers for the government, with each costing almost 14 cents to make.

Fiscal News Roundup

Views and Analysis