Editor’s note: The Hill’s Morning Report is our daily newsletter that dives deep into Washington’s agenda. To subscribe, click here or fill out the box below.
In today’s issue:
- Trump, central bank wrestle with economic unknowns
- White House skewers senator amid deportation drama
- Stefanik mulls New York governor run
- US aims shift into weekend Iran talks
President Trump’s efforts to persuade international partners to join the U.S. in isolating China collided Wednesday with a starkly downbeat 2025 economic outlook from Federal Reserve Chair Jerome Powell, dashing the hopes of those looking for global certainty anytime soon.
Multiple tariff deals Trump hopes to negotiate with Asian nations are becoming more complicated and may take months. The president declared “big progress” Wednesday after a Washington meeting with Japanese officials and his Treasury and Commerce secretaries to discuss the “cost of military support,” tariffs and fair trade.
Securing agreements with better terms for the U.S. and less favorable terms for China will test Trump’s bet that the U.S. economy can weather an expensive transition period in order to bolster American manufacturing and U.S. economic dominance. In Japan’s case, an agreement may also reshape the future of its security relationship with the U.S.
Powell offered no rosy scenarios Wednesday, instead projecting a “strong likelihood” that consumers would face higher prices and that the economy would see higher unemployment as a result of tariffs applied in the short run. Tariffs are “likely to move us further away from our goals … probably for the balance of this year,” he said.
To attentive listeners, Powell was repeating what he’s said before: The central bank will wait to assess how inflation and employment are shaking out. To investors, it also suggests that interest rate cuts are not imminent. Financial markets fell as Powell was speaking.
Powell, in remarks to the Economic Club of Chicago, emphasized the “very fundamental policy changes” occurring this year, including tariffs that are “significantly larger than anticipated.”
“There isn’t a modern experience for how to think about this,” Powell said. Businesses and consumers, he added, “are saying in surveys that they’re experiencing incredibly high uncertainty.”
Powell obliquely addressed ongoing debate in Congress about taxes, spending and deficit reduction. Policymakers are right to focus on lowering the U.S. debt, he added, but progress ultimately will require bipartisan agreement to shift the conversation from domestic discretionary spending, which is small and declining as a percentage of federal spending, he continued, to focus on rising obligations for Social Security, Medicare, Medicaid and interest on the debt.
“So much of the dialogue that the politicians offer is about domestic discretionary spending, which is not the issue,” Powell added.
Trump campaigned on promises to protect Social Security and Medicare benefits, while House Republicans want to reduce federal spending for Medicaid, which provides low-income health coverage in partnership with states.
GOP lawmakers say they’re considering other revenue-raising options to help their budget math, including higher taxes on the wealthy. But the idea divides Republicans and poses political risks. One option in early discussion: a 40 percent top tax bracket on income more than $1 million.
▪ The Hill: Trump faces obstacles, steeper costs with the administration’s manufacturing jobs push.
▪ The Hill: The president’s potential semiconductor tariffs spook the tech industry.
▪ The Hill: Computer chipmaker and artificial intelligence leader Nvidia unveiled a $5.5 billion charge to comply with Trump’s tighter export controls.
▪ The Wall Street Journal: U.S. chip-export limits that rocked global markets on Wednesday are a clear sign from the White House that whatever advances China makes in artificial intelligence (AI) will have to happen without America’s help.
▪ NBC News: Revenue from Trump’s tariffs since April 5 totaled $500 million as of Monday, according to Customs and Border Protection. The president has described a much larger revenue haul of $2 billion per day.
Blake Burman’s Smart Take is off this week and will return next week.
3 THINGS TO KNOW TODAY:
▪ Environmentalists say they’re alarmed by the administration’s proposed regulation change issued Wednesday to eliminate habitat protections for endangered and threatened species.
▪ Seventy-two percent of lawsuits challenging major Trump administration actions since January have been assigned to judges appointed by a Democratic president, according to an analysis by The Hill.
▪ The Hill’s fourth report this week about housing in America highlights the shortage problem by the numbers. Check TheHill.com to find the entire series.
