China Accuses U.S. of Violating Geneva Trade Consensus
Senate tax drama returns: High-stakes scramble begins | Bessent vows U.S. will ‘never default’ amid rising fiscal anxiety | Still waiting on USDA ag trade report | More industry groups to meet with OMB on EPA's RFS proposal
Other Updates: Link to Weekend Updates | Link to The Week Ahead | Link to special report on trade negotiations and court issues | Canada’s strategic puzzle: How to navigate Trump’s trade war tactics | Bonus depreciation | Trump’s new tariff lifeline: Steel protectionism doubles down | Former CIT clerk: Where the trade court’s tariff decision went wrong | SCMP: U.S. retail giants press Chinese suppliers to shoulder up to 66% of tariff costs | Delivery apps drive 75% of restaurant orders as ghost kitchens proliferate | Iconic California avocado in peril | Mass firings blocked: Court halts Trump’s federal downsizing order | Poland elects Trump-backed nationalist as president | U.S. dollar plunged to its lowest level in six weeks on Monday | Walmart and Target see steep increases amid tariff tensions | Fed’s Waller sees 2025 rate cuts despite tariff-driven inflation risks | Vast majority of canceled energy projects were planned for rural and conservative areas that voted for Trump | Swampbuster rule upheld in Iowa court ruling | Ukraine grain exports well behind year-ago | Forecasts signal record summer heat, floods, and grid stress across Northern Hemisphere
Updates: Policy/News/Markets, June 2, 2025
|
Beijing vows retaliation as Trump seeks Xi call to salvage talks
China has accused the United States of violating the trade consensus reached in Geneva last month, escalating tensions just weeks after a temporary tariff thaw. In a sharp statement issued Monday, China’s Ministry of Commerce condemned new U.S. restrictions — ranging from AI chip and software export controls to student visa revocations — as a breach of recent agreements between Presidents Donald Trump and Xi Jinping. “If the U.S. insists on its own way and continues to damage China’s interests,” the ministry warned, “China will continue to take resolute and forceful measures to safeguard its legitimate rights and interests.”
The flare-up comes amid uncertainty over a leadership-level call Trump says he hopes to hold with Xi. White House economic adviser Kevin Hassett said such a call could happen this week, but Beijing’s reaction casts doubt on near-term progress.
Trump administration actions getting China’s attention. The Trump administration recently moved to revoke Chinese student visas, restrict chip design software sales, and bar key jet engine exports — steps that Beijing characterized as discriminatory and destabilizing. Meanwhile, U.S. Trade Representative Jamieson Greer criticized China for allegedly failing to accelerate exports of critical minerals essential to high-tech manufacturing.
Trump offered no specifics when accusing Beijing of violating the tariff truce on Friday. Treasury Secretary Scott Bessent admitted talks had stalled and said a presidential call might be necessary to move forward.
— Quote of note: “I’ve known Jamie for a long time, and for his entire career he’s made predictions like this. Fortunately none of them have come true. That’s why he’s a great banker. He tries to look around the corner.” — Treasury Secretary Scott Bessent on the warning by JPMorgan Chase's Jamie Dimon that a crack in the bond market “is going to happen.”
— MAHA quote of note: The MAHA report’s findings on pesticides cite a study thrown out of a lawsuit by a judge last year because it was “junk science,” NOTUS reports.
BTW: The next major MAHA report, this time including recommendations, is slated for an Aug. 12 release date.
— Senate tax drama returns: High-stakes scramble begins GOP races time to finalize ‘One Big, Beautiful bill’ before July 4
The Senate reconvenes Monday night — and with it, the full spectacle of GOP tax bill negotiations: backroom dealing, committee maneuvering, and a bevy of corporate lobbying. Senate Republicans face a tight window to reshape and pass their version of the House’s $3.9 trillion tax package, with Majority Leader John Thune (R-S.D.) aiming to deliver it to President Donald Trump by Independence Day. Many think the process will be closer to the August recess, but recent House timing prognostications were wrong.
The action kicks off with a Finance Committee meeting Monday evening, followed by GOP chair meetings and Tuesday’s weekly Republican lunch. Markups in Senate committees remain uncertain; leadership may skip them to avoid delays. The “Byrd Bath” is also imminent, as Republicans must test which provisions survive reconciliation rules.
One of the biggest flashpoints: how closely the Senate will stick to the House-passed bill. Speaker Mike Johnson (R-La.) has warned against big changes. His version includes a SALT deduction cap deal — $40,000 for filers earning up to $500,000 — crafted to keep blue-state Republicans onboard. Senate Republicans are less beholden to that deal, raising the risk of intraparty friction.
Beyond SALT, Senate Republicans must vet the bill’s mix of tax cuts, offsets, and member pet projects. Lobbyists are working overtime to shape the final product.
Key tax provisions
Other flashpoints
The Senate’s multitask: With the July 4 deadline looming, expect a frenetic June as Republicans rush to finalize a bill that pleases President Trump, keeps House moderates onboard, and survives Senate procedural hurdles. Recall that GOP leaders can only lose three Republican votes to clear its eventual reconciliation package.
— Treasury chief vows U.S. will ‘never default’ amid rising fiscal anxiety Scott Bessent seeks to calm investors as debt concerns mount under Trump-era spending
U.S. Treasury Secretary Scott Bessent on Friday reassured global markets that the United States will “never default” on its debt obligations, despite increasing scrutiny over federal deficits and the Trump administration’s aggressive fiscal agenda. “We understand our responsibility to maintain the full faith and credit of the United States,” Bessent said during remarks at a financial forum in New York. “Let me be clear: the United States will never default on its debt. Period.”
