Morning Report — Trump stirs economic uncertainty

In today’s issue:

• President faces economic doubts
• Congress races to avert a shutdown
• Hearing set for detained pro-Palestinian protester
• Trump tightens the screws on Zelensky

President Trump marked 50 days in office Monday confronting a grim report card that raised new doubts about his tariff policy and his theory that chaos improves leadership leverage.

Financial markets, reflecting investors’ fears, sent the Dow Jones Industrial Average down nearly 900 points Monday while the Nasdaq composite suffered its worst day since 2022. A three-week market sell-off intensified.

The plunge followed anxieties about Trump’s trade wars, consumers’ ennui, the labor market and stubbornly high prices. Trump was asked Sunday if he was worried about a recession this year.

“I hate to predict things like that,” Trump told Fox News.

Reuters: Monday’s U.S. market losses were estimated at $4 trillion in value.

SELF-INFLICTED UNCERTAINTY: Economists across the political spectrum point to the president’s pattern over seven weeks of stirring confidence-sapping uncertainty among businesses, everyday consumers and investors, not to mention the federal bureaucracy and on Capitol Hill. Financial markets thrive on stability and predictability. Trump’s on-off tariffs aimed at Canada and Mexico, China, and promised in April against exporters everywhere are the opposite of predictable.

The president’s rolling federal layoffs, firings, frozen grants to contractors and shuttered agencies under the Department of Government Efficiency (DOGE) have produced ripples of unease nationwide, even if most Americans support the general goals.

Former President Biden lamented that voters blamed him for high prices in the aftermath of the pandemic, even as economic indicators proved resilient. Six months before the November elections, most Americans told pollsters the economy was in recession, a false impression tied to inflated prices and wage stagnation. U.S. economic growth at the time had been increasing for years.

Trump told voters he would drive down prices, cut taxes, ease federal regulations, produce more energy, adopt protectionist policies and share the resulting national wealth with everyday Americans.

Those promises, however, appear distant and uncertain, Torsten Slok, the chief economist at Apollo, a private equity and asset-management firm, recently told The New Yorker. If consumers rein in purchases while companies and the government shed jobs and financial markets quake amid global upheavals, the net result is anxiety rather than confidence.

“What we are still trying to understand is the magnitude of the shock,” Slok said. “What are the sizes of the tariffs and the DOGE layoffs? If you give me that information, I can use it to run some simulations and see what happens to the economy. But it isn’t just the magnitude of the shock that is unclear. It is also the duration. How long will it last? Without that information, it’s very difficult to look forward.”

Mark Zandi, chief economist with Moody’s Analytics, told NPR, “You need … some confidence in the rules of the road.”

WHAT DOES TRUMP WANT? Economist Douglas Holtz-Eakin, president of the center-right American Action Forum and former director of the Congressional Budget Office, told CNBC last month that Trump’s tariffs are problematic.

“In the analogy of the Fed, there’s no forward guidance. No one knows what the end point is. What does [Trump] want to accomplish? How high do they go? Why do they go that high? How do you make a plan in this environment?” he said. “That’s terrible for the markets and very bad for the business community, as well.”

The president maintains that tariff can be an effective negotiating tool and when applied can level the playing field with countries that have a higher average tariff on imports than America’s. White House National Economic Council Director Kevin Hassett predicted Monday that the first quarter will “squeak” by with expansion, likely followed by stronger growth in the second quarter.

NewsNation: Is the U.S. headed for a recession?

Former Trump economic adviser Stephen Moore told Fox News on Sunday that Trump’s tariff policy is “misguided.”

“I think we have a very wobbly economy. We saw a not-very-good jobs report on Friday. The consumer confidence numbers are sinking, and other indicators are not positive,” he said.

Two economists who served Democratic presidents echo the criticisms that uncertainty in Trump’s tariff policy poses economic perils.

DO NO HARM: “In just about every case, tariffs are bad for your economy. … Even just putting them on and putting them off is itself harmful,” said former Obama White House economic adviser Jason Furman. “You never want self-imposed uncertainty if you can avoid it,” he said during an interview last week with the “Security Economics” podcast.

Former Treasury Secretary Larry Summers, who, like Furman, served in the Clinton and Obama administrations, told The Free Press last week that potential downsides posed by Trump’s tariffs are stagflation, higher inflation and “withdrawals of confidence and purchasing power that could possibly tip the economy into recession. … Every kind of uncertainty premium is going way up.”