LEADING THE DAY
© The Associated Press | Salvador Melendez
DEPORTATIONS: The White House is digging in on its refusal to bring back Kilmar Abrego Garcia, a Maryland man who was mistakenly deported to El Salvador, viewing the controversial fight as a political winner that keeps the focus on an issue of strength for Trump. Democrats and civil rights groups have been in an uproar about the removal of Abrego Garcia, who the Trump administration acknowledged in a court filing had been sent to a notorious El Salvador prison by mistake.
Maryland Sen. Chris Van Hollen (D) on Tuesday traveled to El Salvador in the hopes of releasing Abrego Garcia, but he said officials in the Central American country denied his request to meet with the Maryland resident. Speaking in San Salvador, Van Hollen said the country’s vice president, Félix Ulloa, told him that Abrego Garcia remained in custody only because the Trump administration was paying to keep him there.
The White House’s tone toward the Abrego Garcia case has solidified this week, as officials have plainly stated he will not return to live in the United States. They have argued he entered the country illegally from El Salvador and therefore would be sent back to his home country one way or another. The administration describes him as a violent gang member, in contrast with a court record and denials from his family.
“The rule of thumb here is, whenever [the administration is] leaning in on immigration they’re winning, or they want to change the message,” said one Trump ally.
On Wednesday, the White House doubled down, calling a previously unscheduled press briefing where they invited Patty Morin, the mother of a Maryland woman who was killed by a man from El Salvador. The man entered the country illegally and had no connection to Abrego Garcia.
“Why should we allow violent criminals that have no conscience at all to murder our mothers, our sisters, our daughters?” Morin said. “We are American citizens. We need to protect our families, our borders, our children.”
▪ The Hill: Rep. Delia Ramirez (D-Ill.) has requested a congressional delegation to visit the Salvadoran prison where the Trump administration has sent numerous deportees.
▪ The Wall Street Journal: El Salvador’s President Nayib Bukele plans to double the size of the maximum-security prison where his government is holding U.S. deportees.
▪ NPR: “Homegrowns are next”: Trump embraces the idea of deporting and jailing U.S. citizens abroad.
COURT PUSHBACK: U.S. District Judge James Boasberg on Wednesday found probable cause to hold the Trump administration in criminal contempt for willfully disobeying his order to immediately halt deportations and turn around any airborne planes. The judge’s order gives the administration a final opportunity to come into compliance but says he otherwise will take steps to identify the specific people who flouted his March 15 ruling, which was later lifted by the Supreme Court, and refer them for prosecution.
The order is a blow to a Trump administration that has dug in on its claims it has no obligation to return any of the men swiftly deported to a Salvadoran prison after Trump invoked the 1798 Alien Enemies Act, which has been used only three previous times, all during wars.
“It appeared that the Government had transferred members of the Plaintiff class into El Salvador’s custody hours after this Court’s injunction prohibited their deportation under the Proclamation. Worse, boasts by Defendants intimated that they had defied the Court’s Order deliberately and gleefully,” Boasberg wrote. “The Constitution does not tolerate willful disobedience of judicial orders — especially by officials of a coordinate branch who have sworn an oath to uphold it.”
▪ The Hill: A federal judge has ordered the Trump administration to unfreeze funds under Biden-era laws authorizing massive investments in climate-friendly projects.
▪ Axios: Health and Human Services Secretary Robert F. Kennedy Jr. contradicted one of his own agencies’ autism studies on Tuesday, suggesting at a press conference that “environmental factors” including drugs, not improved screening, were causing a spike in confirmed cases.
▪ The Washington Post: The Trump administration is seeking to deeply slash budgets for federal health programs, a roughly one-third cut in discretionary spending by the Department of Health and Human Services.
▪ The Hill: Trump has sought shortcuts in the otherwise lengthy regulatory process via executive order — which legal scholars are describing as a power grab.
HIGHER EDUCATION: The administration on Wednesday moved to revoke Harvard University’s tax-exempt status, continuing the president’s tug-of-war with the school. The directive is a significant escalation of Trump’s feud with Ivy League institutions and other nonprofit groups the White House views as “woke.”