His comments come as bond markets flash warning signs over the long-term sustainability of the U.S. debt load, now surpassing $35 trillion, and as investors digest the fiscal implications of President Donald Trump’s ambitious second-term agenda — including new rounds of tax cuts, increased defense spending, and a multi-trillion-dollar tariff revenue system.
Bessent also dismissed speculation that recent budget showdowns and the administration’s plans to sidestep traditional funding mechanisms would undermine Treasury auctions or dollar stability. “We have tools, we have policy options, and we have the world’s deepest capital markets,” he said.
Still, some market participants remain wary. Yields on 10-year Treasuries edged higher last week, while ratings agencies have warned about potential downgrades absent a long-term fiscal consolidation plan.
The Treasury secretary signaled support for upcoming rescission packages and structural spending reforms but emphasized that near-term economic growth would be the administration’s primary tool for managing deficits. “Our strategy is rooted in growth. A strong economy is the best guarantee of fiscal health,” Bessent said.
— U.S. tariff update: Two Trump officials comment Lutnick says tariffs are “not going away” while Hassett is confident judges “will uphold this law”
Trump’s top economic advisors have remained optimistic in the tariffs even with the recent legal challenge, as Commerce Secretary Howard Lutnick said on Fox News over the weekend that the tariffs are “not going away.” Additionally, National Economic Council Director Kevin Hassett told ABC News that he’s “very confident that the judges will uphold this law.”
Of note: As previously mentioned, Hassett suggested that Trump and China’s President Xi Jinping could discuss trade as early as this week, though he said no date for the talks has been set. His comments come as trade tensions between the U.S. and China ramped up last week, with Trump writing in a Truth Social post Friday that China has “TOTALLY VIOLATED ITS AGREEMENT WITH US.”
— Canada’s strategic puzzle: How to navigate Trump’s trade war tactics Experts urge Ottawa to swap politeness for strategy in dealing with Trump’s tariff brinkmanship
How can Canada win a trade war? As Canada faces a potential second round of U.S. trade tensions under President Donald Trump, The Globe and Mail’s Report on Business assembled a provocative weekend package asking: How can Canada win a trade war with a man who doesn’t play by the rules?
The context is sobering. Despite a U.S. Court of International Trade ruling that Trump overstepped his authority when imposing certain tariffs, Globe and Mail’s Ethan Lou reminds readers that “Trumpism remains on the menu.” As he writes, “He is winter thunder on a wild wind… Two impeachments and a criminal conviction have not stopped him.”
The ruling itself is on hold pending appeal, and trade lawyer Lawrence Herman warns it’s unlikely to deter future action: “It won’t deter Trump from continuing his tariff wars using whatever alternative routes can be found.”
Meanwhile, Prime Minister Mark Carney —Canada’s central-banker-turned-leader — is signaling a tougher posture. A recent throne speech by King Charles III made clear that the era of “polite tut-tutting” is over. But as Lou puts it bluntly, “Talk is cheap.”
To offer substance, the Globe and Mail asked six experts for practical strategies. Their ideas suggest Canada need not merely react — it can maneuver:
“Give him a symbolic win.” Western University’s Andreas Schotter proposes satisfying Trump’s craving for public victory through “trade theatre.” A headline about milk quotas could give Trump a photo-op, while Canada protects its real interests in autos.
“Use energy as a bargaining chip.” Oil executive Adam Waterous suggests resurrecting the Keystone XL pipeline proposal – but only in exchange for full tariff removal.
“Play defense.” Jack Mintz and Munir Sheikh advise pre-emptive tax reform to protect Canadian investment from fleeing to the U.S. under Trump’s business-friendly pitch.
“Weaponize car sales.” Former NAFTA negotiator Tom MacDonald notes that Canada’s car market ranks among the world’s top 10 – and could be leveraged as powerful negotiating collateral.
“Controlled chaos.” Ian Robertson, partner at The Jefferson Hawthorne Group, channels The Art of War, advocating for strategic unpredictability and “deception” in Canada’s economic approach.
While there’s no magic bullet, Lou concludes that “Canada has more leverage than it thinks — if it’s willing to play a little harder and think a little more outside the box.”
Link to the article for details (paywall).
— Mass firings blocked: Court halts Trump’s federal downsizing order Appeals court rules executive reorganization exceeds constitutional authority
President Donald Trump’s push to dramatically shrink the size of the federal workforce has hit a legal wall. On Friday night, the U.S. 9th Circuit Court of Appeals ruled 2-1 to uphold a temporary restraining order halting mass firings at over a dozen federal agencies. The decision came in response to an executive order Trump issued in February, aimed at what the administration called “an urgent need to dismantle bloated bureaucracies.” Federal employee unions, local governments, and advocacy groups quickly challenged the order in court, arguing it bypassed congressional authority and violated long-standing civil service protections. A lower court agreed last month, issuing a temporary halt to the firings.
In its ruling, the appeals panel said Trump’s executive order “far exceeds the President’s supervisory powers under the Constitution,” adding that while the executive has latitude to direct agency operations, any broad-scale reorganization or mass termination of federal employees requires congressional cooperation.
The Trump administration has already filed an emergency appeal with the Supreme Court once, which was denied without comment. Now, with a federal appeals court siding against the administration, the legal battle is expected to return to the high court in the coming weeks.
