Policy Risk Monitor – March 21, 2025
A weekly news scan of key policy areas to help firms identify and monitor policy risks.
Key Policy Developments
Federal Reserve Cites Impact of Tariffs in Revised Outlook
The Federal Reserve cited Trump’s tariffs as weighing on the economy, as it cut its forecast for U.S. economic growth and revised its projections for higher inflation and unemployment. The Fed held its benchmark federal-funds rate at around 4.3%. “We think it’s a good time for us to await for further clarity,” Fed Chair Jerome Powell said, as the central bank is continuing to assess how policy changes on trade, taxes, government spending, and immigration will impact the economy.
Powell said “a good part” of the Fed’s revised outlook for inflation is from tariffs, noting that tariffs “tend to bring growth down and push inflation up.” Powell noted that further progress on reducing inflation was “probably delayed.”
President Donald Trump, meanwhile, said the Fed should reduce interest rates. “The Fed would be MUCH better off CUTTING RATES as U.S. Tariffs start to transition (ease!) their way into the economy,” Trump said in a post on Truth Social. “Do the right thing. April 2nd is Liberation Day in America!!!” April 2 is when reciprocal tariffs take effect.
Reciprocal Tariffs Will Focus on “Dirty 15” Countries Most Responsible for Unfair Trade
Treasury Secretary Scott Bessent said the Trump administration will focus its reciprocal tariffs on the so-called “dirty 15” countries deemed most responsible for unfair commercial practices. “What’s going to happen on April 2: Each country will receive a number that we believe that represents their tariffs” against the United States, Bessent said. “For some countries it could be quite low. For some countries it could be quite high.” Bessent said 15% of countries account for a significant share of trading volume. “There’s what we would call kind of the ‘dirty 15,’ and they have substantial tariffs” and other barriers, Bessent said. He also stated that he would not expect any exceptions to the reciprocal tariffs.
The “dirty 15” and their trade deficits with the United States was reported to include China ($295.4 billion), the EU ($235.6 billion), Mexico ($171.8 billion), Vietnam ($123.5 billion), Ireland ($86.7 billion), Germany ($84.8 billion), Taiwan ($73.9 billion), Japan ($68.5 billion), South Korea ($66.0 billion), Canada ($63.3 billion), India ($45.7 billion), Thailand ($45.6 billion), Italy ($44.0 billion), Switzerland ($38.5 billion), and Malaysia ($24.8 billion).
Emerging Policy Issues
Tax
Republicans in Congress weigh tax increase for top university endowments, FT, March 15, 2024
Senate Budget Republicans to huddle with parliamentarian, Punchbowl News, March 18, 2025
Britt pitches fellow Republicans on new child care agenda, Semafor, March 20, 2025
Executive Orders
Immediate Measures to Increase American Mineral Production, The White House, March 20, 2025
Fact Sheet: President Donald J. Trump Takes Immediate Action to Increase American Mineral Production, The White House, March 20, 2025
Trade
Rubio says US could engage in new trade deals after tariffs imposed, Reuters, March 16, 2025
Trump Trade Chief Pushes for Order After Rocky Tariff Rollout, Bloomberg, March 17, 2025
US will be hit by 'high tariffs' from other countries, China's Global Times warns, Reuters, March 18, 2025
Shipping Trade Group Says Trump Port-Fee Plan Will Hurt US, Financial Post, March 19, 2025
Mexico and Canada
Trump trade war to sap Canadian, Mexican and US growth, OECD says, Reuters, March 17, 2025
Trump Says It’s Easier to Deal With Liberal Leader in Canada, Bloomberg, March 18, 2025
EU
Trump's 'tit-for-tat' trade war with Europe threatens $9.5 trillion worth of business, Quartz, March 17, 2025
EU to tighten controls on steel imports and waste metal flows amid trade tensions, EuroNews, March 18, 2025
EU Open to Talks With Trump on Tariffs, Ireland’s Harris Says, Bloomberg, March 18, 2025
Italy’s Meloni calls for ‘pragmatism’ on tariffs, supports Trump’s ceasefire efforts for Ukraine, AP, March 18, 2025
Trump’s 200% Alcohol Tariff Threat Shocks European Drink Firms, Bloomberg, March 19, 2025
EU delays implementing first retaliatory tariffs on U.S. goods to middle of April, CNBC, March 20, 2025
Asia
Vietnam at ‘Real’ Risk of New US Tariffs, US Business Group Says, Bloomberg, March 18, 2025
A New ‘China Shock’ Is Destroying Jobs Around the World, Bloomberg, March 19, 2025
Trump Says India Won’t Avoid Being Hit by Tariffs on April 2, Bloomberg, March 20, 2025
U.S.-China
China Ramps Up Criticism of Li Ka-shing’s BlackRock Ports Deal, Bloomberg, March 15, 2025
American maritime regulator calls for levy on Chinese ships at ports, FT, March 17, 2025
U.S. Domestic Policy
Trump picks Fed Governor Michelle Bowman to replace Michael Barr as Fed’s supervision head, CNBC, March 17, 2025
Roberts rejects Trump’s call for impeaching judge who ruled against his deportation plans, AP, March 18, 2025
Judge finds Elon Musk likely acted unconstitutionally in shuttering USAID, The Hill, March 18, 2025
Democratic FTC Commissioners Sacked by Trump Administration, Bloomberg, March 18, 2025
Minnesota AG sues Trump administration for holding up green project funds, Minnesota Star Tribune, March 19, 2025
Bessent Resists DOGE Cuts That Put Low-Income Lending Program Under Fire, Bloomberg, March 19, 2025
Economy
OECD Cuts US, Global Economic Outlooks on 'Higher Trade Barriers', MSN, March 17, 2025
Trump's policies might cause a deep recession and stagflation, study says, Quartz, March 19, 2025
Climate and Energy
China Halts US LNG Imports as Trade War Reroutes Deliveries, Bloomberg, March 17, 2025
War-Torn Congo Has a Deal for Trump: Kick Out Rebels, Get Minerals, WSJ, March 19, 2025
Invite-Only Meeting Revives Hope For a Global Plastic Treaty, Bloomberg, March 19, 2025
Biden LNG Study Shelved After Pollution Impacts Deemed Minor, Bloomberg, March 19, 2025
Trump signs order on critical mineral production, The Hill, March 20, 2025
Geopolitics
Trump and Putin agree to an immediate ceasefire for energy infrastructure in Ukraine conflict, AP, March 18, 2025
Trump Says US Doesn’t Want Russia, China Moving Closer Together, Bloomberg, March 18, 2025
Russia preparing for confrontation with Europe, EU's von der Leyen says, Reuters, March 18, 2025
Putin showed ‘true face’ by bombing Ukraine after ceasefire call, says Finland’s president, Politico, March 19, 2025
EU leaders hustle to transform Europe into a military superpower, Politico, March 19, 2025
EU to exclude US, UK and Turkey from €150bn rearmament fund, FT, March 19, 2025
On defense and Ukraine, European nations still have no consensus, LeMonde, March 20, 2025
Trump Floats Idea of U.S. Owning Ukrainian Power Plants as He Pushes Cease-Fire, WSJ, March 19, 2025