Connect with us

Published

on

Editor’s note: The Hill’s Morning Report is our daily newsletter that dives deep into Washington’s agenda. To subscribe, click here or fill out the box below. Close Thank you for signing up!

Subscribe to more newsletters here The latest in politics and policy. Direct to your inbox. Sign up for the Morning Report newsletter Subscribe

The nation’s central bank on Wednesday described the rough equivalent of determinedly rowing a boat in unpredictable economic waters, uncertain of the distance to shore or whether the vessel will hit sand or boulders.

Federal Reserve Chair Jerome Powell said the Federal Open Market Committee unanimously agreed to continue battling inflation with higher interest rates, including a 25 basis-point hike announced on Wednesday, with the caveat that achieving its 2 percent inflation goal “in time,” compared with the current 6 percent, remains an endeavor filled with uncertainty and somewhat perplexing data (The Hill).

Will the Fed pause its relentless rate hikes? “Some additional policy firming may be appropriate,” the central bank said in its statement about pursuing the 2 percent goal. Powell said the key words in that phrase were “may” and “some” — in other words, pausing rate hikes hasn’t been ruled out but was not the central bank’s choice this month. The Fed this year does not expect to roll back higher rates. Its forecast for this year is 5.1 percent.

“Rate cuts are not in our base case, and that’s all I can say,” Powell added.

Would the Fed stop hiking at 5.1 percent? “It’s going to depend,” he added.

Stronger-than-anticipated economic indicators, including high employment, robust consumer demand and stubbornly high prices, could be impacted as a result of this month’s turmoil in some banks, but “it’s too soon to tell” whether demand will sag with tightening credit and help drive down prices, akin to the impact of an interest rate hike, Powell said.

The New York Times: Some analysts say that the banking industry tumult has slowed the economy as banks pull back on lending.

Could a potential recession have a snowballing effect on job losses? “Recessions are hard to model,” Powell replied. Is a soft landing after continued rate hikes still a possibility amid a roiled banking sector? “It’s too early to say whether these events have had much of an effect,” the chairman noted, adding that the question is “how long this period will be sustained.”

Powell offered one assurance: The U.S. banking sector is “sound and resilient,” he said. “I think depositors should assume their deposits are safe” (The Hill)

The Hill: The five most important things Powell said about recent banking turmoil.

What went wrong with Silicon Valley Bank’s supervision? “I want nothing else than for us to find out what happened and why,” the chairman said, noting that an internal Fed review is underway. The Fed will “welcome” independent investigations of what occurred before the collapse of SVB and Signature Bank, he added, noting a “100 percent certainty” that outside probes, including on Capitol Hill, are expected.

▪ The Hill: Powell says the banking system is sound following the SVB collapse. 

▪ The Hill: SVB tripled loans to insiders in months before its collapse.

Sens. Rick Scott (R-Fla.) and Elizabeth Warren (D-Mass.) are promoting Federal Reserve oversight legislation (The Hill). The bipartisan measure would require a presidentially appointed and Senate-confirmed inspector general to the Board of Governors of the Federal Reserve System and the Consumer Financial Protection Bureau.

“After the Federal Reserve’s failure to properly identify and prevent the shocking failures of Silicon Valley Bank and Signature Bank, it’s clear we can’t wait any longer for big change at the Fed,” Scott said in a statement.

Warren wants a vote on legislation to reverse a 2018 rollback of post-financial crisis restrictions that small- and medium-sized banks lobbied Congress to change, The Hill’s Alexander Bolton reports. However, any such vote would be a problem for Democrats who backed the 2018 bill, including Sens. Jon Tester (D-Mont.), Joe Manchin (D-W.Va.), Kyrsten Sinema (I-Ariz.), and Tim Kaine (D-Va.). Senate Majority Leader Chuck Schumer (D-N.Y.) says he favors legislation but is signaling he won’t bring any banking measure to the floor absent bipartisan backing.

Senate Banking Committee Chairman Sherrod Brown (D-Ohio) said on Wednesday he envisions efforts to restore faith in the banking sector coming primarily from regulators. “We don’t rule out doing some things legislatively,” he added, noting that there could be bipartisan support for new laws to reform the system of deposit insurance administered by the FDIC (MarketWatch).

