Bessent to Start Trade Talks With China This Week

Carney and Trump
Reuters
By Yuval Rosenberg and Michael Rainey

Happy Tuesday! On this date 90 years ago, President Franklin D. Roosevelt established the Works Progress Administration via executive order. Here's what's happening today.

Canada's Carney Tells Trump His Country Is 'Not for Sale'

President Donald Trump's trade war was playing out at both ends of Pennsylvania Avenue today.

At the White House, newly elected Canadian Prime Minister Mark Carney visited Trump. In a cordial exchange in front of television cameras in the Oval Office, Carney sought to make clear that Canada will never become the 51st U.S. state.

"As you know from real estate, there are some places that are never for sale," Carney told Trump. "Having met with the owners of Canada over the course of the campaign, last several months, it's not for sale. It won't be for sale, ever. But the opportunity is in the partnership and what we can build together."

"Never say never," Trump replied.

"Never, never, never, never, never," Carney mouthed to reporters, smiling.

Tensions between the two traditional allies have been ratcheted up by Trump's tariffs, his talk of Canada becoming the 51st state and his repeated insistence that the United States doesn't need Canadian goods. "We don't need their Cars, we don't need their Energy, we don't need their Lumber, we don't need ANYTHING they have, other than their friendship, which hopefully we will always maintain. They, on the other hand, need EVERYTHING from us!" Trump wrote on social media shortly before Carney arrived for their meeting. The president also repeated a debunked claim that the U.S. is "subsidizing" Canada to the tune of $200 billion a year.

Still, Tuesday's discussion between the two leaders was amicable, in stark contrast to Trump's recent jabs at Canada and his Oval Office blowup with Ukrainian President Volodymyr Zelensky. Canadians may be furious at Trump, but Carney praised him as a "transformational president." For his part, Trump said he has a lot of respect for Carney and praised Canada for stepping up its defense spending. "We're going to be friends with Canada. Regardless of anything, we're going to be friends with Canada," Trump said.

Many of Trump's remarks were unrelated to Canada or Carney, but the president also made clear he's thinking about trade deals largely as a one-way street and he pushed back on questions about when new deals might be announced. "Think of us as a super luxury store, a store that has the goods," he said. "You're going to come and you're going to pay a price and we're going to give you a very good price."

When asked if there was anything Carney could say that would make him lift the tariffs he'd imposed, Trump simply said, "No."

Bessent Will Start Trade Talks With China This Week

At the other end of Pennsylvania Avenue, Treasury Secretary Scott Bessent told lawmakers that the U.S. could announce new trade deals with leading trade partners as soon as this week, though talks with China have yet to get off the ground. Later in the day, the Treasury Department announced that Bessent will travel to Switzerland on Thursday to start talks with China.

Bessent will reportedly be joined by U.S. Trade Representative Jamieson Greer.

Appearing before a House panel in the morning, Bessent said the U.S. has 18 major trading partners, and the Trump administration is currently negotiating with 17 of them - all except China.This contradicts statements made by President Trump, who has hinted that he has talked to Chinese leader Xi Jinping and that White House officials are talking to their Chinese counterparts. China has denied that talks are occurring at any level, and Bessent appeared to back their version of the story today. "China, we have not engaged in negotiations with them as of yet," he said.

As for the rest of the trade deals, it could take more than a few weeks to complete any agreements. Referring to the country's 15 largest trade partners, Bessent said he "would be surprised if we don't have more than 80 or 90% of those wrapped up by the end of the year."

A warning on debt: Bessent also said that the IRS is still tallying the revenues from the 2025 tax season, and when he has a better sense of where things stand he will update Congress with his estimate of when the federal government will exhaust its borrowing capacity as it bumps up against the debt ceiling.

Although he is still awaiting more definitive numbers, Bessent did say that he knows the U.S. is getting close to the point, known as the X-date, when it will face a funding crisis.

"Just as an outfielder running for a fly ball, we are on the warning track," Bessent said. "And when you are on the warning track, it means the wall's not far away."

Bessent vowed that the U.S. government "will never default." The debt ceiling will be raised, he said, and the Treasury will not use any "gimmicks" to get around its obligations. But the X-date will be a key factor in determining the deadline for Republicans' budget bill, since they plan to raise the debt limit in that legislation.

Congressional Budget Office Director Phillip Swagel said Monday that revenues are sticking close to estimates, suggesting that the government could have until the end of summer before the X-date arrives. "We still have it as late in the summer - into August, into September," Swagel told Bloomberg.

Top Appropriators Call for White House to Restore Spending Tracker

As the Trump administration clashes with Congress over the power of the purse, top Republicans and Democratic appropriators are questioning why the White House took down a website tracking federal spending, Carl Hulse of The New York Times reports.

