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The Senate confirmed several Trump administration nominees (see below). The House passed a few uncontroversial bills but was unable to pass more notable legislation (see below).

The Senate will continue to confirm Trump administration nominees and may pass a government spending bill package (see below). The House will be out of session until September 2.��

Some Tariff Deals.

As we get closer to an August 1 deadline for the imposition of “reciprocal” tariffs, the Trump administration announced a few additional bilateral agreements, most notably one with Japan. That tentative agreement would set a 15% tariff rate on products with Japan (importantly, this would include autos, which are subject to a more general sectoral tariff of 25%). The agreements (and ongoing negotiations with other partners) cover not just tariff levels, but also other issues including non-tariff barriers and commitments to purchase US goods or make investments. We expect more tentative deals to be announced over the next week, though many countries will have higher tariffs set unilaterally by the Trump administration on August 1. The ongoing work by the administration to impose new sector-based tariffs on national security grounds continues to complicate discussions with various trading partners (such as the EU).��While the mood on tariffs and trade has improved greatly since early April, the overall direction is higher tariffs.

China Thaw.��

In addition to the looming August 1 deadline, there’s also an August 12 deadline for trade negotiations with China. Trump administration officials have been sanguine on the state of those ongoing discussions. There will be high-level talks between the two sides next week that could prompt an extension of the August 12 deadline. So far, there’s been limited tangible movement beyond a relaxing of export controls (most recently on AI chips) and purchases of rare earths. The US would like to broaden negotiations to a range of other issues, including commitments from China to purchase US products and China’s purchases of Russian oil. There are a multitude of details to sort out, but the hope is that the de-escalation and ongoing negotiations could yield some sort of agreement in a meeting between President Trump and President Xi later this year.��

Nominations.

August is traditionally the slowest month of the year in Washington, DC. Congress is typically out of session, thereby affording lawmakers time to connect with their constituents and spend time with their families. President Trump is throwing the Senate a curveball and pushing them to stay in session in order to advance many of the over 100 nominations still pending on the Senate calendar. The Trump administration has been frustrated by the lack of progress to date. George W. Bush ended his first year in office with 403 confirmations; Obama with 383; Biden with 267. In Trump’s first term, he had 238 nominations approved in his first year (aided by a deal that allowed for the quick clearing of over 60 nominations). Many Senators are hopeful of a similar deal to approve a bunch of Trump administration nominees at once to allow them to get out of DC this August.

Epstein Woes.

The House already has left Washington. It began its recess a day early when House Republican leadership decided to halt further legislative business in large part to avoid voting on amendments proposed by House Democrats to publicly release the Jeffrey Epstein documents. President Trump also has come under fire from some Republicans for not releasing the documents and trying to brush the issue aside. House Speaker Mike Johnson (R-LA) hopes that the issue will lose momentum over the recess period, but that is far from certain.

Government Funding Behind (Again).

There are 67 days until September 30, the end of the fiscal year. This is the deadline that Congress has to pass a government funding extension and thereby avoid a government shutdown. To date, the House has passed two of the twelve spending bills (on a largely party line basis). The House had cleared five bills this time last year. Meanwhile, the Senate has not passed any spending bills. The Senate did begin to advance one spending bill (Military Construction-Veterans Affairs) this week. This bill passed a procedural hurdle in an overwhelming 90 to 8 vote, though Senate Democrats are still fuming about last week’s efforts by Republicans to strike previously passed spending through a recissions bill. The Senate may be able to pass some additional spending bills next week, but Congress seems all but certain to come well short of passing all twelve spending bills by the September 30 deadline. This means that Congress will need to come to an agreement on a bipartisan basis on a continuing resolution to keep the government funded. With Democrats’ misgivings about recissions and the Trump administration’s unilateral spending cuts and some Republicans seeking additional cuts, it's not clear that that will happen. Many in Washington are bracing themselves for a potential government shutdown.

Crypto and Taxes.

At a recent House hearing, Rep. Max Miller (R-OH) indicated that he would introduce a bill to address a number of tax issues relating to crypto, including clarifying the tax implications for mining crypto and wash sales rules. Senator Cythnia Lummis (R-WY) is a sponsor of similar legislation. While we are generally skeptical of additional tax law changes, interest from lawmakers in keeping pace with the changing landscape of the crypto market makes this a possibility for action later this year.

Pocket Rescissions.

The Trump administration has signaled that it may wield a budget tool called the “pocket rescission” soon, this has not only sparked controversy, but also confusion around whether or not this would comply with the budget process. Unlike typical recissions, which require explicit Congressional approval, pocket rescissions theoretically would allow the president to void unspent funds at fiscal year-end by sending a rescissions package to Congress shortly before the end of the fiscal year. Recissions packages like the one passed last week require that Congress approves the administration's rescissions request within 45 days. The Trump administration is arguing that if it sent a rescissions package to Congress with less than 45 days before the end of the Fiscal Year (September 30^th) and Congress does not act on it, the administration would still be able to rescind the money. Advocates argue it gives the executive branch a powerful lever to curb wasteful spending, while critics warn it usurps Congress' power of the purse and infringes on the separation of powers. Expect this debate to intensify soon as the administration plans its next request.

Trump and Artificial Intelligence.��

The Trump administration released a plan this week to spur the development of artificial intelligence (AI). The 28-page document outlines over 90 federal actions to be implemented in the next year. It was released concurrently with three executive orders. Key priorities of the plan include AI innovation, the building of AI infrastructure, and diplomacy and security efforts on AI issues. The blueprint has measures to roll back permitting processes and streamline environmental standards for AI-related infrastructure projects. This includes expediting the construction of large-scale data centers and chip fabrication facilities. It directs federal agencies to review and withhold AI-related discretionary funding from states that are determined to have burdensome AI regulations. This echoes a provision that was removed in the reconciliation bill. The plan also seeks to counter Chinese development by strengthening export controls and increasing innovation through deregulation. Along with President Trump’s announcement this week, some Republican lawmakers have laid out their AI priorities while ensuring support of the president’s plan. AI will remain a key priority in Congress, though legislating on such a complex issue that cuts through many committees of jurisdiction will continue to be difficult.

Six Months In.

Six months into his second term, President Trump has approval ratings that currently are at the lowest of this term. While past presidents have struggled to recover after early-term slumps, Trump’s support has proven uniquely elastic, rising and falling with the news cycle but rarely cratering among his base. In Gallup polling during his first term, his approval among Republicans never dipped below 77 percent. Even amidst current controversies, the party base remains overwhelmingly loyal. That stands in contrast to previous presidents, from Bush to Obama to Biden, who saw declining approval become a drag they never fully escaped. Trump, by contrast, has bounced back time and again from lows that would doom most politicians. Whether that pattern holds as his administration wades deeper into its second act remains to be seen, though no one should write off Trump’s influence due to his lagging polling.