If upheld, the ruling could deal a significant blow to Trump’s second-term agenda of centralizing executive power and reducing the size of the federal government through aggressive agency restructuring. |
|
FINANCIAL MARKETS |
— Equities: U.S. stock futures fell early Monday amid renewed trade tensions between the U.S. and China. Global stocks started the new month under pressure as a flare-up in trade tensions and heightened attacks in the Russia-Ukraine war dampened investors’ appetite for risk. European defense shares surged to fresh records. Federal Reserve Chair Jerome Powell speaks at an international finance conference in Washington, DC. In Asia, Japan -1.3%. Hong Kong -0.6%. China closed. India -0.1%. In Europe, at midday, London flat. Paris -0.7%. Frankfurt -0.6%.
Steel and aluminum and steel stocks are rallying after Donald Trump said he would be increasing tariffs on exports of the metals to 50% from 25% (see related item below). Among movers: Cleveland-Cliffs +27%, Nucor +11%, Steel Dynamics +5.9%. By contrast, Canada’s Algoma Steel slid 12% in the premarket.
Eight of the world’s 10 best-performing stock markets are in Europe, according to data compiled by Bloomberg. That list features Germany’s DAX Index with a rally of more than 30% in dollar terms, as well as peripheral markets such as Slovenia, Poland, Greece and Hungary.
— U.S. dollar plunged to its lowest level in six weeks on Monday, with U.S. tariff concerns back on. The slide follows a flurry of developments tied to President Trump’s escalating trade agenda, including the enforcement of sweeping import tariffs and legal setbacks related to executive trade actions. Investors are increasingly concerned that prolonged trade conflicts — especially with key partners like China, the EU, and Japan — will weigh on U.S. growth prospects and accelerate inflation. As a result, demand for the dollar as a safe-haven currency has waned, particularly as some traders anticipate a more dovish stance from the Federal Reserve if tariffs begin to stifle consumer demand and increase unemployment. This renewed market pressure may complicate the Fed’s path forward. If inflation ticks up due to tariffs, but growth falters, policymakers could face a stagflationary squeeze — limiting room for rate cuts.
— Trump’s new tariff lifeline: Steel protectionism doubles down
Higher steel and aluminum duties will cost U.S. manufacturers and jobs
President Donald Trump is betting that a dramatic hike in steel tariffs will boost struggling U.S. producers. By doubling the Section 232 tariffs on steel imports from 25% to 50%, the Trump administration aims to bolster domestic firms like Cleveland-Cliffs, which has been hemorrhaging red ink in recent quarters. But industry experts and economists warn the move could backfire — raising costs for downstream industries while doing little to revive employment.
Trump’s latest protectionist salvo builds on the tariffs he enacted during his first term, which initially sent domestic steel prices soaring. However, a study by the Federal Reserve Board of Governors found that those earlier tariffs ultimately led to a loss of 75,000 manufacturing jobs, as higher input costs hurt U.S. competitiveness. As of May 2025, employment in fabricated metal manufacturing remains about 33,000 below pre-tariff levels.
Cleveland-Cliffs CEO Lourenco Goncalves, one of Trump’s high-profile industry allies, recently offered a candid assessment. Speaking during an earnings call, he acknowledged the fallout from Trump’s trade moves on U.S./Canada relations: “Mr. Trump’s auto and steel tariffs on Canada impacted our clients who sell products in the U.S. That was not part of our plan. Absolutely not. Nobody saw that coming.” He added that he regretted the acquisition of Canadian steelmaker Stelco: “I wouldn’t have bought Stelco if I knew that Canada would not be treated like a friend.”
The new tariff increase may offer temporary breathing room to integrated producers like Cleveland-Cliffs, but broader economic risks loom. Automakers, construction firms, and equipment manufacturers that rely on competitively priced steel could see margins squeezed — further dampening job creation and investment.
The increased production costs are likely to be passed on to consumers, raising prices for new farm equipment. This could lead to decreased demand, as farmers may delay purchases or opt for used equipment. Additionally, the uncertainty surrounding trade policies is causing hesitation among farmers and dealers, potentially leading to a slump in equipment sales.
Upshot: With global retaliation possible and U.S. allies angered, the question remains whether higher walls will insulate American industry — or isolate it.
— Price shock on the aisle: Walmart and Target see steep increases amid tariff tensions
Photos and price trackers show toys and gear jumping over 40% as retailers warn of more to come
Photos shared by Walmart employees and data from tracking site AisleGopher reveal that prices on popular items like toys and fishing gear have spiked between 38% and 45% in recent weeks — and in some cases, Target has followed suit. Business Insider reports the following:
- A Jurassic World T. rex toy rose from $39.92 (Apr 27) to $55 (May 21) — a +38% jump.
- A Baby Born doll climbed from $34.97 (Mar) to $49.97 (May) — +43%.
- A left-handed fishing reel soared from $57.37 (Apr) to $83.26 (May) — +45%.
Walmart CFO John David Rainey said last week that tariff rates are “too high” and warned more price hikes were coming. President Donald Trump pushed back, suggesting Walmart should “eat the tariffs.”
Target has echoed concern but said raising prices would be a “last resort.” Still, in at least one case, Target raised its Baby Born doll price just a day after Walmart's increase.