Treasury Secretary Janet Yellen, who testified on Wednesday to members of the Senate Appropriations Committee, said government regulators were not focused on lifting the FDIC’s $250,000 insurance cap to backstop more bank deposits. “[We’ve] not considered or discussed having anything to do with a blanket insurance or guarantees of all deposits,” she said in response to a question.

But the secretary pledged that federal bank regulators would do whatever it takes to “ensure that depositors’ savings remain safe” in U.S. banks (CNBC). Yellen said that if there’s a contagious bank run, the Treasury would likely pursue an exception that would permit the FDIC to protect all depositors of the failed banks. This would be considered on a case-by-case basis, she told senators (Barron’s).

▪ The Hill: The Federal Reserve projects the U.S. unemployment rate will climb from 3.6 percent in February to 4.5 percent by the end of the year. “That’s an estimate of what will happen. It’s a highly uncertain estimate,” Powell told reporters.

▪ Fortune: “Already past the point of no return”: JPMorgan says the U.S. is probably headed for a recession as economic “engines are about to turn off.”

Related Articles

▪ Fox News: Manchin and 21 colleagues led by Sen. John Barrasso (R-Wyo.) support legislation introduced on Tuesday that would cut off the Chinese Communist Party from multilateral development banks.  

▪ The Hill and CNBC: Democratic Sens. Cory Booker (N.J.) and Raphael Warnock (Ga.) press big bank CEOs to pause overdraft fees after SVB failure. 

▪ ​​The New York Times “The Daily” podcast: Former Rep. Barney Frank (D-Mass.) on his role in the banking crisis. 

LEADING THE DAY

➤ POLITICS

Former President Trump set off a frenzy a few days ago when he declared based on news accounts that he would be arrested on Tuesday, but the alleged hush money case against him in Manhattan has yet to turn up an indictment, lending an air of mystery to what comes next. The grand jury hearing evidence in the probe did not convene on Wednesday, and although Manhattan District Attorney Alvin Bragg (D) has taken a series of steps in recent days interpreted to be pre-indictment, his office has been mum (The Hill and The New York Times). 

“I’m a little confused by all the speculation about why the Manhattan DA’s indictment is delayed,” Noah Bookbinder, president of Citizens for Responsibility and Ethics in Washington, tweeted Wednesday. “He never said he would indict today, or at all, so there is no delay. For such a high-profile case, they’ll want to get it right. They’ll move if and when ready, not a moment before.”

▪ ​​The Hill: Senate Majority Leader Chuck Schumer (D-N.Y.) declines to state confidence in Manhattan district attorney.

▪ ​​BuzzFeed News: Indictment looms, but Trump keeps posting.

▪ ​​NBC News: “War room” mentality pervades Mar-a-Lago with possible Trump indictment looming.

▪ Politico and The Washington Post: In the ongoing federal investigation of Trump’s possession of classified documents and possible obstruction of justice, a panel of three judges with the U.S. Court of Appeals for the D.C. Circuit on Wednesday ordered a lawyer for the former president to turn over evidence.

Florida Gov. Ron DeSantis’s (R) salvo targeting Trump’s character this week has been met with questions from corners of the GOP over its effectiveness as the world waits for a possible indictment. The Hill’s Al Weaver reports that DeSantis, who has yet to announce his expected presidential bid, this week came out swinging against his onetime ally, and Trump and his backers punched back. According to a pair of GOP operatives, however, DeSantis was both too late to respond and too weak in how he did it to be effective.

“The attacks from this week are too cute by half and come off as childish,” one GOP operative told The Hill. “What’s happening this week, the party thinks it’s wildly unfair and the way President Trump is being treated is a total joke, and they’re rallying around him — and that’s from a lot of people who love him, people who hate him who think he’s being treated unfairly… I don’t think they’ve helped [DeSantis]. If anything, they’ve helped Trump.” 

▪ The New York Times: The DeSantis foreign policy: Hard power, but with a high bar.

▪ Politico: Never Don and Never Ron: The rest of the GOP field looks for a third lane.

▪ ​​The Washington Post: DeSantis ignored Trump, then sided with him, then criticized him. Other GOP 2024 hopefuls are charting their own paths.

▪ ​​Axios: The DeSantis administration moves to expand the “Don’t Say Gay” law in Florida.

