Update provided by Hance Scarborough, LLP
Last week, Congress made significant progress on setting spending limits for the next decade.
On April 5, the Senate passed its amended version of the House budget resolution, and on April 10, the House voted on the measure, narrowly adopting it with a roll call vote of 216-214.
The budget now passed by both chambers calls for steep tax cuts, an expansion of the Pentagon, an increase in spending for immigration enforcement, and a $5 trillion increase to the debt limit. The plan also extends the 2017 Trump Tax Cuts and provides for additional cuts, allowing $5.3 trillion in tax cuts over the next 10 years.
House and Senate committees will begin outlining specific cuts and increases in response to reconciliation directives.
At 12:01 a.m. on April 9, President Donald Trump’s reciprocal tariffs went into effect and the markets went wild. But shortly after 1 p.m. ET, the President announced on Truth Social that he was increasing China tariffs to 125 percent but issuing a 90-day pause for most “Liberation Day” tariffs and maintaining an original baseline tariff of 10 percent for all countries. The 25 percent automobile, steel, and aluminum tariffs are still in place.
On April 11, China raised its total retaliatory tariff on U.S. imports to 125 percent after the Trump administration clarified that U.S. duties on Beijing are actually 145 percent because of earlier fentanyl-related levies.
FTC
On April 10, the Senate confirmed the nomination of Mark Meador for the third Republican seat on the Federal Trade Commission (FTC) following President Trump’s firings of both Democratic commissioners. Meador was confirmed in a 50-46 party-line vote. Meador served at the DOJ during the first Trump administration and worked as an aide to Senator Mike Lee from Utah and was an attorney at the FTC. Meador joins Chair Andrew Ferguson and Commissioner Melissa Holyoak. President Trump’s removal of Democratic commissioners Alvaro Bedoya and Rebecca Kelly Slaughter is being challenged in federal court.
Clean Car Rules
Senate Republicans are exploring ways to reject California’s plans to phase out gasoline-powered vehicles by 2035 and other related mandates. Last week, the Senate Parliamentarian ruled that Biden Administration waivers for three vehicle pollution standards are not “rules” and therefore federal lawmakers cannot nullify them under the Congressional Review Act (CRA). The CRA allows Congress to repeal newly issued rules by a simple majority, and Republicans have been eager to use it against the California waivers. Senate Environment and Public Works Chair Shelley Moore Capito of West Virginia, who is leading the charge on the repeal effort, says the committee will be looking at options over the two-week April recess.
EV Tax Credit
House Republicans are counting on both a repeal of vehicle efficiency regulations and an elimination of electric vehicle tax credits to earn them hundreds of billions of dollars in savings for their budget reconciliation push. However, Republicans would not be able to count a large chunk of the potential savings from repealing an EPA efficiency regulation, which the GOP refers to as the “EV Mandate,’ if the EV tax credits are no longer in place. House Energy and Commerce Republicans propose that rolling back the EV mandate would mean more gas-powered cars, leading to higher revenue. At the same time, fewer people would buy EVs and claim the credit, which could be calculated as savings. House Ways and Means Committee Republicans are simultaneously working to repeal the EV tax credit and other clean energy subsidies in the IRA, which raises the question of whether Republicans would try to count EV tax credit-related savings twice, or whether they could cancel each other out. Regardless, EV tax credits are the least popular among Republicans, and will likely stay on the chopping block during budget reconciliation negotiations.
