Trump to notify trading partners soon of unilateral tariffs... President Donald Trump announced he plans to send letters to U.S. trading partners in the next one to two weeks setting out unilateral tariff rates, ahead of a July 9 deadline to reimpose higher duties on dozens of economies. “We’re going to be sending letters out in about a week and a half, two weeks, to countries, telling them what the deal is,” Trump said Wednesday. “At a certain point, we’re just going to send letters out. And I think you understand that, saying this is the deal, you can take it or leave it.”
Trump’s timeline for action has shifted before, and it remains unclear if the new deadline will hold. The administration has so far finalized a trade framework only with the UK and reached a temporary tariff truce with China. The U.S. is still pursuing deals with India, Japan, South Korea and the EU, while negotiations with China remain tense over mutual accusations of backtracking on commitments.
Trump indicated he is open to extending the July 9 deadline but doesn’t expect it to be necessary.
Meanwhile, Treasury Secretary Scott Bessent told lawmakers Wednesday that it’s “highly likely” some countries will receive an extension of the current pause on U.S. country-specific tariffs, which are otherwise set to resume July 9.
Testifying before the House Ways and Means Committee, Bessent said the Treasury is actively engaged in trade discussions with 18 “important trading partners” and that countries “who are negotiating in good faith” are likely to see the temporary suspension extended.
The 90-day tariff freeze — announced earlier this spring — was designed to give space for talks aimed at realigning trade terms with U.S. strategic goals. Bessent’s comments suggest the administration may pursue a rolling extension model, offering targeted relief to nations making diplomatic or commercial progress with the U.S.
He did not name specific countries, but recent diplomatic activity has included negotiations with Canada, Mexico, Japan, and the EU over reciprocal market access and strategic defense alignments.
Canada, U.S. exchange draft trade document amid tariff tensions... U.S. and Canadian officials have exchanged a short working document outlining potential terms for a new trade deal, according to CBC News, signaling preliminary progress toward easing strained relations between the two countries. The document, described as fewer than five pages, indicates Canada’s willingness to join President Donald Trump’s Golden Dome missile defense initiative and emphasizes commitments on border security, NATO defense spending and increased Arctic infrastructure development.
Despite this diplomatic step, sources cited indicate no finalized agreement is expected before the upcoming G7 summit in Alberta, set to begin Sunday. The two nations’ relationship has been notably strained by Trump’s tariffs on key Canadian industries like steel and aluminum and his repeated provocative suggestion that Canada should become the 51st U.S. state.
Canadian Prime Minister Mark Carney, recently re-elected on a platform of standing firm against Trump’s policies, is pursuing this new trade and security pact cautiously.
Lutnick: Europe likely last in U.S. trade negotiations... Commerce Secretary Howard Lutnick signaled that Europe is likely to be the final focus in the Trump administration’s ongoing global trade negotiations. In an interview with CNBC, Lutnick remarked that Europe would “probably be at the very, very end,” describing the bloc as “tough to deal with” due to its rigid approach in negotiations.
The comments come as the U.S. accelerates trade talks with other key partners. A framework deal with China was reached in London, highlighting progress elsewhere, while negotiations with the EU have been slowed by legal and procedural complications. Lutnick dismissed concerns that a recent court ruling pausing some Trump-era tariffs would derail talks, noting that discussions with Brussels continue, though at a “slower pace.”
Upshot: Lutnick’s remarks underscore a strategic order in U.S. trade diplomacy: finalize deals with more flexible or urgent partners — such as China — before engaging in potentially more drawn-out discussions with Europe.
U.S. tariff revenue surges, helping narrow May budget deficit... U.S. customs duties surged to a record $23 billion in May, sharply reducing the monthly budget deficit, according to the Treasury Department. This marked a 270% increase last year, driven by President Donald Trump’s significant tariff hikes. Consequently, May’s fiscal deficit narrowed by 17% year-over-year to $316 billion.
However, Treasury Secretary Scott Bessent warned that the overall budget deficit remains large, forecasting it at between 6.5% and 6.7% of GDP for the current fiscal year, driven largely by higher Social Security and healthcare spending.
Tariff revenue could fluctuate as ongoing trade negotiations with China continue and legal challenges to Trump’s tariff policy remain pending.
Of note: During his appearance before a congressional panel on Wednesday, Bessent said: “I find it very difficult to be lectured to by people who created the largest deficit in history,” relative to partisan disputes over tax policy.