Meanwhile, Homeland Security Secretary Kristi Noem on Wednesday announced the cancelation of more than $2.7 million in grants to Harvard University amid tensions between the school and the Trump administration. The administration on Wednesday also threatened to withdraw Harvard from the federal program that administers student visas if it does not comply with a records request by the end of the month.
▪ CNN: Can the president revoke a university’s tax-exempt status?
▪ Bloomberg Law: Trump’s threat to yank Harvard’s tax-exempt status fuels concerns that the president may use the IRS to target perceived adversaries.
WHERE AND WHEN
- The House and Senate are out this week.
- The president will welcome Italian Prime Minister Giorgia Meloni to the White House for bilateral discussions and a working lunch. Trump will sign executive orders at 4 p.m.
- Secretary of State Marco Rubio is in Paris for talks focused on ending Russia’s war with Ukraine.
ZOOM IN
© The Associated Press | Kevin Wolf
BILLBOARD WARS: House Republicans succeeded in removing six billboards that accused GOP lawmakers in swing districts of favoring proposed Medicaid cuts. How did the party get its way? By taking aim at billboard companies with legally argued assertions of possible defamation. The Hill’s Mike Lillis reports the National Republican Campaign Committee (NRCC) characterized the claims in the billboards, standing in battleground districts and sponsored by Democrats, as “patently false,” arguing that the ad firms would be guilty of defaming the lawmakers if the billboards persisted. Republican operatives say it gives them a playbook heading into next year’s midterms, when Democrats are vowing to make Medicaid a central part of their effort to pick off vulnerable Republican incumbents.
FOLLOW THE MONEY: First-quarter fundraising reports released this week are offering a glimpse into what to expect in the near political future. The Federal Election Commission reports underscore how the 2026 midterms are already underway as Democrats look to flip the House and as states like Georgia and North Carolina tee up some closely watched Senate races. The Hill’s Caroline Vakil has five takeaways from the fundraising reports.
▪ Chicago Sun-Times: Both Illinois Gov. JB Pritzker (D) and Sen. Dick Durbin (D) aren’t quite ready to discuss their reelection plans — decisions that will set in motion a game of high-stakes musical chairs.
▪ CNBC: Rep. Alexandria Ocasio-Cortez (D-N.Y.) raised $9.6 million during the first quarter of 2025, her strongest ever quarter, a campaign finance filing showed Tuesday.
STATE WATCH: Texas: Trump on Wednesday used a phone call with Republican Gov. Greg Abbott to urge Texas House legislators to support a private school voucher bill in the Lone Star State.
Maine: The administration sued Maine’s education department for alleged noncompliance with a federal push to bar transgender athletes in girls’ sports. Democratic Gov. Janet Mills famously told Trump during a testy White House exchange last month, “We’ll see you in court.” The federal Education and Health and Human Services departments allege violations of the Title IX anti-discrimination law, which bars discrimination in education based on sex, by allowing transgender girls to participate on girls’ teams. “This matter … is about states’ rights and defending the rule of law,” Mills said in a statement.
New York: Federal housing officials on Wednesday alleged that New York Attorney General Letitia James (D), who won a civil case against Trump last year, committed mortgage fraud to gain favorable loans. The Federal Housing Finance Agency made a referral to the Justice Department for possible prosecution. No charges have been filed. James, through a spokesperson, said she will not be intimidated.
New York Rep. Elise Stefanik (R) is exploring a bid for governor of New York. The move comes after Trump withdrew Stefanik’s nomination to be U.S. ambassador to the United Nations and asked her to stay in Congress instead, where she has been given a new leadership arrangement.
Michigan: Democratic Gov. Gretchen Whitmer, viewed in her party as a leading potential presidential contender in 2028, is navigating a political minefield after recently visiting Trump at the White House.