SMART TAKE with NewsNation’s BLAKE BURMAN:

Now comes the challenging part for House Republicans.

The powerful Ways and Means Committee, which is tasked with putting together what will eventually be the tax cuts proposal President Trump hopes to sign into law, is already facing GOP pressure.

Twenty-one House Republicans wrote to Ways and Means Chair Jason Smith (R-Mo.) asking him to limit changes to energy tax credits that were passed under Democrats.

“Both our constituencies and the energy industry alike remain concerned about disruptive changes to our nation’s energy tax structure,” the Republican lawmakers argued in their letter.

We will likely see more Republicans raise policy concerns as this process plays out, as this will be massive legislation with serious implications for 2026 (and beyond).

Remember: 13 House Republicans voted against the tax cuts in 2017, and party leaders are dealing with a significantly smaller margin now.

Burman hosts “The Hill” weeknights, 6p/5c on NewsNation.

3 THINGS TO KNOW TODAY:

Strict federal rules governing organ transplant waiting lists are not being followed. An investigation from The New York Times uncovered a dramatic shift toward expediency and favoritism in the transplant system managed by nonprofit organizations.  

The United States has been added to CIVICUS’s monitoring list of potential human rights threats, a move the global nonprofit says is directly linked to Trump’s actions since his return to the White House in January.

The president’s Department of Government Efficiency must produce requested emails and documents sought in a lawsuit “as soon as practicable” because the team has all the hallmarks of an agency covered by the Freedom of Information Act, a federal judge ruled Monday. Why does it matter? Because the administration has suggested DOGE is a presidential advisory group, which could claim executive privilege.

LEADING THE DAY

SHUTDOWN WATCH: If Congress doesn’t pass a spending package by midnight on Friday, the federal government will shut down. To keep the lights on, Speaker Mike Johnson (R-La.) has to pull off a feat: unite his fractious, razor-thin majority. The House is set to vote today on a stopgap bill that would keep the government funded through Sept. 30, boost funding for defense and impose cuts for nondefense programs. The package passed through the chamber’s Rules Committee late Monday.

Republicans have touted the stopgap as “clean,” The Hill’s Emily Brooks and Mychael Schnell report. But Democrats argue the measure is anything but, hammering away at what they say will be cuts to health care, nutritional assistance and veterans’ benefits. House Minority Leader Hakeem Jeffries (D-N.Y.) and his two deputies announced Saturday they will oppose the bill, and leadership is whipping against the measure. 

“We are planning to oppose this CR. The American people want us to fight. And they’re going to see us fight,” Rep. Hillary Scholten (D-Mich.) told CNN on Monday. “We just need three courageous, patriotic Republicans to join us and prevent this disastrous continuing resolution because … it is so harmful to the American people [by] cutting Medicaid, cutting Medicare, threatening Social Security, cutting veterans benefits.”

Should Democrats oppose the stopgap in unison, Johnson will have to rely on his slim majority to get the measure across the finish line — and no further “no” votes on the GOP side. (Rep. Thomas Massie (R-Ky.) is already a confirmed “no,” vote, and Trump on Monday night vowed to “lead the charge” to unseat Massie over that choice.) Only then can the Speaker focus on his next hurdle: daring Senate Democrats to reject the package.

The Hill: Almost a dozen House Democrats in Trump-won districts have yet to reveal if they’ll join Democratic leaders to oppose the GOP bill or hop over the aisle to help Republicans send the package to the Senate.

BACKFIRE RISK? Upper-chamber Democrats are leery of blocking the bill, writes The Hill’s Alexander Bolton, fearing that a shutdown may backfire by giving Musk and the Trump administration more leverage to force federal workers into retirement.

Sen. Mark Kelly (D-Ariz.) said there’s growing uncertainty about how long federal departments and agencies would remain shuttered, and that he’s concerned about “Musk, who is shutting down parts of the government already.”

“Who knows what he’s going to want to open back up? That is a huge risk,” he warned. “Maybe they decide that entire government agencies don’t need to exist anymore.”

The New York Times: Cutting Medicaid? Here’s how Republicans in the House and Senate could change the program as part of the federal budget process.