While shoppers are feeling sticker shock, analysts like David Bellinger of Mizuho say the overall impact of tariffs on total spending may remain in the low single digits. Still, uncertainty remains: a federal court ruled last week that Trump lacked authority to impose sweeping tariffs under emergency powers — a legal decision that could affect future pricing and supply chains.
Walmart, which says 60% of its U.S. merchandise is domestically sourced, has been trying to reduce its dependence on Chinese goods, but these recent price hikes suggest tariff exposure is still hitting core inventory categories.
— Fed’s Waller sees 2025 rate cuts despite tariff-driven inflation risks
Governor says inflation bump from Trump tariffs likely temporary, but warns of rising unemployment and fiscal concerns
Federal Reserve Governor Christopher Waller said he still sees a “path to rate cuts later this year,” even as new tariffs introduced by President Donald Trump are expected to temporarily increase inflation and modestly raise unemployment. In remarks delivered Monday at a Bank of Korea conference in Seoul, Waller said the inflationary effect of tariffs “in the coming months” should be treated as transitory — provided inflation expectations stay anchored. He signaled support for what he called “good news” rate cuts if three conditions hold: progress toward the Fed’s 2% inflation goal, a solid labor market, and a tariff rate closer to his “smaller-tariff” scenario. “Assuming that the effective tariff rate settles close to my lower tariff scenario… I would be supporting ‘good news’ rate cuts later this year,” Waller said.
Waller revisited a framework he introduced in April, comparing two trade policy paths:
- Large-tariff scenario: 25% average tariffs, in place for an extended time
- Small-tariff scenario: 10% average tariffs, eventually negotiated down
He now estimates the actual policy path sits in between, with a 15% trade-weighted tariff on goods imports. While both scenarios lead to temporary inflation pressures, Waller said the employment effects — especially under the smaller-tariff outcome — would likely be modest, though unemployment may "linger" at a higher level.
Waller also highlighted a shift in long-term Treasury yields, attributing the rise to growing alarm over U.S. fiscal health. Markets had anticipated deficit improvement, but updated estimates suggest a federal deficit near $2 trillion — about 6% of GDP — will persist. “If there’s going to be a lot more debt issuance than the markets thought, they’ll buy it — but at a much lower price,” Waller said, referencing reduced bond valuations.
He warned that foreign investors, amid rising geopolitical and trade uncertainty, are showing greater risk aversion and reassessing U.S. exposure — potentially placing additional upward pressure on yields.
Waller dismissed concerns over the University of Michigan’s recent consumer inflation expectations jump, favoring market-based measures and professional forecasts, which remain steady.
Bottom Line: With the labor market still strong and inflation edging closer to the Fed’s 2% target, he said policymakers have time to watch how trade and tariff policies unfold before making further decisions. “As of today, I see downside risks to economic activity and employment and upside risks to inflation in the second half of 2025,” Waller concluded.
|
AG MARKETS |
— Still waiting on USDA ag trade report. USDA's quarterly Outlook for U.S. Agricultural Trade is typically released in February, May, August, and November. “Currently under review” is all the site says about the pending release. The most recent report, dated Feb. 27, 2025, projected U.S. agricultural exports at $170.5 billion and imports at $219.5 billion for fiscal year 2025, indicating a record trade deficit of $49 billion. As of now, the May 2025 report has not been published. While USDA has not provided a specific reason for this delay, several factors could be contributing:
- Operational challenges: Reports suggest that mass layoffs at USDA offices and the freezing of some funds have hindered the agency's ability to deliver assistance and possibly affected report production timelines.
- Policy shifts: The reintroduction of tariffs under the Trump administration has disrupted trade flows and may have complicated the forecasting process.
- Market volatility: Significant changes in global demand, competition from countries like Brazil and Argentina, and fluctuating commodity prices add complexity to trade projections, potentially causing delays in report finalization.
— Ukraine grain exports well behind year-ago. For the first 11 months of 2024-25, Ukraine’s grain exports totaled 38.31 MMT, according to the ag ministry, down 8.65 MMT (18.4%) from the same period last year. That included 20.58 MMT of corn (down 22.6%), 14.86 MMT of wheat (down 14.8%) and 2.31 MMT of barley (down 3.3%).
|
ENERGY MARKETS & POLICY |
— Oil prices rose by about 3% on Monday after producer group OPEC+ kept output increases in July at the same level as the previous two months. Brent crude futures climbed by $1.74, 2.77%, to $64.52 a barrel. U.S. West Texas Intermediate crude was up $1.94, 3.19%, at $62.73. Both contracts lost more than 1% last week. The Organization of the Petroleum Exporting Countries and its allies, known collectively as OPEC+, decided on Saturday to raise output by 411,000 barrels per day (bpd) in July, the third consecutive monthly increase of that amount, as it looks to wrestle back market share and punish members that have produced more than their quotas.
— More industry groups to meet with OMB on EPA's RFS proposal
Stakeholder sessions surge ahead of potential June release of Set 2 rule
The Trump administration’s review of the EPA’s Renewable Fuel Standard (RFS) Program: Set 2 proposed rule continues to draw significant attention, with the number of Office of Management and Budget (OMB) meetings reaching at least 15.
Newly added meetings now include:
- June 3 – Growth Energy
- June 4 – NATSO (representing truck stops and travel plazas)
- June 11 – Advanced Biofuel Association
- June 12 – Union of Concerned Scientists
- June 23 – American Fuel and Petrochemical Manufacturers (AFPM)
The AFPM’s June 23 meeting stands out, as the group generally aligns with the American Petroleum Institute (API), which met with OMB on May 27 to present its concerns about the RFS framework.
