With the 119th Congress well underway and a new President sworn in, issues in Washington are travelling at warp speed to kick off 2025. President Trump has wasted no time in issuing a flurry of Executive Orders (EO), covering everything from the border to government waste to renaming significant geographical locations. The pace has been so quick, that things change on an hourly basis – something that Washington is certainly not used to and a far cry from the slow and steady approach that usually dictates government progress.

There are numerous critical issues that President Trump has embarked upon. He has tasked Elon Musk with seeking out and eliminating government waste, along with the reduction of the size of government through the Department of Government Efficiency (DOGE). This has happened so quickly that many have not had time to react. There are a flurry of lawsuits being filed challenging this action, which will ultimately rest with the Supreme Court, that will have to rule on the extent of Executive power when it comes to workforce decisions, compensation levels, and funding government programs that have been passed into law. Almost every president in the modern era has tried in some way to do the same thing, but with questionable success. Time will tell as to what effect Donald Trump will have on the federal bureaucracy.

Tariffs update

Another area of note pertains to tariffs. Shortly after being sworn in, President Trump announced tariffs on Colombia, after that country refused to accept a military flight repatriating migrants. After roughly 38 minutes, Colombia relented, and the President turned his attention to America’s two main trading partners – Canada and Mexico. Even though the USMCA trade accord was negotiated during the first Trump term, the trade deficit with both countries has increased significantly during the four years former President Biden was in office. With a threat of 25% tariffs on everything (apart from 10% on Canadian petroleum products), a deal was reached with both countries to delay implementation for 30 days while negotiations continue.

While this potential action has created uncertainty, it has already obtained much of what President Trump has wanted — namely increased commitment from both countries on border security, classifying drug cartels as terrorist groups, and establishing joint task forces on eliminating fentanyl and other drug distribution networks. Since then, an additional 25% tariff has been announced (but not implemented at this writing) on steel and aluminum imports. As a result of this, and the unlikely takeover of US Steel by Nippon Steel, the meeting this week between President Trump and Japanese PM Shigeru Ishiba bore some fruit. Instead of buying US Steel outright, a proposal to allow Nippon Steel to invest $950 billion into USS, significantly upgrading the Gary Works in Indiana, as well as restarting a long-shuttered tin production facility, has been presented. At the time of this writing, focus has also shifted to reciprocal tariffs on EU products, with the automotive sector being highlighted – the US currently has a tariff of 2.5% on auto imports from the EU, while the EU imposes a 10% tariff on American cars imported into Europe. With the addition of Value Added Tax (VAT), that figure can rise to as high as 30%. The United States Trade Representative designee, Jamieson Greer, has yet to be confirmed by the Senate and will need to hit the ground running as soon as this is finalized.

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There are ongoing negotiations with America’s trading partners as of this writing. Keep in mind that President Trump’s hallmark is that of being a negotiator and much of this is leverage within those negotiations. So far, it seems as though he is succeeding in getting what he wants. Should things go in the other direction, it is also important to keep in mind that waivers for certain products and industries could happen, based on tariff implementation in his first term. While this makes long-term planning difficult, it is critical to understand the framing of potential tariffs.

While trade policy and government efficiency are being focused on by the executive branch, the legislative branch is focused on budget and tax policy. Government funding is set to expire in March on the FY25 budget, as the result of a Continuing Resolution (CR) passed in December during the waning days of the Biden Administration. While that still needs to be figured out, FY26 budget, tax, and spending is being negotiated around the clock. At this writing, the budget resolution that will form the framework for budget reconciliation between the House and Senate is about to be voted out of the House Budget Committee.

Budget reconciliation remains extremely fluid given the number of tax cuts proposed (including the extension of the TCJA or Trump tax cuts in 2017 that expire at the end of this year) and trying to reduce the deficit at the same time. While there is a traditional friction between the House and Senate no matter which party controls the chambers, there has been a difference of opinion within the House. Speaker Mike Johnson (R-LA) and his leadership team remain committed to passing President Trump’s agenda.

However, some factions including the House Freedom Caucus, have suggested that the cuts run too deep and have proposed certain measures like increasing the corporate income tax rate to offset other reductions. In the Senate, Majority Leader John Thune (R-SD) has his work cut out for him as the newest Senate Republican leader since 2007, taking over from Sen. Mitch McConnell (R-KY). With the debt ceiling set to expire shortly, Republicans have proposed a $4 trillion increase to prevent ongoing rancor in Congress and a potential default on the nation’s debt, while budget issues are resolved.

With developments in Washington seemingly changing on a minute-by-minute basis, ASA is monitoring and in touch with Congress as negotiations progress. We will keep you updated as developments allow. If you have any questions, please contact ASA VP of Advocacy Steve Rossi at srossi@asa.net.