Thought of the Week:
My wife has been on me for months (well, years) to consolidate our two storage units into one. We have a small storage unit in the building we live in and maintain another one in a nearby town close to the home we sold when we decided to downsize. This past weekend, I started the project. Going through boxes in our downstairs unit, I came across a couple sets of books—a mix of classics (a hardcover The Red Badge of Courage was in there), sports novels (Andre Agassi’s Open may be the best sports autobiography I’ve ever read), and college reading assignments (Catch-22 was right on top). Catch-22 is the 1961 Joseph Heller satirical novel meant to highlight the circular bureaucracy inherent in wartime governments. The loophole, or catch, in the novel involves an Air Force regulation that asserts an aviator is mentally unsound to fly if he willingly continues to pilot dangerous missions, but if he makes a formal request to be released from such missions that act alone proves he’s sane and therefore ineligible to be relieved from flying his mission. In contemporary lexicon, a “catch-22” is used to describe any illogical, circular, or senseless situation or a dilemma that presents two equally undesirable alternatives; in other words, a “catch-22” describes a paradoxical situation where someone is trapped by conflicting rules or requirements, making it impossible to achieve a desired outcome. Classic examples include being unable to obtain a job without experience, but also being unable to gain experience without a job, or being unable to get a loan without adequate credit, but at the same time being unable to build credit without getting a loan. Earlier this week, I attended a trade association lunch briefing featuring officials from the Commerce Department and Bureau of Industry and Security (BIS). In answering member questions on tariffs, country trade agreement negotiations, and general business uncertainty caused by the administration’s trade policy, more than assuaging corporate concerns, the policymakers unintentionally highlighted the catch-22s businesses often face when approaching this administration. In answering a question concerning ongoing trade agreement negotiations, the officials encouraged firms to come forward and raise specific issues with the White House, but then cautioned about the danger of using certain words such as “exemption” or “exclusion.” When a question was raised about the best way to approach the Commerce Department, the speakers stressed how the Secretary is extremely data focused and relies on reams of information before making a decision, but then they recommended sending in no more than a one-pager that succinctly states the problem at hand. The overarching catch-22 faced by business was lost on no one in attendance: your business might be in jeopardy if you don’t approach the administration, but if you do approach the administration, you may become a target that places your business in jeopardy. The Washington office is here to help—we have learned the words and phrases accepted by the White House; we maintain a network of consultants, lobbyists, and think tanks with insight into the workings of and contacts in the executive branch; and we have experience advising when, and when not, to engage; in fact, just this week we advised one business unit not to engage at all because a bill was going to be signed regardless of their input. For me, if I keep all my books, I may not be able to consolidate two storage units to one, but if I don’t consolidate two units to one, I may not have a comfortable place to re-read any of these books. Come to think of it, my dilemma may not be a catch-22 at all.
Thought Leadership from our Consultants, Think Tanks, and Trade Associations
Inside U.S. Trade Reports Supreme Court has Set a Hearing Date for Tariff Suits. The Supreme Court will hold oral arguments in the combined legal challenges to President Trump’s International Emergency Economic Powers Act (IEEPA) tariffs the morning of November 5, solidifying its earlier plan to hear the suits sometime in the first week of November. The court posted a new hearing calendar for November showing the two consolidated tariff cases—known as Learning Resources v. Trump and Trump v. V.O.S. Selections—as the only ones the justices will hear on November 5. Arguments are slated to begin at 10 a.m. and to run for an hour, though Supreme Court hearings generally run long. Both cases will test whether the White House can lawfully use IEEPA as the basis for sweeping, frequently changing tariffs on China, Mexico, Canada, and U.S. trading partners generally. The administration has argued that a provision in the law allowing presidents to “regulate . . . importation” of foreign-owned goods during a declared emergency authorizes tariffs, but litigants including individual importers, small companies, and Democratic state attorneys general say that interpretation stretches IEEPA beyond what Congress intended and potentially violates constitutional limits on executive power. So far, three courts have agreed with the challengers: the Court of International Trade, the U.S. Court of Appeals for the Federal Circuit, and the U.S. District Court for DC. The DC district court held that IEEPA does not allow tariffs at all, while CIT and the Federal Circuit said that even if it does, the “magnitude” of President Trump’s duties go beyond what the law constitutionally permits. The Justice Department filed its opening brief in the combined cases last week, with plaintiffs due to respond by October 20. A final decision could arrive at any point after the November argument concludes; the justices often take several months to craft their rulings, especially in politically significant cases, but the tariff suits have moved on a greatly accelerated schedule.