▪ ​​Miami Herald and The Daily Beast: After DeSantis tussle, Disney World will host a major LGBTQ summit.

Chicago’s mayoral race between Brandon Johnson, a progressive Black former Cook County commissioner, and Paul Vallas, a moderate white former CEO of Chicago Public Schools, spotlights the city’s long-evident racial divisions. As The Hill’s Cheyanne M. Daniels reports, Johnson secured support from predominantly Black neighborhoods, running on an agenda of education and police reform. Vallas, meanwhile, espoused tough-on-crime policies and urged middle-class and wealthier Chicagoans to “take back the city.” Vallas was the only white candidate in this year’s election and his rhetoric won the support of many voters in the North and Southwest neighborhoods, predominantly white areas home to wealthy families and police officers and firefighters. 

“Chicago has always been a city that has been very explicitly divided by racial politics,” explained Twyla Blackmond Larnell, associate professor of political science at Loyola University Chicago and faculty affiliate for the school’s Institute for Racial Justice.  

In Texas, new legislation is heating up the long-running cold war between the state’s relatively progressive cities and its GOP-dominated legislature, writes The Hill’s Saul Elbein. The bills are part of a broader push by conservative groups to take their conflicts with progressive cities up with state legislators, rather than cities themselves, said Bennett Sandlin, executive director of the Texas Municipal League, a trade group for the state’s cities.

“It’s coming out of national think tanks in the last years,” he said. “You go straight to the state government and don’t have to go city by city.”

➤ CONGRESS

TikTok is fighting to justify its existence in the U.S. ahead of CEO Shou Zi Chew’s testimony today before the House Energy and Commerce Committee, where he’ll talk about the company’s privacy practices, the app’s impact on children, and its relationship with China’s government. On Tuesday, Chew posted a video to TikTok’s official account, addressing the company’s 150 million U.S. users. He said that he plans to tell Congress everything the company is doing to “protect Americans using the app,” which is owned by the Chinese company ByteDance.

Lawmakers aren’t so sure about that protection, with many saying they’re worried about the app sharing Americans’ data with its Chinese owners. Congress is scrutinizing its data and privacy practices; several bills have been introduced to regulate the company. The FBI and Department of Justice are reportedly investigating whether the app spied on U.S. citizens, including journalists, and Biden has explored possibly banning TikTok in the U.S. unless its Chinese owners sell their stakes (NPR).

▪ ​​ABC News: TikTok updates rules; CEO on charm offensive for US hearing. 

▪ ​​Quartz: Chew wants to dismantle the idea that TikTok is a Chinese app.

▪ ​​The Wall Street Journal: Who is the TikTok CEO trying to reassure America?

▪ ​​NBC News: A 50 percent jump in active users on TikTok suggests the app has become even more entrenched in the U.S. over the nearly three years that Washington has grappled with how to rein it in. 

▪ ​​Reuters: TikTok lands its first major ally on Capitol Hill in Rep. Jamaal Bowman (D-N.Y.).

Defending parental rights in education has become a fan favorite state-level policy move among Republicans, and the GOP-majority House today is set to shine a national spotlight on the issue with a vote on the “Parents Bill of Rights Act.” The measure will receive neither time nor attention in the Democratic-controlled Senate, The Hill’s Lexi Lonas writes, but Republicans clearly think they’ve found a winning message. 

“The pandemic brought to light for a lot of us moms and dads for the first time ever, we sat down and we saw what our children were being taught through the virtual classroom. And when we saw that, so many of us were disheartened with what we were viewing,” said Rep. Julia Letlow (R-La.), the lead sponsor of the bill. “Then we did the right thing, right? We went to our school boards and we voiced our displeasure. But we were turned away.”  

The Main Street Caucus, one of the five most influential factions of Republicans in the House, is finding its footing in the new GOP majority. The Hill’s Emily Brooks reports that after something of a rebirth in the last Congress, Chairman Dusty Johnson (R-S.D.) and Vice Chairwoman Stephanie Bice (R-Okla.) are taking charge of the group of more than 70 members in the 118th Congress — starting with a push of support for House Speaker Kevin McCarthy (R-Calif.) during his drawn-out Speaker’s election. Johnson said the group’s goal is to bring “responsibility, reasonableness, sensibility” to major priorities. 

