Thought of the Week:
Each morning, I receive an email that consolidates links to all of President Trump’s social media posts over the past 24 hours. Over the last day and a half, I’ve received at least a dozen reports summarizing the second quarter campaign fundraising numbers for all 435 House members and in-cycle Senators. In the past week, a seemingly unending string of reports from think tanks, trade associations, consultants, and political news outlets on everything from the OBBB to appropriations to rescissions to tariffs to renovation cost overruns at the Federal Reserve to the Epstein files has flashed across my computer screen. This makes sense. I live in Washington, D.C., the nation’s capital, and I work in government affairs. To me, policy and politics is a ubiquitous presence in my daily life, and too often, I assume this to be the case for everyone. Earlier this week, my wife and I had dinner with another couple at the CAVA Group’s new steak restaurant, Bouboulina (CAVA was founded in my hometown, Rockville, MD). While the couple owns a popular string of sandwich and coffee shops in Maryland and Delaware, interestingly, over the course of the entire meal, politics never came up as a topic of conversation, which, to be honest, on my short walk home I found a bit refreshing. But maybe I shouldn’t have been so surprised. According to a Pew Research survey released last week, the vast majority of Americans say that who is president has a large impact on the country overall but a limited impact on their own personal lives. In fact, wide majorities of American adults say who is president makes a big difference for the U.S.’s standing in the world (78%); the mood of the country (76%); national security (71%); and the health of the economy (68%), but far fewer (30%), less than on-third, say who the president is makes a big difference in their own lives (another 51% say who the president is makes some difference in their lives, while 18% say it makes no difference). Although more Americans say the president has a big impact on both national issues and their personal life compared with two years ago, this is the rare public opinion metric that doesn’t seem to have much of a partisan gap. While Democrats have become slightly more likely to say it matters since President Trump took office, the juxtaposition between little personal impact and massive national and global impact illustrates how many Americans, outside of strong partisans in both parties, live their lives disconnected from politics. I’m not saying we can escape politics; the media is all over it, and we’re in an era of high political polarization, sensationalism, and dissatisfaction. As my sister, CNN’s assistant bureau chief at the time, once told me, these are TV shows, news is entertainment. But maybe we can assume that until policies clearly and directly impact lives, people will continue to think that whoever is president isn’t a big deal for them personally. I’ll have an opportunity to test this theory when I attend a wedding on Kent Island this weekend that will be filled with sailors and power boaters. I’ll let you know if politics comes up.
Thought Leadership from our Consultants, Think Tanks, and Trade Associations
Eurasia Group Predicts the Pentagon is Likely to Buy More Miners to Combat Chinese Critical Minerals Dominance. The federal government will continue to pursue a more aggressive investment strategy to jumpstart domestic minerals production (a 75% probability). A deal for the Pentagon to become the biggest shareholder of MP Materials is a signal that the Trump administration will use recent congressional appropriations to pursue direct capital injections in mining companies. This type of deal, including government equity stakes, is likely to become a new norm. This is a sea change for U.S. industrial policy; a recognition that, given the volatility and Chinese dominance of crucial minerals markets for defense and energy, loans and grants are not sufficient to promote a domestic industry. The White House has access to at least $5 billion for these types of investments. While the recently passed One Big Beautiful Bill Act (OBBBA) cut tax credits for critical minerals, it also approved billions for defense-led spending. It appropriated $5 billion for Pentagon investment in critical minerals supply chains, and another $5.3 billion for the agency to stockpile minerals, and award grants and purchase commitments. Washington and G7 allies are also likely to pursue more of these offtake agreements among other measures to place a premium on supply from outside of China. A top ask from miners, the new policy is widely thought to be one of the best strategies to stabilize commodity prices and support domestic or friend-shored supply chains in key, often small and volatile minerals markets.
Inside U.S. Trade Reports on USTR’s Stated Goal—a Reduced Goods Deficit, Not Trade Deals. Following President Trump satisfaction with the terms laid out in tariff rate letters sent to trading partners, U.S. Trade Representative (USTR) Greer noted that the goal behind the administration’s trade policy is not to secure specific trade deals but to lower the U.S. goods trade deficit and raise incomes for American households. In comments concerning domestic manufacturing, USTR Greer criticized pre-Trump trade policy, saying it had prioritized liberalization over all else—to the detriment of the industrial base. The goal now is not to conclude trade deals but tackle the goods deficit, raise incomes, and boost manufacturing. Specifically, the USTR outlined three goals: (1) to reverse the trend of the U.S. global trade deficit in goods, and keep it decreasing over time; (2) to increase real median U.S. household income; and (3) to increase manufacturing’s share of GDP. The U.S.’s total goods trade deficit is $1.2 trillion, and reducing it has been a key focus of the Trump administration. In fact, it was cited by the president as justification for the national emergency declared under the International Emergency Economic Powers Act to impose a baseline 10% tariff on nearly all imports as well as higher country-specific duties. USTR Greer cited the “reciprocal” tariff regime, which includes the baseline 10% tariff and country-specific duties, as well as tariffs on key sectors as policies he is confident will advance his goals, pointing to the reduction in the goods trade deficit with China during the first Trump administration following a slew of tariffs as well as a Reagan-era restriction on Japanese autos that brought production to the U.S. The White House insists the letters sent to trading partners outlining set tariff rates will function as the final deals for most. To date, the administration has announced three trade deals—with the U.K., Vietnam, and Indonesia. The U.S. has also agreed to an arrangement with China, and expects to finalize a deal with India along similar lines as the one with Indonesia. There is no argument that tariff revenue is soaring; according to U.S. Customs and Border Protection, the U.S. collected nearly $27 billion in duties in June for a total of $109 billion since Jan. 20. By comparison, the U.S. collected just $77 billion in tariff revenue in all of fiscal year 2024.
