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The Senate confirmed Trump administration nominees, including Paul Atkins to serve as Chairman of the Securities and Exchange Commission and several nominees to serve as US Ambassadors. It also approved a House-passed resolution to repeal a Biden administration rule on energy efficiency standards for gas-fired water heaters. The House advanced the Senate-passed budget resolution (see below) and two Senate-passed resolutions to repeal CFPB rules on overdraft fees and digital consumer payment platforms. It also passed a bill to limit nationwide judicial injunctions and a bill to require in-person proof of citizenship to register to vote.

Both the Senate and House will be out of session and will return to Washington the week of April 28.

Tariff Pause.

This week was a reminder that things can change pretty quickly in Washington. Only hours after beginning to implement (on April 9) large-scale “reciprocal” tariffs – the largest set of tariff increases since the Smoot Hawley tariffs of 1930 – the Trump administration hit a 90-day pause button. The decision was prompted by market tumult in reaction to the original announcement (sustained equity market losses and a spike in Treasury yields) and concerns from Congressional Republicans that bubbled out in the open, particularly at hearings with the US Trade Representative Jamieson Greer on both sides of the Capitol this week. The market initially responded very enthusiastically, and many Republicans breathed a sigh of relief as they go back to their districts and states over the next two weeks. However, it is important to note that a live-fire trade war between the US and China (additional tariffs of 145% on imports from China after a raise later in the week) and the still-substantial 10% across the board tariffs will remain in place and will continue to have bite (both economically and politically).

Trade Divisions.

As we mentioned last week, President Trump positions tariffs as serving multiple objectives (basis for negotiation, source of revenue and spur for domestic investment), though there are tensions between the objectives. There also are divisions within his administration that began to come more out into the open this week. Treasury Secretary Scott Bessent and others are interested in positioning tariffs and the threat of them for the purpose of negotiations and winning concessions on trade, investment and other areas. Others, like trade advisor Peter Navarro, want to use tariffs as a way to recreate the US economy and eliminate the $1.2 trillion trade deficit. Trump has sung from that more fundamentalist song sheet, but the pause shows that there are limits to how far he is willing to take it in the face of economic and political backlash. These divisions will not be resolved in 90 days and will be an ever-present feature of the administration.

What’s Next?

There will be a frenzy of negotiations between the Trump administration and counterparts within other countries. However, trying to reach meaningful deals on lowering bilateral trade deficits (versus lower tariffs) and reducing non-tariff barriers will be very complicated, difficult and time-consuming. This process also will need to be replicated across dozens of countries. Then there is the China question. In the short-term, the escalation of tensions is only accelerating. Any big settlement likely will need to come from a summit between President Trump and President Xi, and that still seems a ways off. Meanwhile, the 10% tariffs have value for raising revenue for tax cuts and may be a more permanent feature of US trade policy over the next four years. Finally, the Trump administration is in the process of implementing various sector-specific tariffs. Whatever the buzz of dealmaking and deals, uncertainty and volatility around tariffs will continue.

Budget Showdown.

After a strong push from the White House and House Republican leadership, the House passed the Senate’s budget resolution on Thursday in a 216-214 vote. Passage of the budget resolution was not an easy task for House Speaker Mike Johnson (R-LA). Some House Republicans were holdouts against the budget blueprint due to concerns over the lack of spending reductions outlined in the Senate’s version. This was in contrast with the budget resolution passed by the House in February. That measure required at least $1.5 trillion in spending cuts over ten years. Ultimately, most of the holdouts relented (all but two House Republicans voted for the resolution) after Senate Majority Leader John Thune (R-SD) provided assurances that the final bill would contain significant spending cuts. Getting the budget resolution over the finish line jump starts what will be a frenetic spring and summer on advancing Trump’s legislative priorities via the budget reconciliation process. That process allows a bill to pass the Senate with a simple majority without having to meet a 60-vote threshold. Buckle up for a busy and impactful few months in Washington.

Judicial Tensions.