“In the same way that we were at the center of the Speaker election, we will be at the center of all those must-pass bills,” Johnson said. Main Street Caucus Republicans bill themselves as a “pragmatic” group looking to be the adults in the room on legislating. But don’t call them moderates, they say, as the group’s members include ideological conservatives in deep red districts. 

▪ Politico: McCarthy’s newest challenge: Keeping the House GOP peace on war powers. It’s the rare topic that unites archconservatives and Democrats, but the Speaker needs to find a way to please the mainstream members of his conference, too.

▪ ProPublica: Rep. Jim Jordan (R-Ohio) issues sweeping information requests to universities researching disinformation.

IN FOCUS/SHARP TAKES

➤ INTERNATIONAL 

Russia on Wednesday blasted an apartment block in Ukraine with missiles and swarmed cities with drone attacks overnight, punctuating a display of force as President Vladimir Putin bid farewell to his visiting “dear friend” and Chinese counterpart Xi Jinping, who departed Moscow. Officials in Zaporizhzhia said at least one person was killed and 33 wounded by a twin missile strike (Reuters).

“Right now, residential areas where ordinary people and children live are being fired at,” President Volodymyr Zelensky tweeted. “This must not become ‘just another day’ in Ukraine or anywhere else in the world. The world needs greater unity and determination to defeat Russian terror faster and protect lives.”

▪ ​​NPR: The leaders of China and Russia have finished talks. Here are some takeaways.

▪ ​​The New York Times: Zelensky makes a morale-building visit to the war zone in the east.

▪ ​​Politico EU: Ukraine sees no way to negotiate peace with Putin after war crimes warrant.

▪ ​​The Washington Post: Xi’s delay of the Siberia pipeline signals limits to his embrace of Putin.

▪ Reuters: Russian missiles batter Ukraine, but Bakhmut offensive seen stalling.

Xi’s offer to negotiate peace between Russia and Ukraine — which he claimed as part of the reason for visiting Moscow in the first place — is widely viewed as a smokescreen amid Beijing’s deepening relationship with Russia. The proposed plan didn’t get much attention during the three-day visit. But Beijing recently achieved a nascent, diplomatic breakthrough between Saudi Arabia and Iran, and their offer to be a peace broker suggests Beijing is focused on flipping the world order away from the U.S., the West and other democracies (CNN).  

▪ The Wall Street Journal: It wasn’t just Credit Suisse. Switzerland itself needed rescuing. Crisis threatened an economic model and national identity built on safeguarding the world’s wealth.

▪ The New York Times: French President Emmanuel Macron denounces violent protests, warning against “excesses.”

▪ Politico EU: Ahead of EU leaders’ summit, Germany and France steal the show — again.

▪ Reuters: “If not now, when?”: Emotional Australian prime minister advances Indigenous referendum.

The State Department has eased restrictions on employees with foreign ties. Critics have called the practice discriminatory, particularly to Asian American diplomats barred from working in countries such as China and Taiwan (The Washington Post).

OPINION

■ Bankers attacked my views on regulation. But my “golden” idea could save them from themselves, by Saule Omarova, guest essayist, The New York Times. https://nyti.ms/3z307St

■ Trump’s indictment won’t win him votes, by Karl Rove, opinion columnist, The Wall Street Journal. https://on.wsj.com/40gkfg0

WHERE AND WHEN

📲 Ask The Hill: Share a news query tied to an expert journalist’s insights: The Hill launched something new and (we hope) engaging via text with Editor-in-Chief Bob Cusack. Learn more and sign up HERE.

The House will convene at 10 a.m. The House Committee on Science, Space and Technology will hold a hearing at 10 a.m. about “Advanced Air Mobility: The Future of Unmanned Aircraft Systems and Beyond.”

The Senate meets at 10 a.m. 

The president will receive the President’s Daily Brief at 9 a.m. Bidenwill host an anniversary event at 1 p.m. in the East Room to mark the enactment of the Affordable Care Act. Biden and first lady Jill Biden will depart the White House at 4:40 p.m. for travel to Ottawa, Canada, for a visit that concludes on Friday. They will be greeted upon arrival at the airport at 6:40 p.m. by Canadian Governor General Mary Simon and her spouse, Whit Fraser. The president and first lady at 8:25 p.m. will be welcomed to Canada by Prime Minister Justin Trudeau and wife Sophie Grégoire Trudeau at the prime minister’s residence and they will participate in a private reception.