Observatory Group Says President Trump’s State Capitalism Creates Opportunities for MNCs and Investors. President Trump has found a government agency that he actually likes—the International Development Finance Corporation (DFC). He plans to use it to support U.S. national and economic security, rather than the economic development of emerging market countries. The nominee to lead DFC, Benjamin Black (son of Leon Black), stated, “Implicitly and explicitly, Congress has challenged DFC to make a greater impact and to serve as a substantive economic counterweight to China and its Belt and Road Initiative and other global strategic competitors.” DFC has not generated substantial headlines thus far because President Trump has used different pots of money (CHIPS Act, Inflation Reduction Act, etc.) and legal authorities (Defense Production Act) to invest in companies like Intel, MP Materials, and to retain a “golden share” in Nippon Steel. Expect to hear a lot more about DFC initiatives to promote American economic security abroad in the months ahead. The White House is interested in facilitating investment in sectors ranging from mining and mineral processing to maritime and technology. In the end, DFC is there to mobilize private investment and ensure the U.S. uses its wealth to influence business decisions globally. It could also greatly improve the prospective return/risk profiles for multinational companies and funds investing in such sectors via its initiatives, endorsement, capital, and sovereign risk insurance.
“Inside Baseball”
Government Shutdown Likely as Congressional Recess Blocks Potential Offramps. A shutdown at the end of the month is now likely (60% odds). While Democrats have dug in more strongly than expected against the House-passed continuing resolution (CR) to fund the government, and are demanding multiple changes to secure their support, President Trump may hold the key to reaching any agreement between the two parties. In fact, House Speaker Johnson (R-LA) appears ready to keep his members on recess until after the funding deadline has passed, limiting the opportunity for a back-and-forth with the Senate. And with the Senate also on recess until September 29, there is extremely limited time for a vote to avoid a shutdown. The most straightforward path to avoiding a shutdown would be for the group of Senate Democrats who backed the March CR to sign off on the current House-passed version, though even then, the procedural time requirements in the Senate mean that a vote may not be possible before the end of the month. While a meeting between President Trump and Democratic leaders would be a signpost for a potential off-ramp, Democrats are asking for a lot in exchange for their votes, with the most important item being an extension of Affordable Care Act subsidies set to expire at the end of the year.
Deregulation to Accelerate with Senate Rules Change. President Trump’s deregulation efforts have been touted since January as essential to his economic agenda. Combined with trade/tariffs and the One Big Beautiful Bill, deregulation is the final pillar that administration officials’ claim will lead to unprecedented rates of real economic growth. To date, the backlog of Senate-confirmed positions to key agencies and departments has slowed the rollback of regulations; this on top of the months it always takes to conform with the Administrative Procedures Act (APA). However, the Senate changed its rules earlier this month to confirm lower-level Presidential appointments far more quickly using an en bloc process. The rules change should be a boon to the White House’s deregulatory agenda beginning in Q4 2025 as vital personnel take up their positions across the administration. In particular, energy and financial services deregulation should be accelerated.
In Other Words
“I’m telling you that if you don’t get away from the green energy scam, your country is going to fail. And if you don’t stop people that you’ve never seen before, that you have nothing in common with, your country is going to fail. You’re doing it because you want to be nice, you want to be politically correct, and you’re destroying your heritage,” President Trump during his UN General Assembly speech.
“That’s where I disagreed with Charlie. I hate my opponent, and I don’t want the best for them. I’m sorry, Erika—now Erika can talk to me and the whole group and maybe they can convince me that that’s not right—but I can’t stand my opponent,” President Trump at the Charlie Kirk memorial service.
“If the government gets in the business of saying, ‘We don’t like what you, the media, have said, we’re going to ban you from the airwaves if you don’t say what we like,’ that will end up bad for conservatives,” Sen. Cruz (R-TX) remarking that the Federal Communications Commission’s pressure campaign against late-night host Jimmy Kimmel set a dangerous precedent for free speech.
Did You Know
A bronze statue of President Trump and Jeffrey Epstein holding hands was unveiled on the National Mall earlier this week. Despite a National Park Service permit that was to allow the sculpture to remain in place for nearly a week, the statue was removed just one day after it was erected. The Department of the Interior contended that the statue was removed because it was not compliant with the permit issued.
Earlier this week, the White House unveiled a Presidential Walk of Fame just outside the Oval Office in which the portrait of former President Biden is actually an image of an autopen.
Graphs of the Week
The Conference Board’s Leading Economic Index (LEI) Declines in August. In August, the LEI registered its largest monthly decline since April 2025, signaling that more headwinds may be ahead. Overall, the LEI suggests that economic activity will continue to slow, with a major driver of the slowdown being higher tariffs, which already trimmed growth in H1 2025 and will continue to be a drag on GDP growth in the second half of this year and into H1 2026. Although not forecasting recession currently, the Conference Board expects GDP to grow by just 1.6% in 2025, a substantial slowdown from 2.8% in 2024.
