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QUICK FIX
Donald Trump spent months vowing to take a hammer to U.S. trade policy on his first day back in the White House. Markets and foreign governments braced for the possibility that he would quickly follow through on threats to impose 25 percent tariffs on Canadian and Mexican imports and ratchet up levies on Chinese goods.
It’s now Day Two in what Trump has dubbed the “golden age of America” and, at least so far, all we’ve seen is a promise to study the matter. The new administration’s opening salvo to upend trade policy was actually a memorandum that ordered federal agencies to investigate and address trade deficits and unfair trade and currency practices, per Ari Hawkins. The memo stopped short of imposing the punishing tariffs many investors had feared.
Trump told reporters on Monday night that he thinks tariffs on Canadian and Mexican goods could be implemented on Feb. 1. When asked about universal tariffs, he said, “We’re not ready for that yet.”
Markets were closed for Martin Luther King Jr. Day, but off-hours trading indicated a favorable response to the new president’s early trade agenda. Futures contracts on the S&P 500 and Dow Jones Industrial Average climbed and the dollar softened — though it pared back some of those losses after Trump's impromptu comments in the Oval Office. The market’s reaction mirrored the public’s preference for what The Wall Street Journal has dubbed “MAGA Lite” — i.e., they support Trump’s goals, but would prefer he temper his approach.
As Citi analysts led by the bank’s head of G10 FX Strategy Daniel Tobon wrote on Monday, Trump’s initial trade plans “point to more ‘bark than bite’ for now.”
“For now” is the operative phrase in that sentence.
“We caution against viewing this as an all-clear on the trade policy front. The trade policy volatility is still almost certainly on the road ahead,” said Isaac Boltansky, the managing director and director of policy research at BTIG. “With that being said, the lack of an announcement today does dovetail with the broader expectation that there will be a modicum of incrementalism on the trade policy front given the broader economic realities.”
Some of Trump’s top appointees have signaled they would prefer a gradual implementation of new tariffs. Scott Bessent, whose nomination for Treasury secretary will be considered by Senate Finance today, told CNBC after the election that he’d recommend that tariffs be “layered in gradually” to account for one-time price adjustments. Stephen Miran, Trump’s pick to lead his Council of Economic Advisers, floated a policy that would raise tariffs on Chinese goods by 2 percent each month “to help minimize uncertainty and any adverse consequences.”
Of course — as Trump’s team cautioned throughout the transition — the new administration’s policies will be decided by the president. And Trump has swatted down stories saying that he may pare back his plan to impose universal tariffs. His second inaugural address provided no indication that he’s reassessing his campaign agenda now that he’s back in the Oval Office.
“Instead of taxing our citizens to enrich other countries, we will tariff and tax foreign countries to enrich our citizens,” he said. “It will be massive amounts of money pouring into our treasury coming from foreign sources.”
A strong banking industry is foundational to a strong economy. America's banks look forward to working with the new administration and the 119th Congress to advance pro-growth policies that produce a healthy economy, rational regulation that preserves access to capital and credit, and a competitive financial services market. To learn more about what guides ABA's advocacy in support of our customers and communities, read our 2025 Blueprint for Growth.
It’s harder than it looks — As we noted in yesterday’s Morning Money, Trump secured his second term with promises to bring down inflation and halt the flow of unauthorized immigrants into the U.S. On inflation, Trump on Monday said his first action would be to direct his cabinet “to marshal the vast powers at their disposal to defeat what was record inflation and rapidly bring down costs and prices.”
— Trump’s memorandum orders agency heads to deliver “emergency price relief, consistent with applicable law.” The memo targets administrative expenses in health care, “counterproductive” requirements for home appliances, and “coercive” climate policies that drive up food and fuel costs. He also asks agency heads to “create employment opportunities for American workers, including drawing discouraged workers into the labor force.”
— In a recent interview with Time, Trump downplayed expectations that he’ll quickly bring down grocery costs — which he used to batter Democrats throughout the campaign — saying that lower energy costs and supply chain improvements will “bring them down.” On Monday, he said he’d declare a “national energy emergency” to drive up domestic oil and gas production — which are now at record levels — in order to lower prices and boost exports, Zack Colman reports.
— White House officials declined to say when consumers could expect to see lower prices as a result of those actions. “Lowering prices for all Americans is a key priority of the Trump administration. The president is taking these actions as soon as possible here on day one, so that we can lower prices as soon as possible for the American people,” the official said.
Constituent services — As prominent elected officials like Georgia Gov. Brian Kemplooked on from the overflow room, many of the wealthiest people in the world caught Trump’s swearing-in up close. Bloomberg estimates the combined net worth of the billionaires seated behind the Trump family exceeded $1.3 trillion. Among those spotted: “Elon Musk, Jeff Bezos and Mark Zuckerberg. Also spotted inside the Capitol Rotunda for the inaugural ceremony were LVMH Chief Executive Officer and France’s richest man, Bernard Arnault, Alphabet Inc. co-founder Sergey Brin and Las Vegas Sands Corp. majority owner Miriam Adelson.”
What, no tax policy? — Notably, Trump’s early executive actions and inaugural address made no mention of the tax policy fight that’s expected to dominate the early days of his presidency, Richard Rubin reports in The WSJ. Republican lawmakers and GOP allies are pushing to extend 2017 tax cuts that expire at the end of this year.
Dems mount last-minute push on Bessent — Democrats on the Senate Finance Committee are continuing to press their allegations that Scott Bessent avoided paying nearly $2 million in taxes. Democratic staff who reviewed Bessent’s tax returns said in a memo last week that he relied on a disputed interpretation of how Medicare taxes applied to hedge fund managers and also failed to properly substantiate losses he claimed from a publishing business, Michael Stratford reports.