Vice President Harris will participate at 1 p.m. in the East Room event for the Affordable Care Act tribute.

Secretary Yellen will testify before a House Appropriations subcommittee at 3 p.m. (👉The White House today released a statement of opposition to House Freedom Caucus budget ideas titled “Five Alarm Fire,” asserting that Republicans would harm U.S. seniors.) 

Secretary of State Antony Blinken will testify at 2 p.m. before a House Appropriations subcommittee about his department’s budget.

Defense Secretary Lloyd Austin will testify about his department’s proposed budget at 10 a.m. before a House Appropriations subcommittee.

Health and Human Services Secretary Xavier Becerra will attend a White House event to mark the 2010 enactment of the Affordable Care Act.

Economic indicator: The Labor Department at 8:30 a.m. will report on claims for unemployment insurance filed in the week ending on March 18.

ELSEWHERE

➤ HEALTH & PANDEMIC 

More than 20 percent of transgender children and adolescents in the U.S. can no longer legally access gender-affirming health care because of new state laws that bar doctors from providing certain medications or services to minors, according to a Wednesday report from the Human Rights Campaign, a national LGBTQ advocacy organization.

Of the more than 300,000 transgender 13- to 17-year-olds currently living in the U.S., close to 1 in 4 — around 66,600 — have lost access to gender-affirming health care. With more than 100 bills targeting transgender health care under consideration in over half the country this year, an additional 28 percent of transgender children and teens may soon lose access to care considered medically necessary by most major medical organizations (The Hill).

▪ ​​The New York Times: Medicare tries to combat fraud. Now insurers are fighting back.

▪ ​​The Hill: Tainted eye drops linked to three deaths, vision loss.

▪ ​​The Washington Post: Troubled U.S. organ transplant system targeted for overhaul.

▪ ​​The Hill: Rising drug shortages pose national security threat, Senate panel says.

A deadly fungus spreading at an alarming rate in U.S. hospitals and clinics has exposed a broader problem of patient safety being jeopardized by underfunded and understaffed infection-prevention efforts, experts say (The Washington Post).

“Infection control within health care is extremely neglected,” Saskia Popescu, an assistant professor at George Mason University who is an expert in infection prevention, told the Post. “We expect hospitals to continuously respond to growing and emerging infectious-disease threats but don’t give them the resources to do so.”

The Wall Street Journal: Moderna to price its COVID-19 vaccine at $130 a dose.

Information about the availability of COVID-19 vaccine and booster shots can be found at Vaccines.gov. 

Current U.S. COVID-19 deaths are 1,706 for the most recent week, according to the Centers for Disease Control and Prevention. (Data is reported on Fridays.)

THE CLOSER

Take Our Morning Report Quiz

And finally … It’s Thursday, which means it’s time for this week’s Morning Report Quiz! Inspired by the city we deep dive into every morning, we’re eager for some smart guesses about Washington, D.C.

Be sure to email your responses to asimendinger@thehill.com and kkarisch@thehill.com — please add “Quiz” to your subject line. Winners who submit correct answers will enjoy some richly deserved newsletter fame on Friday.

Building codes in the District specify that no structure may be built taller than ___? The Washington Monument 130 feet, as per the Height of Buildings Act of 1899 (amended in 1910) The Capitol  Heights specified by Pierre Charles L’Enfant, the city’s original architect

In what year did the District undergo so-called retrocession and return some of the land ceded by the federal government for its construction to Virginia? 1847 1798 1812 1870

East-west streets in D.C. use letters. Which one doesn’t exist? L St. I St. J St. E St.

As the dividing center for all of the city’s quadrants, all roads really do lead to ___? The Capitol The White House The Washington Monument The Lincoln Memorial Republicans grill military on diversity, equity goals Why the Fed hiked rates in the face of banking crisis

Stay Engaged

We want to hear from you! Email: Alexis Simendinger and Kristina Karisch. Follow us on Twitter (@asimendinger and @kristinakarisch) and suggest this newsletter to friends!

Continue Reading

World

Israel announces military operation expanding in Gaza to seize ‘large areas’

Published

on

By

Israel announces military operation expanding in Gaza to seize 'large areas'

Israel is beginning a major expansion of its military operation in Gaza and will seize large areas of the territory, the country’s defence minister said.