The spike in meetings signals continued lobbying over EPA’s finalization of its multi-year biofuel blending mandates. While June has historically been the month when the agency releases proposed RFS volumes, the current pace suggests a release could still happen this month — if all scheduled meetings proceed as planned. However, delays are possible if sessions are canceled or rescheduled. The breadth of participants — from petroleum groups to advanced biofuel backers — underscores the balancing act EPA faces as it shapes the next phase of the RFS.
— DOE cancels $3.7 billion in industrial project funding
Majority of withdrawn funds were targeted for red and rural states
The Department of Energy under President Donald Trump has canceled more than $3.7 billion in funding for 24 industrial and manufacturing projects, many of which were planned for conservative-leaning states including Texas, Kentucky, Louisiana, Alabama, and Ohio, according to a NOTUS report.
The canceled contracts included:
- $500 million for a carbon capture project in Baytown, Texas (Exxon-Mobil and Calpine),
- $170 million for Kraft Heinz emissions reduction efforts,
- $500 million for a cement/asphalt plant in Louisiana,
- $375 million for a chemical recycling plant in Longview, Texas.
More than half the canceled awards were granted between the 2024 election and Trump’s January 2025 inauguration, with the DOE saying many projects “failed to advance the energy needs of the American people, were not economically viable and would not generate a positive return.”
The cuts primarily affected technologies aimed at reducing industrial emissions and carbon capture — efforts once heavily funded by the Inflation Reduction Act and Bipartisan Infrastructure Bill under President Biden.
Energy Secretary Chris Wright sharply criticized the Biden administration’s post-election rush to approve the projects, calling them fiscally unsound. Industry leaders pushed back, warning that U.S. global leadership in carbon management is now at risk.
“Moves like this risk ceding America’s energy and technological leadership to other nations,” said Jessie Stolark of the Carbon Capture Coalition.
Among the affected were venture-backed climate-tech firms Brimstone Energy and Sublime Systems, both focused on decarbonizing cement production.
Only a handful of projects in liberal states like California and New York were affected.
|
TRADE POLICY |
— Where the trade court’s tariff decision went wrong
Former CIT clerk says a legal challenge to Trump’s emergency tariffs ignores historical precedent, statutory authority, and the executive’s discretion in foreign economic policy
George E. Bogden is a fellow at the Steamboat Institute, a conservative policy think tank. He previously clerked for the U.S. Court of International Trade (CIT), giving him direct familiarity with the very judicial body whose ruling he now critiques. Bogden frequently writes on constitutional law, foreign policy, and national security.
In a pointed op-ed in the Wall Street Journal (link), George E. Bogden argues that the U.S. Court of International Trade (CIT) misstepped in its recent ruling that President Trump’s use of the International Emergency Economic Powers Act (IEEPA) to impose global tariffs was unlawful. Bogden contends that the decision is not only inconsistent with statutory text and precedent but also disregards historic executive authority in trade matters.
Key quotes from Bogden:
- “The ruling overlooked history, statute, precedent and national interest.”
- “IEEPA’s independent emergency authority allows the president to regulate, prevent or prohibit the importation of property in which foreign countries or nationals have an interest.”
- “Trade deficits can qualify as emergencies... Congress recognized that ‘large and serious’ balance-of-payments deficits could justify swift presidential action.”
- “I should know: I helped coordinate their implementation.” (on the April 2 Trump tariffs executive order)
- “Even John Maynard Keynes... cautioned against the utopian allure of borderless commerce.”
Bogden's legal and historical argument:
- IEEPA’s language and intent: Bogden argues the CIT ruling misreads IEEPA, which he says grants the president broad authority during emergencies to impose trade restrictions. The statute, he notes, is derived from the Trading with the Enemy Act, upheld in U.S. v. Yoshida (1975).
- Executive discretion is well-established: He cites Dames & Moore v. Regan (1981) and Field v. Clark (1892) to demonstrate that courts have long respected the president’s discretion in addressing foreign threats.
- Historical continuity: Bogden connects Trump’s “reciprocal tariffs” to Cordell Hull’s 1940 testimony defending similar tools. He underscores that even President Nixon and President Carter utilized emergency powers in trade and economic crises with judicial backing.
Bottom Line: Bogden’s core argument is that the judiciary has overstepped by second-guessing the executive's interpretation of an emergency and the tools used to respond. The decision, he contends, jeopardizes a longstanding bipartisan tradition of presidential leadership in trade policy, especially during crises. He warns that the trade court is pushing a return to an outdated “economic orthodoxy” and failing the test of proper legal interpretation grounded in text, history, and precedent.
|
Tariffs before income tax, and the rise of presidential trade power
Before the Sixteenth Amendment was ratified in 1913, federal revenue came largely from tariffs. That changed with the introduction of the income tax and growing global economic interdependence, prompting Congress to assign tariff-setting duties to the nonpartisan International Trade Commission. In 1977, Congress expanded presidential authority through the International Emergency Economic Powers Act (IEEPA), allowing trade actions during declared national emergencies.
Trump's “Liberation Day” Tariffs and Legal Challenge President Trump invoked IEEPA in April 2025 to justify a blanket 10% tariff on all imports — rising as high as 145% on Chinese goods — framing it as a response to national emergencies including trade deficits, immigration, and cartel violence. The tariffs were initially paused for 90 days, but legal challenges followed quickly. Wine importer V.O.S. Selections, four other small businesses, and a dozen states spearheaded by Oregon sued in the Court of International Trade (CIT), arguing that such tariffs exceeded constitutional and statutory limits, particularly Congress’ exclusive power to levy duties under Article Art. 1, § 8, cls. 1, 3.