Politico Recognizes the GOP’s Low-Key Campaign Against Tariffs. Republican House members in manufacturing hubs are quietly working to rein in the excesses of the Trump administration’s tariff agenda—sending letters to the president’s top trade advisers and encouraging them to show restraint on tariffs. Rep. Malliotakis (R-N.Y.) led a letter sent earlier this summer from 20 GOP Ways and Means members pushing the administration to narrow the focus of any future U.S. duties on pharmaceuticals, reminding that disruptions could imperil the lives of Americans. Unlike the more confrontational messaging from vocal opponents of the White House’s trade agenda, the quiet campaign is carefully calibrated, often pairing praise for the administration’s broader efforts to revive U.S. manufacturing with objections to its most sweeping tariff proposals. For instance, a letter led by Rep. Estes (R-KS) with two dozen House Republicans commended the Administration’s commitment to restore a robust American manufacturing sector, while pressing USTR Greer to maintain a zero-tariff agreement on civil aircraft that the U.S. and other countries have held since 1979 and, implicitly, drop its plan to hike aerospace tariffs. The low-key campaign reflects mounting anxiety over the political risks of tariff hikes, as well as a coordinated push by GOP staffers working in tandem with pro-trade lobbyists and industry groups. In fact, tariff-skeptical campaigners have zeroed in on planned tariffs on the nine critical sectors currently under investigation for potential tariffs under Section 232. Lobbyists involved in promoting the letter-writing campaign say that because industry leaders saw their direct appeals to the administration falling flat, they’ve shifted focus to lawmakers with “phone call” access to the Trump administration. While Republican staffers maintain that it is categorically wrong to say they oppose Trump on trade, they also believe the White House should understand the benefits of a more measured approach.
“Inside Baseball”
Inflation Report Points to Emerging Electoral Risk for Republicans. The first inklings of tariff-related inflation showed up in this week’s CPI report, with numerous goods-related categories seeing higher-than-average price increases (however, the current pass-through to prices should not be overstated; so far, it is slow, and the producer price index report was soft). President Trump has been insulated from the negative ramifications of tariffs thus far, due largely to the fact that tariff-related inflation has taken longer to appear than many expected, and equity markets have stayed high. The most recent report, though, suggests that this political runway may be nearing its end. Inflation is a major political risk for the Republican Party heading into the midterms; it’s viewed by many analysts as an incumbent-killer. There is no reason to expect anything different this time around, particularly because President Trump campaigned in 2024 on an explicit promise to bring down prices that had risen during the Biden administration. Should tariff-related inflation continue—and there is no reason to expect it will not—it will create a political quandary for the GOP in vulnerable House and Senate seats next year, as they will need to tread a careful path between demonstrating independence from the White House and avoiding any splits with the MAGA base, still the most powerful electoral force in Republican politics.
In Other Words
“There was supposed to be an Epstein joke here but I guess it got deleted. Must have probably deleted itself right? Probably never existed, actually. Let’s move on as a country and ignore that,” Shane Gillis MC-ing the ESPY awards.
“I’ve got one office left in me,” former Ambassador to Japan Rahm Emanuel teasing a presidential run.
Did You Know
Presidents Lincoln (Kentucky) and Arthur (Vermont) are the only two presidents born before 1860 who were not born in one of the 13 original colonies.
Graph of the Week
A Tale of Two CPIs: Goods Inflation Dwarfed by Services. The June CPI report clearly indicated a passthrough of tariffs imposed earlier this year into select categories of consumer goods, suggesting inflation may stay elevated over the remainder of the year. Additional tariffs due in August would filter into consumer inflation going into the holiday season, posing risks of a significant slowdown in growth by year-end. Disinflation in services continued to provide an offset to goods inflation with consumers shying away from more discretionary purchases. Despite a fifth consecutive downside surprise on Core CPI, the Conference Board estimates tariffs may substantially raise inflation in the coming months as the data clearly shows goods inflation rising on the back of merchandise most prone to tariffs.