Israel Katz said in a statement that there would be a large scale evacuation of the Palestinian population from fighting areas.

In a post on X, he wrote: “I call on the residents of Gaza to act now to remove Hamas and return all the hostages. This is the only way to end the war.”

He said the offensive was “expanding to crush and clean the area of terrorists and terrorist infrastructure and capture large areas that will be added to the security zones of the State of Israel”.

The expansion of Israel’s military operation in Gaza deepens its renewed offensive.

The ceasefire between Israel and Hamas that had begun in January ended in March as Israel launched various air strikes on targets across Gaza.

The deal had seen the release of dozens of hostages and hundreds of Palestinian prisoners, but collapsed before it could move to phase two, which would have involved the release of all hostages and the withdrawal of Israeli forces from Gaza.

Please use Chrome browser for a more accessible video player

26 March: Anti-Hamas chants heard at protest in Gaza

The Israel Defense Forces (IDF) had already issued evacuation warnings to Gazans living around the southern city of Rafah and towards the city of Khan Yunis, telling them to move to the al Mawasi area on the shore, which was previously designated a humanitarian zone.

Israeli forces have already set up a significant buffer zone within Gaza, having expanded an area around the edge of the territory that had existed before the war, as well as a large security area in the so-called Netzarim corridor through the middle of Gaza.

This latest conflict began when Hamas launched an attack on Israel on 7 October 2023, killing around 1,200 people and taking around 250 hostages.

The ensuing Israeli offensive has killed more than 50,000 Palestinians, according to Gaza’s Hamas-run health ministry.

Read more:
Father demands protection after Gaza aid workers’ deaths
Anti-Hamas chants heard at rare protest in Gaza

Please use Chrome browser for a more accessible video player

Bodies of aid workers found in Gaza

Aid group Doctors Without Borders warned on Wednesday that Israel’s month-long siege of Gaza means some critical medications are now short in supply and are running out, leaving Palestinians at risk of losing vital healthcare.

“The Israeli authorities’ have condemned the people of Gaza to unbearable suffering with their deadly siege,” said Myriam Laaroussi, the group’s emergency coordinator in Gaza.

“This deliberate infliction of harm on people is like a slow death; it must end immediately.”

Continue Reading

UK

Heathrow bosses ‘warned about substation’ days before major power outage, MP committee hears

Published

on

By

Heathrow bosses 'warned about substation' days before major power outage, MP committee hears

Heathrow Airport bosses had been warned of a potential substation failures less than a week before a major power outage closed the airport for a day, a committee of MPs has heard.

The chief executive of Heathrow Airline Operators’ Committee Nigel Wicking told MPs of the Transport Committee he raised issues about resilience on 15 March after cable and wiring took out lights on a runway.

A fire at an electricity substation in west London meant the power supply was disrupted to Europe’s largest airport for a day – causing travel chaos for around 200,000 passengers.

“I’d actually warned Heathrow of concerns that we had with regard to the substations and my concern was resilience”, Mr Wicking said.

“So the first occasion was to team Heathrow director on the 15th of the month of March. And then I also spoke to the chief operating officer and chief customer officer two days before regarding this concern.

“And it was following a number of, a couple of incidents of, unfortunately, theft, of wire and cable around some of the power supply that on one of those occasions, took out the lights on the runway for a period of time. That obviously made me concerned.”

Mr Wicking also said he believed Heathrow’s Terminal 5 could have been ready to receive repatriation flights by “late morning” on the day of the closure, and that “there was opportunity also to get flights out”.

However, Heathrow chief executive Thomas Woldbye said keeping the airport open during last month’s power outage would have been “disastrous”.

There was a risk of having “literally tens of thousands of people stranded in the airport, where we have nowhere to put them”, Mr Woldbye said.

This breaking news story is being updated and more details will be published shortly.

Please refresh the page for the fullest version.

You can receive breaking news alerts on a smartphone or tablet via the Sky News app. You can also follow us on WhatsApp and subscribe to our YouTube channel to keep up with the latest news.

Continue Reading

Business

What are Donald Trump’s tariffs, what is ‘liberation day’ and how does it all affect the UK?