Trade Court Ruling: Presidential Overreach In V.O.S. Selections, Inc. v. United States, the Trade Court ruled against the administration. The panel — comprising Judges Katzmann (Obama appointee), Restani (Reagan), and Reif (Trump) — found the tariffs unauthorized by IEEPA and lacking statutory basis. The decision was praised across the political spectrum as a strong reinforcement of the separation of powers.
Appeal, Delay, and Strategic Consequences A stay was issued by the U.S. Court of Appeals for the Federal Circuit on May 29, keeping the tariffs in place while the appeal proceeds. According to the order, the plaintiffs are directed to respond to the United States’ motion for a stay by June 5, and the U.S. may file a reply no later than June 9, so the appeal will be handled promptly. Legal experts anticipate the case will ultimately be reviewed by the Supreme Court.
While IEEPA is under fire, President Trump retains tariff tools under Sections 232 (national security) and 301 (unfair trade practices) of the Trade Act. Section 122 of the Trade Act of 1974 could also permit temporary tariffs — but with more limited scope and duration.
Global Fallout and Market Reactions The ruling throws ongoing trade negotiations into uncertainty. Nations like the UK may hesitate to finalize deals amid doubts over U.S. tariff legality. However, global equity markets rose on hopes of reduced trade tension, while manufacturers remain wary of further executive actions.
Of note:
Link to our Special Report on trade negotiations and court issues |
— SCMP: U.S. retail giants press Chinese suppliers to shoulder up to 66% of tariff costs
Amid political pressure to ‘eat the tariffs,’ American retailers push burden onto producers in China and Southeast Asia
In an exclusive report by the South China Morning Post (SCMP), U.S. retail giants including Walmart, Target, Nike, Puma, and Adidas are now demanding that their Chinese suppliers absorb 50% to 66% of the cost of new tariffs imposed under President Donald Trump's trade agenda. The push marks a sharp shift from earlier agreements in April, when companies like Walmart had committed to covering the full costs themselves to keep supply chains intact during the height of trade tensions. “Most of our customers… are being asked to cover 50 to 66 per cent of the current tariffs,” said one executive at a garment supplier with operations across China and Southeast Asia.
The aggressive cost-sharing demands come as U.S. retailers face political pressure at home not to raise consumer prices, while navigating an uncertain landscape under the current 90-day U.S.-China tariff truce, which temporarily reduced tariffs but could snap back to triple-digit levels by mid-August. Treasury Secretary Scott Bessent acknowledged Thursday that trade negotiations remain “a bit stalled.”
A supplier in Zhejiang province told the SCMP that although Walmart had previously agreed to cover tariffs through August, “there is no room” for the company to absorb more than 30% of the cost moving forward. “We agree to get prepared for the worst situation, while hoping for the best,” the source said.
Walmart responded in a statement: “We have always worked to keep our prices as low as possible. We’ll keep prices as low as we can for as long as we can given the reality of small retail margins.”
Meanwhile, some brands are quietly shifting operations. Puma has trimmed direct shipments from China, while Nike and Adidas have signaled that price hikes are inevitable if tariff costs continue to rise. Target CEO Brian Cornell described price increases as a “very last resort.”
President Trump recently clarified that his trade strategy is aimed at reshoring “chips and computers” rather than low-margin goods: “We’re not looking to make sneakers and T-shirts,” Trump said. “We can do that very well in other locations.”
But Chinese exporters, especially contract manufacturers, are struggling to pivot. A Gavekal analysis cited by the Post noted that certain U.S.-bound products have no real domestic market in China—like “oven gloves” or “bulk Christmas cards.” As Gavekal’s Christopher Beddor wrote, “Chinese exporters will almost certainly be forced to curtail output and divert supply to other markets.”
Bottom Line: The next 10 weeks will be critical: if no U.S.-China agreement is reached before August 12, tariff rates could return to 145% on Chinese goods and 125% on U.S. goods, drastically reshaping global retail sourcing strategies.
|
TAX POLICY |
— Bonus depreciation. The pending reconciliation measure in Congress, known as the "One Big, Beautiful Bill Act" (HR 1), includes a provision to reinstate 100% bonus depreciation for qualified property. This allows businesses to immediately deduct the full cost of eligible investments, such as machinery and equipment, in the year they are placed in service. The reinstatement applies to property acquired and placed in service after Jan. 19, 2025, and before Jan.1, 2030. Some GOP senators want to make permanent business tax breaks in the measure, including bonus depreciation and research and development expensing.
Bonus depreciation aims to encourage business investment by providing immediate tax benefits, potentially boosting economic growth. However, it also raises concerns about increasing the federal deficit, as the Joint Committee on Taxation estimates the cost of this provision at $37 billion over ten years; more if the language is made permanent.
The bill has passed the House of Representatives and is currently under consideration in the Senate, where it will face some changes.
|
POLITICS & ELECTIONS |
— Poland elects Trump-backed nationalist as president
Karol Nawrocki’s narrow win threatens Tusk’s pro-EU agenda
A former boxer and nationalist historian, Karol Nawrocki, has narrowly won Poland’s presidential election, marking a significant shift in the country’s political trajectory. Backed by President Donald Trump, Nawrocki’s victory deals a blow to centrist Prime Minister Donald Tusk, whose pro-Brussels government has been pushing to liberalize domestic policies and align more closely with the European Union.