Bessent and the transition team have pushed back against the accusations, calling them meritless. At his hearing last week, Bessent said the interpretation he relied on for calculating Medicare taxes was being litigated. He said he would set aside the amount of taxes at issue “until the case makes its way through the courts.”
“You cannot effectively serve as Treasury Secretary with the cloud of tax avoidance hanging over your head,” Democratic Sens. Elizabeth Warren, Ron Wyden, and Sheldon Whitehouse wrote in a letter to Bessent. They said they wanted Bessent to submit to an IRS audit of his taxes, publicly release his filings, and recuse himself from any Treasury Department discussions related to the policy issues raised by his taxes. They also asked him to “commit to supporting ongoing enforcement efforts against wealthy tax cheats.”
A Bessent spokesperson did not comment on Democrats’ request for those assurances. A spokesperson for Committee Chair Mike Crapo said Bessent “followed all of the applicable laws and met the Committee's long standing due-diligence standard” through the committee’s vetting process, adding that Crapo “looks forward to advancing his nomination.”
Crypto
Waters blasts Trump over memecoin — The top Democrat on House Financial Services, Rep. Maxine Waters of California, took aim at Trump for launching a meme coin, writing in a statement that the token "represents the worst of crypto and shows why many regulators, advocates, and policymakers have long been worried." Her criticism is a sign that Democrats will go after Trump for launching the crypto product just ahead of his inauguration. "Through his meme coin, Trump has created a way to circumvent national security and anti-corruption laws, allowing interested parties to anonymously transfer money to him and his inner circle," Waters wrote.
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Immigration
Earthshaking — Trump used his inaugural address to lay out his priorities on immigration, including declaring a national emergency at the southern border and beginning the process to return “millions and millions of criminal aliens back to the places from which they came.”
— He also signed an executive order that would effectively revoke the citizenship of Americans who were born to immigrants who lack legal status. It is likely to immediately face legal challenges, Myah Ward and Daniella Diaz report.
A message from the American Bankers Association:
At the regulators
Freeze — Trump has also directed a freeze on federal rulemaking pending review. Where applicable, the order also calls for the postponement of the effective date final rules that haven’t taken effect.
— Banking groups cheered the order. “We strongly support President Trump’s decision to pause all pending rulemakings,” Bank Policy Institute President and CEO Grag Baer said in a statement. “The incoming administration should extend its review beyond pending regulations to include policy statements, interpretive rules and agency actions illegally enforced by regulators as binding rules without going through the required notice-and-comment process.”
Meet the (temporary) new boss — With nearly all of Trump’s nominees still awaiting confirmation, The White House on Monday announced the names of acting heads of top financial regulators.
— David Lebryk, the fiscal assistant secretary, is set to become acting Treasury secretary, Michael Stratford reports. Matthew Ammon will take over as acting secretary of the Department of Housing and Urban Development, per Katy O’Donnell.
— SEC Commissioner Mark Uyeda will run the agency as acting chair, according to Declan Harty, priming what’s expected to be a friendlier regulatory regime under Trump. Wall Street groups are already making their pitches to the regulator. The Managed Funds Association sent Uyeda a letter calling on the SEC to withdraw its recent appeal of a lower-court ruling striking down its so-called dealer rule and to extend the SEC’s compliance deadline for new short-position reporting requirements. It also recommended Uyeda halt “regulation by enforcement” — something the Republican himself has advocated for.
— The Commodity Futures Trading Commission will be led by Commissioner Caroline Pham until Trump’s as-yet-unnamed nominee is confirmed, Declan reports.
— Trump has not yet announced who will lead the Office of the Comptroller of the Currency, but Victoria Guida reports that the president’s landing team is led by former acting Comptroller Keith Noreika and the agency’s former chief counsel, Jonathan Gould.
The SEC may not be heading for one-party rule after all — After the Senate failed to advance SEC Commissioner Caroline Crenshaw’s renomination late last year, Democrats fretted that Trump would seek to install his pick to chair the agency, Paul Atkins, in the Democratic commissioner’s seat — setting up a 3-0 Republican commission atop the Wall Street regulator.
He didn’t. Rather, in one of a blitz of announcements yesterday, Trump nominated Atkins for the remainder of recently departed Chair Gary Gensler’s term, which ends in 2026, Declan reports. The move means that Crenshaw, who is sitting on an expired term, will not be ousted upon Atkins’ expected confirmation — and that the SEC will, for now at least, continue with a bipartisan commission.
Confirmation — Vivek Ramaswamy is leaving DOGE to run for governor of Ohio, Holly Otterbein and Adam Wren report. Ramaswamy “just burned through the bridges and he finally burned Elon,” said a Republican strategist close to Trump advisers, per Adam and Holly. “Everyone wants him out of Mar-a-Lago, out of D.C.”
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The Economy
The Davos crowd braces for inflation— Demographic challenges, changing technology and geopolitics could push inflation higher, BlackRock Vice Chair Philipp Hildebrand told Bloomberg on Monday at the World Economic Forum in Davos.
“While inflation has clearly come down, much of it driven by the post-pandemic adjustments, I don’t think this inflation story is completely over,” he said. “The biggest risk would be that we wake up and realize inflation is not just sticky, but continues to be stubbornly sticky.”
Kylie Patterson, a former deputy assistant to Biden and a House Financial Services and Commerce Department alum, has joined Citi as a senior vice president on its third-party public policy engagement team. She will lead the bank’s relationships with center-left groups.
A message from the American Bankers Association:
America's banks help drive the U.S. economy. That's why the American Bankers Association remains committed to working with the new Administration and the 119th Congress to advance commonsense policies that allow banks to best serve their customers, clients and communities. Our 2025 Blueprint for Growth identifies policies that will spur growth and foster a vibrant, resilient financial services market. Learn more here.