Published

on

By

What are Donald Trump's tariffs, what is 'liberation day' and how does it all affect the UK?

If there is a word that has dominated Donald Trump’s second term, it’s tariffs. 

Aluminium, steel, cars and champagne have all been in his firing line, while China, Canada and Mexico are the countries targeted with the heaviest costs.

Along the way, there have been threats, pauses and postponements.

So what are tariffs, what is in the pipeline – and what could all this mean for the UK?

What are tariffs and why is Trump threatening to use them?

Tariffs are taxes on goods imported into the US.

It is the importers buying the goods who pay the tariffs – therefore, American companies.

Ultimately, the intent is to protect US manufacturing and bolster jobs by making foreign-made products less attractive.

However, there is a knock-on effect: to compensate for tariffs, companies put up their prices, so customers end up paying more for goods.

Tariffs can also damage foreign countries as they make their products pricier and harder to sell.

In his second term, Mr Trump has frequently used them – or the threat of them – as a trade weapon.

Please use Chrome browser for a more accessible video player

Trump’s tariffs: What can we expect?

They are a key part of Mr Trump’s efforts to reshape global trade relations, and he plans to impose a swathe of what he calls “reciprocal” taxes that would match tariffs levied by other nations.

Tariffs were also part of his playbook in his first term, when he imposed taxes on most goods coming from China and used them as a bargaining chip to force Canada and Mexico to renegotiate a North American trade pact.

On his first day back in office, the US president promised 25% tariffs on all products coming into the US from its nearest neighbours Mexico and Canada – ostensibly to force the countries to tackle illegal migration and fentanyl crossing the border.

What is liberation day?

Mr Trump has branded 2 April “liberation day”, when he could unveil the reciprocal tariffs on countries deemed to be giving the US a bad deal on trade.

The extent of potential tariffs and countries affected remains unclear, with Mr Trump at times sending mixed messages.

On 30 March, he said “all countries” could expect to be hit by tariffs.

Please use Chrome browser for a more accessible video player

What is Trump’s ‘Liberation Day’?

Speaking from Air Force One, the US president rubbished a question from a reporter who asked whether it was true he was planning on targeting between 10 and 15 countries.

“Who told you 10-15 countries? You didn’t hear it from me,” he said.

When pressed on how many he was planning to hit, he said: “You’d start with all countries, let’s see what happens.”

Two days prior, he said he was open to carving out deals with countries seeking to avoid US tariffs, but that those agreements would be negotiated after 2 April.

He had previously said he “may give a lot of countries breaks, but it’s reciprocal”, adding: “We might be even nicer than that.”

How could the UK be affected?

The UK hopes an economic deal with the US will spare the country from some of the tariffs.

Sir Keir Starmer and Mr Trump have had “productive negotiations” towards a UK-US “economic prosperity deal”, Downing Street has said.

Please use Chrome browser for a more accessible video player

‘Everything on table over US tariffs’

The two leaders discussed a possible deal in a phone call on Sunday and agreed negotiations will “continue at pace”, according to a statement released on Sunday 30 March.

The day before the so-called “liberation day”, Sir Keir told Sky News political editor Beth Rigby the UK was “working hard on an economic deal” with the US and said “rapid progress” has been made.

But, he admitted: “Look, the likelihood is there will be tariffs. Nobody welcomes that, nobody wants a trade war.

“But I have to act in the national interest and that means all options have to remain on the table.”

Sir Keir added: “We are discussing economic deals. We’re well advanced.

“These would normally take months or years, and in a matter of weeks, we’ve got well advanced in those discussions, so I think that a calm approach, a collected approach, not a knee-jerk approach, is what’s needed in the best interests of our country.”

Mr Trump has not explicitly said the UK is in his sights for further tariffs, though he has described VAT – a tax added on all goods and services in the UK – as unfair.

In deciding what is a reciprocal tariff for the UK, it’s possible Mr Trump could use the tax, typically 20%, to decide.

Data shows no great trade imbalances – the gap between what you import and export from a certain country – and UK figures show no trade deficit with the United States.

UK ministers have previously suggested this could be good news for avoiding new levies.

But the tariffs Mr Trump has already announced would have a big impact on the UK – particularly the car tariff.