Nawrocki is expected to act as a check on Tusk’s reform agenda, which includes loosening abortion laws, legalizing civil partnerships, and undoing judicial policies criticized by the EU as undermining judicial independence. As president, Nawrocki holds veto power and could significantly delay or block these legislative efforts.
The election campaign was dominated by debates over national security and migration, reflecting Poland’s strategic position in Europe and its ongoing role in supporting Ukraine. While both candidates pledged continued support for Kyiv, Nawrocki was more critical of Ukrainian President Volodymyr Zelenskyy and adopted a harder stance on the status of Ukrainian refugees, accusing many of exploiting Poland’s hospitality.
Bottom Line: Nawrocki’s win underscores the enduring influence of nationalist politics in Central Europe and signals a potential cooling of Warsaw’s ties with Brussels.
|
FOOD & FOOD INDUSTRY |
— Takeout boom reshapes U.S. dining
Delivery apps drive 75% of restaurant orders as ghost kitchens proliferate
A new report from the National Restaurant Association (link) reveals that takeout now accounts for 75% of all restaurant orders in the United States, underscoring a seismic shift in how Americans consume food. The trend is particularly pronounced among younger consumers, who are increasingly relying on delivery platforms like DoorDash and Grubhub.
The rise of ghost kitchens. These apps have not only expanded access to restaurants previously limited to dine-in patrons — they’ve also fueled the rise of "ghost kitchens": facilities that prepare food solely for delivery, with no storefront or on-site dining. Two industry giants, Rebel Foods and CloudKitchens, operate hundreds of these delivery-only hubs, managing multiple virtual restaurant brands under one roof.
The growing investor interest in this model is global. The Qatar Investment Authority recently committed $25 million to India-based Rebel Foods, signaling confidence in the long-term viability of cloud kitchens as a scalable, tech-enabled foodservice model.
Bottom Line: This evolution is blurring the line between traditional restaurants and food-tech platforms — and redefining the future of the industry.
— Iconic California avocado in peril
A former neurologist-turned-farmer battles imports, drought, and industry politics to save the state’s signature fruit
California’s avocado, once a symbol of the Golden State’s agricultural innovation, is now fighting for its future — and Norman Kachuck is leading the charge, according to an article in the Los Angeles Times (link). From his 372-acre ranch in San Diego County’s Valley Center, Kachuck, a 70-year-old former USC neurologist, is locked in a multifront struggle: against cheap Mexican imports, climate change, unresponsive industry leadership, and looming labor shortages tied to Trump’s immigration policies. “Mexican avocado imports are tainted conflict fruit,” said Kachuck. “The Mexican avocado industry is corrupt and ungoverned — and the American consumer is being deceived.”
Despite California's avocados being hailed for higher quality, market dominance has shifted. Since NAFTA opened the floodgates in 1994, about 90% of avocados consumed in the U.S. are now imported, overwhelmingly from Mexico. This has decimated many local growers.
Kachuck, who calls himself a “Neuroavocado` warrior,” has sunk most of his retirement savings into keeping ACA Groves alive. He is pushing back against both the California Avocado Commission, which he says failed to advocate for trade protections, and major produce firms that he accuses of misleading marketing. “You’ve got to be an activist... Everything has adversarial components to it. But the operative part is making peace,” he said.
In February, he and three other farmers filed a federal lawsuit against Fresh Del Monte, Calavo Growers, and Mission Produce, claiming they falsely labeled Mexican avocados as “sustainably sourced” despite links to deforestation. “This case is really about the American public being misled to the detriment of our local farmers,” said plaintiffs’ attorney Jennifer Church.
Kachuck also fought unsuccessfully to shift leadership on the Avocado Commission’s board in 2024 elections, blaming poor voter turnout and regional divides. He now eyes the 2026 statewide referendum on whether the commission should continue to operate.
And yet, amid adversity, Kachuck’s passion remains rooted in the soil. He’s especially fond of the Reed avocado, a creamy, grapefruit-sized variety he hopes to one day commercialize through genetic improvement. “I would love to concentrate on making a better avocado for us,” he said, showing off the fruit on a breezy San Diego afternoon. “It’s the most luscious, creamy, large and delicious avocado I’ve ever tasted.”
Kachuck may be nearly out of funds, but not out of fight. As he put it bluntly: “I’m stupid enough to not know when quitting is correct.”
|
SWAMPBUSTER RULE |
— Swampbuster rule upheld in Iowa court ruling
Judge dismisses lawsuit challenging federal wetland protections
A federal judge dismissed a lawsuit challenging the constitutionality of the USDA’s “Swampbuster” rule — a decades-old provision that links farm subsidies to wetland conservation — handing a victory to environmental groups that intervened to defend the law, according to the Iowa Capital Dispatch.
Filed by CTM Holdings LLC, the lawsuit argued that Swampbuster, part of the 1985 Farm Bill, unconstitutionally conditions federal farm benefits on refraining from disturbing wetlands. The company wanted to farm a 9-acre tract previously designated as wetland and claimed the land was dry. But Chief U.S. District Judge C.J. Williams ruled that CTM Holdings lacked standing and had not properly pursued administrative remedies such as requesting a formal redetermination of the wetland status. “If plaintiff’s intention was to request a review of the 2010 wetlands determination, nobody else in the world could possibly have known it,” Williams wrote. He added that the company’s claims amounted to a “speculative chain of possibilities” and not an actual or imminent injury.