CABINET: Elon Musk and Secretary of State Marco Rubio sought to project unity on Monday following a private clash at a recent Cabinet meeting, with Trump trying to play mediator. The president brought the two men together for dinner at Mar-a-Lago on Saturday, one day after it was reported that Musk and Rubio had an explosive confrontation over Musk’s efforts to slash the size of the government. Trump has been eager to downplay any kind of infighting reminiscent of his first term among top aides. 

“I think the key thing here is you saw a shift in how the president deals with Elon, when he talks about a scalpel instead of a hatchet,” said one Trump ally who is close to the White House. “There was really some consternation of, ‘If I’m in charge of an agency, why am I not making these decisions?’”

The administration will cancel 83 percent of programs under the U.S. Agency for International Development, Rubio announced Monday. His USAID posture in the administration is a clear about-face from his USAID support as a former Florida senator.

Politico: The U.S. Department of Agriculture canceled $1 billion in local food purchasing for schools and food banks.

The Washington Post: The National Institutes of Health will cancel or cut back dozens of grants that research people’s reluctance to be vaccinated and how to increase vaccine acceptance as Health and Human Services Secretary and vaccine skeptic Robert F. Kennedy Jr. overhauls the agency.

The Hill: The Senate on Monday confirmed former Rep. Lori Chavez-DeRemer (R-Ore.) to lead the Department of Labor.

The Hill: Department of Homeland Security Secretary Kristi Noem on Monday named Todd Lyon as acting chief of Immigration and Customs Enforcement (ICE) and Madison Sheahan, her former aide as governor of South Dakota, to be the agency’s deputy director.

WHERE AND WHEN

• The House will meet at 10 a.m. The Senate will convene at 10 a.m. 
• The president will have lunch at the White House with Vice President JD Vance at 12:30 p.m. Trump will speak to the Business Roundtable at 5 p.m. in Washington.
• Secretary of State Marco Rubio is in Jeddah, Saudi Arabia, where he and White House national security adviser Mike Waltz expect to meet midday local time with Ukrainian Foreign Minister Andrii Sybiha, Ukrainian Head of the Presidential Office Andriy Yermak and Ukrainian Minister of Defense Rustem Umerov.

ZOOM IN

ICE ARREST: The State Department on Monday cooperated with ICE to arrest and deport Syrian-born activist Mahmoud Khalil, who is a legal permanent resident and holds a green card, for his involvement in pro-Palestinian campus protests last year at Columbia University. Trump took credit for the arrest and described “many to come.”

A federal judge on Monday scheduled a Wednesday court hearing for Khalil, forbidding the government from moving forward with deportation efforts before then.

“We will be revoking the visas and/or green cards of Hamas supporters in America so they can be deported,” Secretary of State Marco Rubio wrote on social platform X, sharing a news report regarding Khalil. Khalil was detained Saturday in university housing after the Department of Homeland Security accused the former student of leading “activities aligned to Hamas.” The Trump administration announced last week it was rescinding $400 million in federal grants to Columbia University for allegedly failing to thwart antisemitism on campus. The president recently described such demonstrations as “illegal.” After ICE detention, Khalil was transported to New Jersey, then to Louisiana. Khalil’s attorney, Amy Greer, said her client is married to an American citizen who is eight months pregnant. When ICE agents took Khalil on Saturday, they threatened to arrest his wife, Greer said. Columbia University said in a statement that law enforcement agents can enter university property if they produce a warrant.

NBC News: Can Khalil be deported if he has a green card?

POLITICS: Texas Gov. Greg Abbott (R) paved the way for Trump’s mass-deportation campaign and along the way evolved into an unlikely MAGA hero, according to a New Yorker profile that examines Abbott’s use of “unchecked” authority in a key border state. “He’s a tough motherf—er, and don’t believe otherwise,” said Bill Miller, a Republican lobbyist. “As governor, he has begun exercising power in a way that’s not previously been seen.”

Kentucky Republicans hoping to win Sen. Mitch McConnell’s seat in 2026 are running away from the longtime Republican leader while angling for a coveted Trump endorsement, transforming the contest into a political knife fight, The Wall Street Journal reports.

