Four Fights That Will Define This Week

From tariffs to reconciliation.

UPDATE at 10:30 a.m. ET: This morning’s newsletter cited a report about White House economic adviser Kevin Hassett signaling openness to a 90-day tariff pause that does not appear to have bene true. The purported comments really did cause a jump in the stock markets, as reported below — but the comment did not end up being real. The newsletter has been corrected. This is an incredibly volatile story, changing by the minute.

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Good morning! It’s Monday, April 7, 2025. Election Day 2026 is 575 days away. Thanks for waking up to politics.

Let’s kick things off this morning with the four fights that will define this week:

Trump vs. the markets

U.S. stock markets slumped for a third straight day upon opening this morning, before quickly making a partial recovery, amid heightened uncertainty around President Trump’s sweeping new tariffs.

The Dow Jones Industrial Average plunged 1,250 points at the open; the S&P 500 fell 3.5%. Goldman Sachs raised the odds of a U.S. recession this year to 45%, after previously raising its to 35% (from 20%) last week.

Then, social media reports circulated that Trump is considering a 90-day pause in tariffs for all countries except China. You can pretty much see the exact moment this morning that these (unconfirmed) reports gave investors hope:

Graphic by the Wall Street Journal

Still, Trump himself signaled this morning that he planned to plow ahead with the tariffs, dubbing worried Republican lawmakers as “Panicans.”

“The United States has a chance to do something that should have been done DECADES AGO,” he wrote on Truth Social. “Don’t be Weak! Don’t be Stupid! Don’t be a PANICAN (A new party based on Weak and Stupid people!). Be Strong, Courageous, and Patient, and GREATNESS will be the result!”

Trump, who spent the weekend competing in a golf tournament, had earlier evinced little concern about the self-inflicted market crash. “Sometimes you have to take medicine to fix something,” he shrugged on Sunday.

Trump officials have been rattling markets for days with their contradictory message about how long the tariffs will last. While several have insisted the tariffs are here to stay — “This is not a negotiation,” White House trade adviser Peter Navarro said on Sunday — Trump has signaled willingness to entertain talks to lower the import taxes.

“Countries from all over the World are talking to us,” he wrote on Truth Social this morning. “Tough but fair parameters are being set. Spoke to the Japanese Prime Minister this morning. He is sending a top team to negotiate! They have treated the U.S. very poorly on Trade. They don’t take our cars, but we take MILLIONS of theirs. Likewise Agriculture, and many other “things.” It all has to change, but especially with CHINA!!!”

With the new tariffs set to take effect at 12:01 a.m. on Wednesday, the next 48 hours will provide a series of key tests: Will Trump stick by the tariffs, as he has claimed? Will he postpone them, as the White House is now potentially signaling? Will Republican lawmakers stand by their party leader? And how will stock markets — and the voting public — respond to all the tumult?

Trump vs. the courts

There are two court cases I’ll be watching closely this week, both of which carry big implications for the ongoing questions about whether the Trump administration plans to comply with court rulings.

The first is the case stemming from Trump’s use of the Alien Enemies Act to deport alleged Venezuelan gang members to an El Salvador prison. The Trump administration carried on with the deportations despite Judge James Boasberg verbally ordering officials to turn the planes around; the administration has argued that they weren’t bound by the order because it was made verbally, and because the judge lacked jurisdiction. (Boasberg then followed it up with a written order blocking future deportation flights under the 1798 law.)

Two developments to watch here: First, the Supreme Court could rule this week on whether to lift Boasberg’s order temporarily blocking Trump from using the Alien Enemies Act. And second, Boasberg could decide whether to hold any Trump administration officials in contempt for flouting his initial order. At a hearing last week, Boasberg said the administration acted in “bad faith” by continuing the flights despite his verbal order and signaled that he was actively considering holding officials in contempt.

The second case to pay attention to concerns a Maryland man, Kilmar Abrego Garcia, who the administration has also deported to the El Salvador prison, although they used a different legal authority than the Alien Enemies Act. The administration deported Abrego Garcia because an immigration judge had previously deemed it likely that he was a member of the gang MS-13 and ruled that he could be remove from the US. However, the judge ruled that Abrego Garcia couldn’t be deported to El Salvador, since he had legitimate reason that such a move could lead to his torture or death. And yet, that’s exactly what the Trump administration did.

The administration has openly acknowledged that it should not have deported Abrego Garcia to El Salvador, but has also argued that it cannot rectify the mistake and no judge can order them to. Nonetheless, Judge Paula Xinis has ordered the administration to get Abrego Garcia by midnight tonight. The administration has appealed her order, so we should receive clarity from an appeals court ahead of tonight’s deadline on what the next steps will be.