RFS announcement imminent after OMB concludes review... The Office of Management and Budget (OMB) has concluded its review of the Renewable Fuel Standard (RFS) Program: Set 2 proposed rule, doing so after holding only 15 out of 24 scheduled meetings with various stakeholder groups. The early conclusion means that several organizations — including the Union of Concerned Scientists, Small Refineries Coalition and Wynnewood Refining Company, American Soybean Association, Sidley Austin (representing obligated parties), Waste Management, SIGMA (fuel marketers association), Anew Climate, Iogen, and the American Fuel and Petrochemical Manufacturers (AFPM) — did not have the opportunity to provide their input as planned.
OMB categorized the completed review as meeting a “Statutory or Judicial Deadline,” indicating the review was subject to a legal requirement for timely completion. This marked the second time OMB has finalized its review of RFS provisions without all scheduled meetings taking place.
Additionally, OMB has finalized its review of the RFS Program: Partial Waiver of 2024 Cellulosic Biofuel Volume Requirement final rule, with five of six scheduled meetings held. These developments set the stage for imminent announcements on both the Set 2 rule and the partial waiver, likely within the next week.
The early closure of the review process and the exclusion of input from key industry and advocacy groups could have implications for the final content of the RFS rules and the reactions from affected stakeholders.
We are hearing the announcement could come Friday, along with potential for details on the 45Z clean fuel credit.
Senate GOP unveils ag provisions in reconciliation bill... Senate Republicans on Wednesday released the agriculture section of their budget reconciliation bill, closely mirroring the House-passed One Big Beautiful Bill on core farm policy reforms. Like the House, the Senate version includes increased reference prices and a provision for a voluntary base update for farm program eligibility.
The Senate Ag Committee also adopted the House’s proposal to shift some Supplemental Nutrition Assistance Program (SNAP) benefit costs to states. However, the Senate softened the impact by proposing lower state cost-share rates than the House, though both versions use state SNAP error rates to determine each state’s obligation.
A key structural change in both bills would raise states’ share of SNAP administrative costs from 50% to 75%, increasing pressure on state budgets even as the federal government continues covering the full cost of benefits.
Fiscal impact:
- Senate bill net savings: $144 billion over 10 years
- House bill net savings: $238 billion over 10 years
This divergence signals continuing negotiations between chambers as Republicans seek to finalize President Trump’s full reconciliation package this summer.
Senate GOP moves to shrink SALT cap, revise clean energy credits in reconciliation bill... Senate Finance Committee Chair Mike Crapo (R-Idaho) informed Republican senators Wednesday the upper chamber will tighten the House-passed SALT deduction cap and amend clean energy tax credits as part of the reconciliation bill rewrite. Crapo provided a broad roadmap during a closed-door Senate GOP conference meeting but withheld specific numbers and a release date for the updated legislative text.
Crapo confirmed that Senate Republicans are rejecting the House’s $40,000 SALT cap for households earning up to $500,000 — a major flashpoint. Senators are considering lowering both the income eligibility threshold and the cap itself, possibly aiming for a more stringent $30,000 cap floated earlier by the House Ways and Means Committee.
This poses a major challenge for Speaker Mike Johnson (R-La.), as New York Republicans Reps. Mike Lawler and Nick LaLota have pledged to vote against any bill that waters down the $40,000 SALT cap, placing the bill at risk given Johnson’s narrow House majority.
On clean energy tax credits from the Inflation Reduction Act (IRA), Crapo said phase-outs would vary by energy type, with some accelerated and others slowed — though details remain sparse.
He also noted no significant revisions are expected to the bill’s Medicaid language.
Meanwhile, internal GOP conflict continues over border security funding. Sen. Rand Paul (R-Ky.), who chairs the Homeland Security and Governmental Affairs Committee, is pushing a proposal that would slash House-passed border wall funding from $46.5 billion to $6.5 billion and cut other immigration allocations by 50%. Paul argues the broader bill irresponsibly adds trillions to the national debt.
Senate GOP leaders are resisting Paul’s cuts. Senate Budget Committee Chair Lindsey Graham (R-S.C.) called Paul’s numbers “not realistic,” and Majority Leader John Thune (R-S.D.) vowed the final bill would “hit the number” set by the House. Budget leaders plan to offer alternate text preserving most of the original $175 billion in border security provisions.
A pivotal moment looms today, when Thune and Crapo meet with President Donald Trump at the White House to finalize tax and Medicaid provisions in the bill.