ELSEWHERE
© The Associated Press | Evelyn Hockstein, Reuters
IRAN: Trump has vowed to prevent Iran from getting a nuclear weapon, but there’s a divide over the best way to do it from within his national security team. The president has dispatched negotiators — including special envoy Steve Witkoff and Secretary of State Marco Rubio — to try to get a deal this weekend in Rome, and B-2 bombers and aircraft carriers stand at the ready for Plan B.
“The Iran policy is not very clear mainly because it is still being figured out. It is tricky because it’s a highly politically charged issue,” a U.S. official told Axios.
One group of advisers, unofficially led by Vice President Vance and including Witkoff, believes a diplomatic solution is both preferable and possible. The other, helmed by Rubio and national security adviser Mike Waltz, is skeptical of the power of negotiations.
▪ The New York Times: Israel had planned to strike Iranian nuclear sites as soon as next month but was waved off by Trump in favor of negotiating a deal with Tehran.
▪ Reuters: Iran says its right to uranium enrichment is non-negotiable.
UKRAINE: Washington and Kyiv have made “substantial progress” in their talks on a minerals deal and will sign a memorandum in the near future, Ukrainian officials said Wednesday. The update comes as Russia continues to barrage Ukraine with missile strikes three years into its full-scale invasion.
Politico: Rubio, Witkoff are heading to France for talks on Ukraine, Iran and trade.
GAZA: The war in Gaza will soon escalate with “tremendous force,” and the humanitarian blockade in the enclave will be extended if Hamas does not quickly release hostages amid stalled ceasefire negotiations, Israel’s defense minister warned on Wednesday. The announcement comes as a growing list of former Israeli security officials accuse the government of prolonging the war for political reasons. Meanwhile, the United Nations warned that the humanitarian situation in the enclave was likely at its worst since October 2023, and that the population was once again on the brink of famine.
The Washington Post: Maldives, a country with half a million people living on islands in the Indian Ocean, banned Israeli travelers over “continuing atrocities” in Gaza.
OPINION
■ Why Trump’s supporters trust him on tariffs — for now, by Shannon P. Carcelli and Kee Hyun Park, opinion contributors, The Hill.
■ Trump’s court-defying crusade against The Associated Press is out of the authoritarian playbook, by Dan Perry, opinion contributor, Mediaite.
THE CLOSER
© The Associated Press | AP Photo
Take Our Morning Report Quiz
And finally … 🏆 It’s Thursday, which means it’s time for this week’s Morning Report Quiz! Everyone recognizes the president’s affinity for gold, so test your trivia savvy!
Be sure to email your responses to asimendinger@thehill.com and kkarisch@thehill.com — please add “Quiz” to your subject line. Winners who submit correct answers will enjoy some richly deserved newsletter fame on Friday.
Trump’s likeness appears on gold cards the U.S. now sells for $5 million each to wealthy foreign citizens in exchange for what?
- Permanent U.S. residency
- White House International Advisory Council membership
- State Dinner invitation
- Signed copy of a portrait of the president, which hangs in the White House
When Trump in 2015 launched his bid for the White House in New York City, he famously used what as a golden backdrop?
- Richly attired Melania Trump
- Stock Exchange doorway
- Escalator at Trump Tower
- Light show at Rockefeller Center
The president and billionaire adviser Elon Musk recently noted their shared intrigue with which gold?
- Florida’s Gold Coast
- Gold golf tees
- Fort Knox gold reserves
- McDonald’s golden arches
Trump’s Oval Office shows off an assortment of gold-hued decor, according to photographs, tours he’s given guests and recent news accounts. “It’s the Golden Office for the Golden Age,” White House press secretary Karoline Leavitt told The Wall Street Journal (a clue!).Which is on display?
- Portraits of former presidents hung in golden frames
- Gold-toned coasters marked “Trump”
- Antique gilt pieces from a service acquired by James Monroe from France in 1817
- All of the above
Stay Engaged
We want to hear from you! Email: Alexis Simendinger (asimendinger@thehill.com) and Kristina Karisch (kkarisch@thehill.com). Follow us on social platform X: (@asimendinger and @kristinakarisch) and suggest this newsletter to friends.