House vs. Senate

Just after 2:30 a.m. on Saturday morning, the Senate approved a budget resolution that serves as an outline for the “big, beautiful bill” that Republicans plan to use to advance the bulk of Trump’s legislative agenda, including cutting taxes and raising border security spending.

The next step is for the House to approve the resolution this week, which will then unlock the reconciliation process that allows Republicans to advance the final package along party lines, without being subject to the 60-vote Senate filibuster.

The only problem: House Republicans are not happy with the Senate budget resolution.

Budget resolutions typically set targets for how much spending each congressional committee can cut or raise in the reconciliation package. But, in order to satisfy procedural technicalities, while still advancing the process before inking an agreement on the final bill, the Senate budget resolution took the unusual step of giving different targets to House and Senate committees.

The result is what Rep. Chip Roy (R-TX) called a “Jekyll and Hyde” budget, in which the Senate instructions call for $4 billion in spending cuts and the House instructions call for $2 trillion in cuts — quite a delta. Roy and his colleagues are suspicious that the final product will look more like the Senate sketch than the House sketch, which means it will add too much to the deficit for their liking. (The Senate outline would add $5.8 trillion to the deficit, compared to $2.8 trillion for the House version.)

A slew of other House conservatives have joined Roy in threatening to vote against the Senate-passed blueprint this week, including House Freedom Caucus chairman Andy Harris (R-MD), and Reps. Andrew Clyde (R-GA), David Schweikert (R-AZ), Victoria Spartz (R-IN), and Lloyd Smucker (R-PA). “To say I’m disappointed with the Senate’s deeply unserious budget resolution would be an understatement,” Schweikert said. “The budget instructions passed by the Senate are pathetic,” Spartz added.

Assuming full attendance, House Speaker Mike Johnson (R-LA) can only afford to lose three Republican votes in order for the resolution to pass. Johnson has managed to sway enough dissenters to win almost every tough vote this year (winning the speakership, passing a short-term spending bill, passing the House’s earlier draft of a budget resolution), outperforming his critics’ expectations — although each time he has needed Trump’s help to do it.

Musk vs. Navarro

This is really a sub-fight within the first section, but it’s worth paying attention to this week to see how it unfolds.

Elon Musk, one of the president’s closest advisers, doesn’t seem on board with his ally’s dramatic shift in trade policy. In a video meeting with an Italy right-wing party, Musk expressed hope that Europe and the U.S. will move to a “zero tariff situation, effectively creating a free trade zone between Europe and North America.”

Some Trump allies have used similar language to describe their goals for the tariffs — but the president very much has not.

Musk then followed it up by posting a video of Milton Friedman extolling the virtues of free trade.

In particular, the DOGE chief seems to be focusing his ire on Peter Navarro, Trump’s top trade adviser. In response to a tweet that noted Navarro holds an economics PhD from Harvard, Musk wrote: “A PhD in Econ from Harvard is a bad thing, not a good thing. Results in the ego/brains>>1 problem.”

In any other White House, it would be extraordinary for a top presidential adviser to be publicly targeting the architect of the president’s trade strategy, right in the middle of a trade war that threatens to disrupt the economy. In Trumpworld, it’s just another day. (In fact, it isn’t even the only important power struggle right now: there’s also far-right conspiracist Laura Loomer’s success persuading Trump to five National Security Council officials and the director of the NSA.)

But it will be fascinating to watch who comes out on top in the proxy war between Musk and Navarro for the president’s ear. It’s no exaggeration to say that the fate of the global economy just might hang in the balance.

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More news to know

• AP: Appeals court reverses Trump firings of 2 board members in cases likely headed for the Supreme Court

• STAT: ‘Most effective way’ to prevent measles is vaccination, RFK Jr. says, in most direct remarks yet

• WaPo: Social Security website keeps crashing, as DOGE demands cuts to IT staff

• WaPo: NIH scientists have a cancer breakthrough. Layoffs are delaying it.

• Politico: Ossoff raises record-breaking $11M for Senate reelect

• Columbus Dispatch: Ohio Sen. Bernie Moreno calls top Democrat Chuck Schumer ‘Fuhrer’

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The day ahead

• President Trump will host the Los Angeles Dodgers, the 2024 World Series champions, at the White House before meeting later in the day with Israeli Prime Minister Benjamin Netanyahu. Israel is one of several U.S. allies looking for tariff relief.

• The Senate will hold a procedural vote advancing the nomination of Elbridge Colby to be Under Secretary of Defense for Policy. Colby has faced resistance from some Republicans over his isolationist views, including dovish comments towards Iran. (It’s an ironic vote to be taking place while Netanyahu meets with Trump just down Pennsylvania Avenue.)

• The House will vote on up to nine pieces of legislation concerning veterans.

• The Supreme Court has no oral arguments for the next two weeks.