Carney heads to White House for high-stakes USMCA, tariff talks... Canadian Prime Minister Mark Carney will meet President Donald Trump in Washington today for critical talks on the future of the U.S.-Mexico-Canada Agreement (USMCA) and escalating U.S./Canada tariff disputes. This is Carney’s first official U.S. visit since taking office. Talks are expected to be tense but pivotal. Trump seeks swift concessions; Carney says he’s willing to wait for a deal “on our terms.” The result may reshape North American trade ahead of the 2026 USMCA review.
Canada’s Liberal Party has proposed an ambitious fiscal stimulus package equal to 2.5% of the country’s GDP. While the minority status of the government may complicate full implementation, the plan underscores Liberals’ strategy to buffer the Canadian economy against headwinds from U.S. protectionism. The agenda reflects Carney’s belief in countercyclical fiscal policy to maintain economic resilience, particularly as Canadian exporters grapple with elevated U.S. tariffs and growing uncertainty around the 2026 USMCA review.
Analysts expect Carney to promote stronger international trade frameworks and to resist Trump-era economic nationalism. With his deep economic credentials, Carney is also likely to become a key voice in upcoming global summits, particularly on matters of trade realignment, central bank coordination, and infrastructure investment.
Bessent signals optimism as U.S./China trade talks stall in public... Treasury Secretary Scott Bessent, in an interview with CNBC, expressed optimism that “substantial progress” in U.S./China trade negotiations could be achieved in the coming weeks. However, the overall status of talks remains uncertain, with public statements from both sides highlighting a lack of formal engagement and continued strategic posturing.
Bessent placed responsibility for progress on Beijing, stating that China’s export-dependent economy cannot sustain the current U.S. tariff levels — some as high as 145%. He emphasized that the U.S. is open to de-escalation and has already buffered potential supply chain disruptions through advance retail orders. Importantly, he reiterated that negotiations will not be conducted through the media and that real engagement requires China to take tangible steps first.
Bessent outlined a multi-phase process: starting with tariff de-escalation, followed by broader negotiations on non-tariff barriers and intellectual property protections.
China maintains publicly that no formal talks are happening, despite Bessent’s claims. Chinese officials say they are “evaluating” U.S. overtures but warn against “coercion,” demanding that Washington revoke unilateral tariffs before any serious negotiations begin. Quiet exemptions on select U.S. goods suggest flexibility, but the official line remains firm.
Markets remain jittery amid the mixed signals, and although both countries have made selective tariff exemptions, the larger dispute persists. Bessent argues these moves show that neither country wants full decoupling — but forward momentum requires mutual concessions.
For now, both sides appear stuck in a holding pattern, with the U.S. signaling optimism and flexibility, and China responding with caution and conditionality. The next steps will hinge on whether either side takes the initiative to break the deadlock.
U.S. rejects Japan’s request for full tariff exemptions. The U.S. has denied Japan’s push for full exemption from both “reciprocal” and country-specific tariffs, according to Kyodo. In recent talks, U.S. officials informed Japan’s chief negotiator Ryosei Akazawa that only a reduction — not elimination — of the 14% Japan-specific tariff on certain goods (currently suspended through early July) is under consideration. Japan had sought the removal of these duties, as well as tariffs on cars, steel, and aluminum.
Of note: USDA Secretary Brooke Rollins plans to visit Japan, India and Vietnam in the coming weeks to discuss Trump’s tariffs, according to Kyodo. “Next week, I’ll be in England discussing these things. A few weeks after, I’ll be in Italy, then soon after that, Vietnam, Japan and India,” Kyodo quoted Rollins as saying Monday at the White House. “I’m reflective of a larger Cabinet effort on behalf of this president to get out into the world to expand the markets.”
Japan’s Finance Minister Katsunobu Kato said the country won’t use the sale of its U.S. Treasury holdings in trade talks with Washington, clarifying his previous remarks that suggested they could be used as a negotiating tool. “We are not considering the sale of U.S. Treasuries as a means of Japan/U.S. negotiations,” Kato said in Milan, Italy, on Sunday, where he was attending the annual meeting of the Asian Development Bank.
EU trade chief says bloc will not be pressured into unfair deal with United States... The European Union does not feel pressure to accept an unfair trade deal with the U.S., the bloc’s trade chief Maros Sefcovic said, as other trading partners were keen to accelerate trade talks. “The EU has made clear that we are ready to discuss and we are ready to find mutually beneficial solutions,” he said. However, he added that officials are still preparing in case both sides can’t reach a deal. “The commission stands ready, if necessary, to use all available tools in our trade defense instrument toolbox in a rapid manner to protect the EU single market, EU producers and EU consumers,” Sefcovic said.