Williams also rejected the claim that Swampbuster constitutes an unconstitutional “taking” of private land. The court found that landowners retain significant usage rights and are reimbursed through USDA benefits. Logging, for example, is still permitted — and was done by CTM Holdings. The ruling, issued “with prejudice,” prevents the case from being refiled.
Environmental groups including the Iowa Farmers Union, Iowa Environmental Council, Dakota Rural Action, and Food & Water Watch celebrated the decision. “Commonsense measures like Swampbuster support Iowa farmers and everyone downstream from them,” said Michael Schmidt, an attorney for the Iowa Environmental Council. Aaron Lehman, president of the Iowa Farmers Union, said he was “very happy” with the outcome: “When we have voluntary participation in programs, we expect that it’s going to have conservation compliance attachments that make sense for the farm, make sense for the neighbors and (make) sense for the entire community.”
Despite the loss, Liberty Justice Center, which represented CTM Holdings alongside Pacific Legal Foundation, signaled it would appeal to the Eighth Circuit: “We’re confident that the appellate court will ultimately rule that this federal law is unconstitutional.”
|
WEATHER |
— 158 Fahrenheit: That's the scorching road temperature recorded in northern China. Signs are emerging that the coming months will be blistering in North America, Europe and Asia.
— Forecasts signal record summer heat, floods, and grid stress across Northern Hemisphere
Bloomberg: Climate scientists warn of extreme weather patterns hitting U.S., Europe, and Asia
Heat waves predicted. Even before summer officially begins, signs are mounting that large swaths of North America, Europe, and Asia will be gripped by intensifying heat waves, flooding, and storms, according to climate scientists and meteorological forecasters cited by Bloomberg. “I’d expect to see further instances of extreme to record-shattering downpours and flood events in regions prone to heavy precipitation during the warm season,” said Daniel Swain, climate scientist at UCLA.
In the U.S., Bloomberg reports that heat domes forming across the western and central regions could trap high temperatures in place, while jet stream distortions downstream may lock in rain systems, triggering widespread flooding.
Meanwhile, Paul Pastelok of AccuWeather warned that “the bends in the jet stream may increase the threat of derechos” — long-track severe thunderstorms — across the Midwest and northern Plains, potentially inflicting billions in damages.
In the Atlantic, warmer ocean temperatures are raising the risk of a more intense hurricane season, with Texas and the Gulf Coast particularly exposed, Bloomberg noted.
The report also highlighted severe infrastructure and agricultural stress:
- 89 million Americans across three power grids are at elevated risk of electricity shortfalls this summer, per the North American Electric Reliability Corp.
- Intensifying drought in the Corn Belt may impact corn, soy, and wheat, and could cause Mississippi River levels to fall, disrupting barge traffic.
In Europe, persistent high-pressure systems are expected to reduce rainfall, increasing drought risks and suppressing wind energy generation — a trend that earlier in the year saw record-high solar output but low wind yields.
Bottom Line: As Bloomberg put it: “The Northern Hemisphere’s summer hasn’t officially started, but signs are already piling up that... [it] will be pummeled by record heat and other weather extremes.”
— NWS outlook: Moderate to heavy rain will be moving across the Southwest and Four Corners today with flash flooding possible... ...Heavy rain, severe weather, and flooding threat develop today over the north-central Plains, shifting to the south-central Plains and toward the upper Midwest on Tuesday... ...Tropical moisture is expected to become more focused across South Florida and then spread northward through the next couple of days.
|
KEY DATES IN JUNE |
2: USDA Industrial reports — Grain Crushing, Fats & Oils; Crop Progress
3: JOLTS
4: ADP Employment
5: International Trade; weekly Export Sales
6: Employment; Livestock and Meat International Trade Data
7: Belmont Stakes
9: Wholesale Trade; U.S. Agricultural Trade Data Update; Crop Progress
11: CPI
12: PPI-FD; Crop Production, WASDE; FAS World Markets and Trade reports, World Agricultural Production; weekly Export Sales
12: U.S. Open
13: Consumer Sentiment
14: President Donald Trump’s birthday
15: Father’s Day
15: FIFA World Cup
16: Chinese leader Xi Jinping’s birthday
16: ERS Outlook Reports; Crop Progress
16: Quarterly estimated taxes due; 2024 tax returns for individuals living abroad due
17: Retail Sales; Business Inventories; Import and Export Prices; Industrial Production/Capacity Utilization; FOMC meeting begins
18: Housing Starts; FOMC (interest rates and updated economic forecasts); USDA Cost of Production Forecast; Livestock, Dairy and Poultry Outlook; Sugar and Sweeteners Outlook
19: Juneteenth Holiday — markets and government offices closed
20: Cattle on Feed; Milk Production
20: First day of summer
23: Existing Home Sales; Chickens and Eggs; Crop Progress
24: Consumer Confidence
25: New Home Sales; Food Price Outlook; Cold Storage
26: Durable Goods; International Trade in Goods; GDP; Pending Home Sales Index; weekly Export Sales; Hogs and Pigs
27: Personal Income and Expenditures, incl PCE Price Index; Consumer Sentiment; Agricultural Prices
30: Acreage; Grain Stocks; Rice Stocks; Crop Progress
30: Wimbledon (tennis)