With growing partisan tensions, discussions of judicial reform have begun to surface among Republicans who are unhappy with parts of President Trump’s agenda being held up by the courts. One of the ideas being floated by a few lawmakers is impeaching judges they consider to be the worst offenders. History shows just how rare the process actually is. Only 15 federal judges have been impeached and just eight were removed from office. The Constitution grants Congress the authority to impeach for “high crimes and misdemeanors,” but there is long-running disagreement on what actions fall under this term. While some House Republicans have floated the idea of targeting certain judges over recent rulings against the Trump administration, it’s an idea from which Republican leadership wants to steer clear. The Senate’s two-thirds removal threshold makes convictions unlikely even if the House were to impeach. Still, the mere threat of impeachment remains a tool in the broader fight over the judiciary’s role in shaping policy and will continue to be a persistent topic.

Carried Interest.

Carried interest, which allows a share of profits paid to a hedge fund or private equity fund to be taxed as capital gains (rather than at a higher ordinary income rate), is yet again on the chopping block. Carried interest took a haircut in the 2017 tax law when Republicans extended the necessary hold period to three years from one year. This cut down on its usage. It was narrowly spared in 2022 during passage of the Inflation Reduction Act when then Senator Kirsten Sinema (D-AZ) saved it from elimination. President Trump has singled out carried interest for elimination. Will Republicans heed his call? That seems likely, but, if proponents find a savior like they did with Senator Sinema, this provision can be spared yet again.

DOGE Departure.

Elon Musk is expected to step back from his leadership of the Department of Government Efficiency (DOGE) before May 30. A key catalyst is a rule that prohibits special government employees from serving more than 130 days annually. Musk has signaled he expects to have accomplished most of his DOGE work by then. President Trump also has acknowledged that Musk is likely to depart soon. Musk’s entry into politics and political spending has been meteoric.��Having spent over $290 million on the 2024 election, he began 2025 on the same note by dropping over $20 million into the recent Wisconsin Supreme Court election. While Republicans may miss Musk’s firepower if he steps back from politics, some have begun to worry that Musk’s personal approval ratings could be a drag on the party if he remains so closely tied with the Trump administration. While Musk’s direct involvement with DOGE will likely end, it may not significantly alter the department’s trajectory or the impact it has already had. Following Musk’s departure, Republicans are likely to distance themselves from Musk politically while preserving initiatives of DOGE they support.

Farm Aid on the Horizon?

As the impact of escalating tariffs ripples through the agricultural sector, the Trump administration is exploring direct aid to farmers, echoing similar moves during the first Trump term. Back then, the USDA distributed nearly $28 billion in funds to offset losses from trade disputes, primarily with China. Now, with tariffs widening to cover more trading partners and key exports facing retaliatory duties, Secretary of Agriculture Brooke Rollins has indicated that direct aid to struggling producers could be back on the table. However, the funding pool used for prior aid will need more money if the administration decides to proceed. Replenishing it is likely to require congressional approval. While there is bipartisan sympathy for farmers, especially from rural-state lawmakers, fiscal conservatives are balking at the idea of writing another multi-billion-dollar check amid growing deficit concerns. Meanwhile, Democrats are likely to assert that the situation could be fixed simply by dropping the tariffs. Whether the political appetite exists to authorize more relief remains to be seen, but, with the farm belt feeling the squeeze, the pressure on Congress is mounting.

Tariff Politics and GOP Risk.

While tariffs have long been a hallmark of Trump’s economic nationalism, the real-world consequences of rising prices pose a threat not just to the President’s approval ratings but to the broader GOP brand. Trump’s electoral strength has rested on the perception of economic strength, particularly among working-class voters frustrated by inflation. That advantage is now eroding, with recent polling showing his economic approval slipping below his overall rating. Meanwhile, a small but growing number of Congressional Republicans broke ranks before the tariff suspension was announced by supporting legislation to limit presidential tariff authority, a notable and rare move of intra-party resistance. Republicans fear that if economic conditions worsen and the political fallout deepens, Democrats could leverage the impact of tariffs in traditionally non-competitive Republican seats in the 2026 mid-term elections. Republicans may get a brief reprieve due to the 90 -day pause on broad reciprocal tariffs, but the existing tariffs that are still in place (and the overall uncertainty) pose a political risk should voters believe they’ve caused rising prices.