House GOP pushes forward on $3.8 trillion tax bill... The House Ways and Means Committee worked through the night into early this morning on a sweeping $3.8 trillion tax package that aims to make permanent the expiring 2017 Trump tax cuts while adding new provisions pitched by President Donald Trump on the campaign trail. But the legislation remains a work in progress, with key negotiations continuing outside the hearing room over controversial issues like the cap on state and local tax (SALT) deductions.
House Speaker Mike Johnson (R-La.) is in active talks with Republican members from high-tax states such as New York, New Jersey and California who are pressing for a higher SALT cap than the current $30,000 limit, which phases out above $400,000 in annual income. “We’re making progress,” said Rep. Mike Lawler (R-N.Y.), signaling optimism that a compromise will be reached before the markup concludes Wednesday. One of the options under consideration was a $40,000 cap for individuals and an $80,000 cap for couples. This would be very expensive. Rep. Nick LaLota (R-N.Y.) said there’s “breathing room” to adjust within the committee’s $4 trillion deficit ceiling. Any SALT changes will probably come as a manager’s amendment to the package.
Democrats offered a barrage of amendments aimed at scaling back tax benefits for the wealthy and preserving health care coverage, most of which were rejected along party lines.
The markup is set to conclude today, with GOP leaders hoping to solidify a package that can pass the full House by Memorial Day.
Reconciliation/farm bill update... The House Ag Committee kicked off debate Tuesday on its budget reconciliation package with a controversial proposal to require states to share in the cost of food stamps. The plan, which would start in fiscal year (FY) 2028, drew early GOP criticism but won support from at least one previous holdout after the cost-share was scaled down.
The bill would reduce the deficit by $296 billion over 10 years — exceeding the $230 billion target in the budget resolution — largely by reshaping the Supplemental Nutrition Assistance Program (SNAP). Among the biggest changes:
- All states would cover at least 5% of SNAP costs.
- States with high payment error rates would pay more — up to 25%.
- SNAP administrative costs would shift from a 50/50 federal-state split to 75% state-funded.
- SNAP benefit increases would be tied strictly to inflation.
Rep. Derrick Van Orden (R-Wis.), who had previously opposed a 10% baseline cost-share, said he supports the 5% proposal.
Ranking Member Angie Craig (D-Minn.) sharply criticized the plan.
The reconciliation package also includes new investments in farm policy and conservation programs.
The committee will continue with amendment markups today. They will reconvene at 10 a.m. ET to debate Democrats’ amendments and to vote whether to advance the text out of committee.
Meanwhile, Senate Ag Chair John Boozman (R-Ark.) confirmed coordination with House Republicans to include risk management tools in the farm bill portion of the FY 2025 reconciliation package. However, Boozman warned that broader House provisions — such as partial rewrites of the farm bill — may not survive Senate Byrd Rule scrutiny. House Ag Chair GT Thompson (R-Pa.) acknowledged the Senate’s procedural constraints and said he’s worked closely with Boozman and Senate parliamentarians to minimize conflicts.
The FY 2025 budget reconciliation process is progressing under a strict timeline defined by the budget resolution passed earlier this year. Republicans are pushing hard to finalize and pass the FY 2025 reconciliation bill by Memorial Day, aiming for enactment by Independence Day. A second reconciliation bill this year would require new procedural groundwork.
U.S./China trade deal: Tariffs fall, but effective rates still high... Following last weekend’s trade breakthrough in Switzerland, the U.S. and China agreed to sharply reduce headline tariffs for 90 days. But a South China Morning Post article says that while the move has eased immediate tensions, the real cost for exporters remains complex — and in many cases, still burdensome.
These headline rates do not include earlier tariffs still in force, such as duties left over from Trump’s first term and targeted surcharges on specific goods.
Despite the reductions, Chinese exporters are still looking at an average effective rate of about 50%, according to Huatai Securities and U.S. Treasury Secretary Scott Bessent. “It’s essentially a stacking effect,” Bessent said. “You’ve got the new 30% rate plus about 20% in prior tariffs from the first trade war.” Some products — like steel and aluminum — remain subject to even higher total rates, with additional 25% duties layered on top.
“There’s still a lot more that has to be done,” Nick Marro, principal Asia economist at the Economist Intelligence Unit told the SCMP. “Chinese companies have been operating on increasingly thin margins.” While the tariff cut provides some breathing room, a 40% to 50% rate is still “prohibitive” for many businesses, Marro noted.
This environment is expected to drive continued workarounds:
- Transshipment through third countries
- Undervaluing or mislabeling goods
- Fulfilling U.S. orders from non-China-based factories
The current tariff truce provides temporary relief and market optimism, but many exporters are still navigating an opaque, multilayered tax regime. Unless further rounds of talks deliver deeper cuts — or remove cumulative legacy duties — the burden on cross-border trade remains heavy.
Trump set to announce next trade deal after Middle East trip... President Donald Trump is poised to announce a new trade deal upon his return from the Middle East, according to National Economic Council Director Kevin Hassett. Speaking on Fox News, Hassett revealed that there are more than 20 to 25 trade deals currently “really close” to being finalized, signaling a major push in U.S. trade policy as the administration continues its aggressive pursuit of bilateral and sector-specific agreements.
Hassett has indicated that the administration’s strategy is to replicate and expand on successful past deals, such as the U.S./UK agreement, by tailoring new agreements to individual countries and sectors. The White House continues to defend its tariff-centric approach, citing positive outcomes like job reshoring and increased domestic manufacturing, despite criticism over potential supply chain disruptions.
Hassett has emphasized that these agreements are designed to be pragmatic and targeted, reflecting lessons learned from previous rounds of trade diplomacy. The administration’s flurry of trade activity is being closely watched by industry analysts and markets, as the outcomes will shape the next phase of U.S. economic engagement worldwide.
Thailand optimistic on avoiding tariffs after U.S. praises trade proposals... Thailand is expressing confidence in securing a deal with the Trump administration to avert a looming 36% tariff, following positive remarks from U.S. Treasury Secretary Scott Bessent. Speaking from the Saudi/U.S. Investment Forum, Bessent said trade discussions with several Asian nations—including Thailand—were “going very well,” bolstering Thai hopes of formal negotiations.
Finance Minister Pichai Chunhavajira confirmed that Thailand submitted a package of proposals on May 8 to the U.S. Trade Representative, aimed at narrowing its $46 billion trade surplus with the U.S. and deepening economic ties. The proposals include increased Thai imports of U.S. goods — particularly energy, agricultural products, and aircraft — as well as enhanced U.S. market access in Thai agriculture and commitments to deter trade rerouting.
“All this shows that Thailand is one of the trade partners that the U.S. is willing to discuss with,” Pichai said. He added that Thailand’s top export market is the U.S., accounting for 18% of shipments, making a resolution vital.
A Thai delegation of top businesses is currently in the U.S. attending the Select USA Investment Summit. According to Trade Representative Nalinee Taveesin, Thai firms may invest at least $2 billion in the U.S. in the near term.