In a letter sent last month to Office of Management and Budget Director Russell Vought, the Republican chairs of the House and Senate Appropriations Committees, Rep. Tom Cole and Sen. Susan Collins, and their Democratic counterparts, Rep. Rosa DeLauro and Sen. Patty Murray, said that taking down the site was a violation of the law. "All four of us have indicated and advised O.M.B. that it is not optional to do the public website," Collins told the Times.

Democrats have sharply criticized the budget office, but the bipartisan pushback in this case stands out. "While Ms. Collins has publicly broken with the White House on other issues, including its decision not to spend congressionally approved emergency aid, the decision by Mr. Cole to sign on was striking given he is much more closely allied with the White House," Hulse notes.

Two public interest groups sued Vought and the budget office last month for taking down the site, arguing that the move reduces Trump administration transparency and accountability. In a filing in the case, the administration argued that the apportionments in question are subject to change and requiring them to be disclosed would have a chilling effect on OMB's decision-making process. The administration also claimed that the laws requiring the disclosure of "deliberative" information - that is, spending decisions that aren't final - violate the constitutional separation of powers.

The Government Accountability Office has disputed the notion that all apportionment data is sensitive enough to be kept from being disclosed.

Trump Admin Plans to End Energy Star Rating Program

The Trump administration is shutting down the Environmental Protection Agency's Energy Star program, which rates the efficiency of new appliances and buildings, including homes and industrial facilities. The EPA is reportedly cutting the Climate Protection Partnerships division that includes the Energy Star program, as well as the Greenhouse Gas Reporting Program, which requires businesses to report the release of gases that cause global warming.

"The Energy Star program and all the other climate work, outside of what's required by statute, is being de-prioritized and eliminated," Paul Gunning of the EPA told a group of employees at a meeting Monday, per The New York Times.

Created in 1992 under President George H.W. Bush, the Energy Star program is a public-private partnership that costs about $32 million to operate annually but is credited with helping to save billions in energy costs each year, and more than $500 billion since its inception. The nonprofit coalition Alliance to Save Energy told CNN that the program returns roughly $350 in savings for every federal dollar spent.

Earlier this year, more than two dozen industry groups, including the Chamber of Commerce and air conditioning company Carrier, sent a letter to EPA Administrator Lee Zeldin urging him not to end the Energy Star program, saying it is a voluntary and productive collaboration between the private sector and government.

"Eliminating it will not serve the American people," the letter said, per Reuters. "In fact, because the ENERGY STAR brand is highly recognizable to consumers, it is likely that, should the program be eliminated, it will be supplanted by initiatives that drive results counter to the goals of this administration such as decreased features, functionality, performance, or increased costs."

Steven Nadel, executive director of the American Council for an Energy-Efficient Economy, said the loss of the program would hurt consumers directly. "If you wanted to raise families' energy bills, getting rid of the Energy Star label would be a pretty good way," he said in a statement. "This would take away basic information from consumers who want to choose cost-saving products easily. There's a reason this program has been so popular with consumers and manufacturers alike."

Numbers of the Day

$467.7 Billion: Republicans are considering ways to cut Medicaid spending as part of their tax-cutting budget bill. For decades, the federal government has paid at least half of state Medicaid costs, and one option being discussed is to lower the federal matching rate. A new analysis by the Urban Institute estimates that, if Congress cuts the minimum amount it guarantees to states for their Medicaid programs, the change would affect 10 states and the District of Columbia, reducing their funding by $467.7 billion over 10 years. (The 10 states are California, Colorado, Connecticut, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Washington, and Wyoming.)

If other cuts to federal Medicaid funding were also enacted, the shortfall for the 10 states and the District of Columbia would grow to $835 billion over the next decade.

States would have to ramp up their own Medicaid spending and deal with the budgetary fallout by raising taxes or cutting other services. Or they could reduce Medicaid coverage and benefits.

"It would be catastrophic if federal lawmakers abandoned their commitment to support states' Medicaid programs," said Kathy Hempstead, senior policy adviser at the Robert Wood Johnson Foundation, which supports the Urban Institute. "States would face impossible budget choices and access to Medicaid would likely end for people with no other options."

$140.5 Billion: The trade deficit in goods and services rose to a record high of $140.5 billion in March, the Commerce Department reported Tuesday. The 14% surge in the monthly deficit was driven by companies scrambling to secure products and supplies ahead of President Trump's sweeping new tariffs announced on April 2.

"Imports of consumer goods climbed by the most on record, primarily due to the largest-ever inflow of pharmaceutical preparations," Bloomberg reports. "Imports of capital equipment and motor vehicles also increased."

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