Linking higher reference prices and boost in farm program payment caps... If Title I reference prices in the farm bill are increased significantly, it would be logical to also consider raising the current payment caps for farm program payments. Here’s why:
Why Increasing Payment Caps May Be Logical
- Avoiding unintended constraints: If reference prices are raised but payment caps remain unchanged, more producers could quickly hit the payment limit, especially in years of low market prices. This would blunt the intended benefit of raising reference prices, as the cap would prevent full payment of the increased support.
- Alignment of policy objectives: The purpose of raising reference prices is to enhance the safety net for producers facing lower commodity prices or higher costs. If payment caps are not adjusted accordingly, the policy’s effectiveness is diluted, particularly for larger operations that are more likely to reach the cap.
- Budgetary considerations: Raising both reference prices and payment caps would increase federal outlays for farm programs. This would require policymakers to weigh the benefits of increased support against the budgetary impact and the need for potential offsets elsewhere in the farm bill. However, it would also lessen the need for ad hoc economic aid.
Payment caps primarily affect larger farms and entities with high production levels, as they are more likely to reach or exceed the cap. This can limit the incentive for very large operations to participate fully in farm programs, or prompt them to restructure ownership and management to maximize. Most small and mid-sized farms do not reach payment limits and thus are not directly affected by the caps. For these farms, payment caps do not restrict participation or the level of support they receive.
Payment caps are intended to address equity concerns by preventing the concentration of federal support among the largest producers and ensuring broader distribution of benefits. However, the effectiveness of these caps is debated. Some argue that large operations can use legal entities, partnerships and family members to multiply payment limits, potentially undermining the caps’ intent.
Besides payment caps, income caps (such as the $900,000 adjusted gross income limit) restrict eligibility for payments to those below a certain income threshold. Analysis shows these income caps affect less than 0.5% of farms — since most farms do not exceed these high-income thresholds.
Payment caps exist for farm program payments, such as those made under PLC, ARC and ad hoc disaster relief or economic assistance programs, where limits are typically set at $125,000 or $250,000 depending on the producer’s share of income from farming. However, these caps do not apply to crop insurance premium subsidies, which remain uncapped regardless of farm size or total subsidy received.
Trump pushes ‘made-in-America’ tax cuts in reconciliation talks... The White House has stepped up its involvement in the GOP’s reconciliation process, sending House Republicans a detailed list of tax priorities focused on boosting domestic manufacturing and fulfilling key campaign promises. Amid rising economic uncertainty and market volatility driven by global tariffs, the administration is prioritizing: Trumps tax priorities
- FDII (Foreign-Derived Intangible Income) cut: Lower tax on foreign-derived intangible income (FY 2025–FY 2029).
- Domestic manufacturing: 15% corporate rate for U.S.-made products; matching relief for pass-throughs.
- Full expensing: Immediate deductions for equipment/machinery purchases through FY 2029.
- Auto loan deduction: New break for interest on U.S.-made car/motorcycle loans.
- Targeted cuts: No tax on tips, overtime and Social Security benefits — limited to four years.
- 2017 tax cuts: Push to make them permanent.
Trump-approved revenue offsets
- IRA rollbacks: Repeal of some/all clean energy tax credits from the Inflation Reduction Act (farm-state lawmakers urge continuation of IRA or move back to blender’s tax credit).
- University endowments: Tax hikes on elite institutions; revocation of Harvard’s tax-exempt status floated.
- Private equity & sports: Crackdown on carried interest and tax perks for sports team owners.
Trump’s proposals reflect a blend of manufacturing incentives and populist pay-fors designed to appeal to both GOP moderates and conservative hardliners.
CBO chief projects U.S. debt limit ‘X-date’ in late summer... Congressional Budget Office (CBO) Director Phillip Swagel stated the U.S. Treasury is likely to reach its borrowing limit, known as the “X-date,” in August or September. This projection aligns with previous estimates and is based on current revenue trends. Swagel noted that while the timeline could shift depending on revenue fluctuations, particularly in June, Treasury currently has sufficient funds to meet its obligations until late summer. Treasury has been employing “extraordinary measures” since January 2025 to manage its finances after the debt limit was reinstated at $36.1 trillion. These measures are temporary solutions to prevent default and are projected to be exhausted by late summer.