Democrats are eager to see former North Carolina Gov. Roy Cooper (D) jump into the Tar Heel State’s Senate race next year, seeing him as the most formidable challenger to Sen. Thom Tillis (R). A popular two-term governor of the purple state, The Hill’s Jared Gans and Julia Mueller write Cooper would bring name ID to a race in a state where Democrats haven’t held a Senate seat in a decade and that Trump won by 3 points in 2024.

THE SUPREME COURT on Monday granted a Colorado therapist’s request to review her challenge to a state law banning mental health care providers from engaging minors in conversion therapy, a discredited practice that attempts to change a person’s sexual orientation or gender identity to align with heterosexual or cisgender norms.

Reuters: The Supreme Court nixed a challenge to state climate suits against oil firms.

ELSEWHERE

UKRAINE: Trump is inflicting mounting pain on Ukrainian President Volodymyr Zelensky ahead of peace talks in Saudi Arabia today, as U.S. officials look to secure concessions that Trump can bring to Russian President Vladimir Putin for a ceasefire deal. Zelensky has consistently signaled Ukraine’s willingness to sign a mineral rights deal with the U.S. However, Trump said this weekend that the economic deal alone would not be enough to revive U.S. support for Ukraine’s military. It’s unclear whether the pressure has moved the two sides any closer, as Russia ramps up aerial attacks on weakened Ukrainian defenses. 

“It’s pretty clear that the deal that Trump wants is unsustainable for Ukraine, so I don’t know how much he will be able to get out of there,” said Eugene Finkel, the author of “Intent to Destroy: Russia’s Two-Hundred-Year Quest to Dominate Ukraine,” published last year.

The Trump administration may resume U.S. military and intelligence support for Ukraine if its leaders commit to a peace process during today’s talks, Rubio said. But the secretary said Kyiv would have to make concessions over land that Moscow has annexed since 2014 as part of any agreement to end the war.

Reuters: Ukraine launched its biggest ever drone attack on Moscow today, killing at least two people, injuring 18 others and causing a short shutdown at Moscow’s four airports.

CBS News: As the U.S. pause on Ukraine support has “emboldened Russia,” Trump’s terms for restarting aid are still murky.

The New York Times: Trump’s attacks give Zelensky a popularity boost in Ukraine.

GAZA CEASEFIRE: Tensions are heating up between the U.S. and Israel after the Trump administration’s unprecedented talks with Hamas ahead of crucial negotiations this week for the second phase of the Gaza ceasefire. Rubio told reporters on Monday that the Hamas talks were a “one-off” that “hasn’t borne fruit.”

NPR: Hamas is offering a truce with Israel for 5 to 10 years, a U.S. official said.

The New York Times: Everyone has a plan for Gaza. None add up.

TARIFFS: Ontario’s government is applying a 25 percent surcharge on electricity exports to three states in response to U.S. tariffs on Canada. This surcharge will affect electricity sales for 1.5 million homes and businesses across Michigan, Minnesota and New York, the Ontario government said. In total, it could cost up to $400,000 per day.

The Associated Press: Greenland today holds closely watched parliamentary elections.

NBC News: Rodrigo Duterte, former president of the Philippines, was arrested on an International Criminal Court warrant. He has been accused of crimes against humanity in connection with his war on drugs.

The Guardian: Former Australian Prime Minister Malcolm Turnbull said leaders should “not give in to bullies” after Trump bashed him on social media. Turnbull had claimed the president’s “chaos” was a gift to Chinese President Xi Jinping and that it is “ludicrous” for world leaders to “become just a conga line of sycophants” to avoid U.S. tariffs.

OPINION

■ Where a better Trump resistance would start, by Perry Bacon Jr., columnist, The Washington Post.

■ Both sides lose in culture war name games, by Chris Stirewalt, political editor, The Hill.

THE CLOSER

And finally … We might not understand Fido as well as we think. A new study suggests that no matter how much we love our four-legged, furry friends, humans aren’t all that good at interpreting their actions. We tend to rely too heavily on situational cues rather than the dog’s actual behavior.

“When it comes to just perceiving dog emotions, we think we know what’s happening, but we’re actually subconsciously relying on a lot of other factors,” Holly Molinaro, a doctoral student at Arizona State University and the first author of the new paper, told The New York Times. People who want to be attentive to their dog need to “take a second or two to actually focus on the dog rather than everything else that’s going on.”

Stay Engaged

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