PSW Weekly Round-Up - 4/14

Legislative Update

House and Senate. Both chambers are in recess and will return April 28.

Budget Resolution. When one party controls both houses of Congress and the White House, they have always been on the same page when drafting a budget resolution that provides instructions for reconciliation legislation. This time, though, House and Senate Republicans have agreed to disagree. Each chamber has decided to give its committees different instructions on how much spending should be cut and how much revenue can be devoted to tax breaks.

The latest action came Thursday when the House voted 216-214 to approve the budget resolution that the Senate approved 51-48 on April 5. The House vote was delayed from Wednesday, after more than a dozen Republicans voiced opposition to the measure, but in the end only two Republicans voted no.

Because the budget resolution reflects major differences between the Senate and House reconciliation instructions, Republicans will need to find common ground when they draft reconciliation legislation. On the spending side, for example, the House instructions require at least $1.5 trillion in cuts while Senate instructions call for a minimum of $4 billion in cuts. Senate Majority Leader John Thune said Thursday that the Senate would aim to match the House’s goal.

Another major difference is the Senate’s use of a current policy baseline, which assumes that it will cost nothing to extend some $3.8 trillion in tax cuts that are expiring at the end of the year. The Senate resolution then provides for at least $1.5 trillion more in tax cuts. House Budget Chairman Jodey Arrington (R-Tex.) called the Senate’s baseline a “non-starter” for “a good number” of House Republicans. Instead, the House Ways and Means Committee will be relying on the conventional baseline based on current law and has received instructions allowing for at least $4.5 trillion in tax breaks. Still another difference is that the Senate instructs the Finance Committee to increase the debt limit by $5 trillion while the House Ways and Means Committee is instructed to provide a $4 trillion increase.

The House plans to move forward with markup sessions in some of the 11 committees with reconciliation instructions the week of April 28. It’s possible that the Ways and Means Committee could mark up its tax bill the week of May 5, but no action has been announced.

Tariff Tracker. The latest on the tariff front:

• April 2. President Trump announces 10% across-the-board tariffs on all imports and higher rates for imports from over 60 countries and the European Union. Canada and Mexico were excluded but are still subject to 25% tariffs on exports to the U.S. unless the goods are compliant with the U.S.-Mexico-Canada (USMCA) agreement. Non-compliant energy and potash exports from Canada and Mexico are subject to a 10% tariff.

• April 2. Announced effective date for 25% tariff on imports from any country that imports Venezuelan oil, but the Secretary of State must still determine that countries have purchased Venezuelan oil before the tariffs kick in.

• April 3. Effective date for 25% tariffs on imported passenger vehicles and light trucks. Importers of automobiles under the USMCA will be given the opportunity to certify their U.S. content and systems will be implemented such that the 25% tariff will only apply to the value of their non-U.S. content.

• April 4. China says it will impose 34% tariffs on U.S. imports, effective April 10, in retaliation for the 34% “reciprocal” tariffs on Chinese goods that Trump announced on April 2. China also announces actions against specific U.S. companies. In addition, China orders restrictions on the export of six heavy rare earth metals as well as rare earth magnets.

• April 5. Effective date for 10% across-the-board tariffs that Trump announced on April 2.

• April 7. Trump says he will add another 50% tariff on China, in retaliation for China’s retaliation.

• April 9. Trump says he plans to impose tariffs on pharmaceuticals “very shortly.” (On Sunday, April 13, U.S. Trade Representative Jamieson Greer said the administration must first conduct an investigation before imposing those tariffs.)

• April 9 (12:01 a.m.). Effective date for the higher “reciprocal” taxes announced on April 2, including at least 104% on Chinese goods (50% from April 7 + 34% from April 2 + 20% announced in February related to fentanyl).

• April 9 (1:18 p.m.). President Trump announces on Truth Social that:
  • He is increasing the tariffs on China to 125%, effective immediately.
  • The 10% tariffs on all countries, except China, will remain in place. (The 10% across-the-board tariffs do not include Canada and Mexico.)
  • The higher tariffs announced on April 2 will be paused for 90 days. (The higher duties will go into effect July 9 for countries that have not reached an agreement with the U.S.)

• April 10. The EU says it will hold off for 90 days on tariffs of up to 25% on a range of U.S. imports that it adopted April 9 in response to Trump’s 25% tariffs on European steel and aluminum. The EU tariffs were to take effect gradually, beginning April 15, with further rounds in May and December.

• April 10. The White House clarifies that the tariffs on China are actually 145%, which includes the 20% tariffs imposed in February related to fentanyl.

• April 11. China says it will impose 125% tariffs on U.S. goods.

• April 13. U.S. Customs and Border Protection issues a directive identifying 20 categories of products that are exempt from the “reciprocal” tariffs announced April 2. The exemptions include smartphones, computers, solar cells, flat panel TV displays, flash drives, computer processors, memory chips, and other items.

• April 14. Commerce Secretary Howard Lutnick says that the exemptions are temporary, that electronic products will be “included in the semiconductor tariffs, which are coming in probably a month or two.” He added that the pharmaceutical tariffs will also be announced in a month or two.

• May 3. According to Trump’s March 26 proclamation, a 25% tariff on key imported auto parts, including engines, transmissions, powertrain parts and electrical components, will be effective on a date to be announced in the Federal Register, but no later than May 3. USMCA-qualifying parts are temporarily exempt until Commerce and Customs establish a U.S. content-based valuation system.

To recap, in addition to China’s 125% tariff on U.S. goods, the following U.S. tariffs are currently in place:

• 145% on China (except for the exempt electronic products, which are still subject to 20% tariffs related to fentanyl)
• 25% on steel, aluminum, and autos
• 25% on Canadian and Mexican imports that are not compliant with USMCA
• 10% on non-USMCA compliant potash and energy from Canada and Mexico
• 10% on all other imports (except for the exempt electronic products)

Recent Executive Actions of Note

The President’s recent executive actions include:

• Clarification of Exceptions Under Executive Order 14257 of April 2, 2025, as Amended - April 11, 2025
• Modifying Reciprocal Tariff Rates To Reflect Trading Partner Retaliation And Alignment - April 9, 2025
• Modernizing Defense Acquisitions And Spurring Innovation In The Defense Industrial Base - April 9, 2025
• Restoring America’s Maritime Dominance - April 9, 2025
• Directing The Repeal Of Unlawful Regulations - April 9, 2025
• Reducing Anti-competitive Regulatory Barriers - April 9, 2025
• Reforming Foreign Defense Sales To Improve Speed And Accountability - April 9, 2025
• Amendment To Reciprocal Tariffs And Updated Duties As Applied To Low-value Imports From The People’s Republic Of China - April 8, 2025
• Reinvigorating America’s Beautiful Clean Coal Industry and Amending Executive Order 14241 - April 8, 2025
• Regulatory Relief For Certain Stationary Sources To Promote American Energy - April 8, 2025
• Protecting American Energy From State Overreach - April 8, 2025
• Strengthening The Reliability And Security Of The United States Electric Grid - April 8, 2025
• Review of Proposed United States Steel Corporation Acquisition - April 7, 2025

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