Please use Chrome browser for a more accessible video player

Business secretary hopes Trump tariffs will be ‘reversed in weeks or months’

Jonathan Reynolds, the business and trade secretary, told Sky News he is “hopeful” the tariffs can be reversed soon.

He warned: “The longer we don’t have a potential resolution, the more we will have to consider our own position in relation to [tariffs], precluding retaliatory tariffs.”

He added the government was taking a “calm-headed” approach in the hope a deal can be agreed, but said it is only “reasonable” that retaliatory tariffs are an option, echoing Sir Keir’s sentiments over the weekend.

What tariffs have already been announced?

Some tariffs have already come into effect, while Mr Trump has confirmed some that will come in on 2 April.

He has said a 25% tariff on all cars imported to the US will come into effect, with a similar tariff on car parts expected to follow in May.

This could prove even more complicated for American car makers, who source components from around the world even if the vehicle is made in the US.

Trump tariffs teaser for SEO liberation day explainer

But Mr Trump has insisted the move will “continue to spur growth”, pointing to plans from Hyundai – the South Korean car maker – to build a $5.8bn (£4.5bn) steel plant in Louisiana.

The tariff could have a huge impact on the UK’s car industry, including on manufacturers such as Jaguar Land Rover, Aston Martin and Rolls-Royce.

Official data shows the US is the UK car sector’s largest single market by country, accounting for £6.4bn worth of car exports in 2023 – 18.4% of the total.

Trump has also said he will place a 25% tariff on all imports from any country that buys oil or gas from Venezuela, which includes the US itself – in addition to imposing new tariffs on the South American country.

On 12 March, a 25% tariff on all steel and aluminium imports to the US came into effect, affecting UK products worth hundreds of millions of pounds.

The move came after he placed a 10% tax on all imports from China, which he later doubled to 20%.

He placed 25% tariffs on Mexico and Canada, but paused them for a month two days after they came into effect, meaning they are set to resume on 2 April.

The pause did not fully cover a tariff of 10% on Canadian energy products.

What has been the global response to tariffs?

There has widely been condemnation of the tariffs, especially from countries worst affected like Mexico and Canada.

Please use Chrome browser for a more accessible video player

Canadian PM: ‘Tariffs are an attack’

Some have imposed, or threatened to impose, retaliatory tariffs.

China has already hit back with retaliatory tariffs covering a range of US goods, including a 15% tariff on coal and liquefied natural gas products, a 10% tariff on US crude oil and tariffs of up to 15% on key US farm exports.

Canada imposed tariffs of its own on US products, including a 25% reciprocal tariff on US steel and aluminium products and tariffs worth an estimated C$29.8bn (£16bn) on a wide range of US products including orange juice, peanut butter, alcohol, coffee and clothing.

Read more on tariffs:
It may be harder for the UK to trump metals tariffs
Stock markets tumble as Trump tariffs loom

The European Union has said it will impose retaliatory tariffs on the US, but when they will come into force is unknown.

The European Commission initially threatened to impose “countermeasures” affecting €26bn (£21.9bn) of US goods from 1 April, but later delayed this until the middle of April.

The bloc said the delay was because it wanted “additional time for discussions” with the US after Mr Trump threatened a 200% tariff on EU alcohol – including wine and champagne – if the bloc imposed duties on US whiskey.

Any tariffs imposed by the bloc would not only impact US steel and aluminium products, but also textiles, home appliances, agricultural goods and whiskey.

Why tariffs could cost you – even if Trump spares UK

Even if no tariffs are put on all UK exports to the US, consumers globally will still be impacted by the wider trade war, particularly in the US.

Economists believe that tariffs will raise costs in the US, sparking a wave of inflation that will keep interest rates higher for longer. The US central bank, the Federal Reserve, is mandated to act to bring inflation down.

More expensive borrowing and costlier goods and services could bring about an economic downturn in the US and have knock-on effects in the UK.

Forecasts from the National Institute of Economic and Social Research (NIESR) predict lower UK economic growth due to higher global interest rates.

It estimated that UK GDP (a measure of everything produced in the economy) could be between 2.5% and 3% lower over five years and 0.7% lower this year.

The Centre for Inclusive Trade Policy thinktank said a 20% across-the-board tariff, impacting the UK, could lead to a £22bn reduction in the UK’s US exports, with the hardest-hit sectors including fishing and mining.

Continue Reading

Trending