“The Trump administration’s shock and awe campaign over the president’s first months back in the Oval Office has caused a spike in uncertainty for the economy and the private sector. It is still possible though to classify the key sources of uncertainty under Trump 2.0 into a series of known unknowns – namely, the legislative agenda, trade and geopolitics, and government spending.” — Howard Schweitzer, CEO, Cozen O’Connor Public Strategies

The Cozen Lens

• House Republicans have made significant progress on their version of the reconciliation bill encompassing much of President Trump and the GOP’s legislative agenda in recent weeks, but they will still need to negotiate changes with their Senate counterparts as Trump remains impatient to sign the bill into law.
• Trump’s tariff policies have created a cloud over global trade, but his moves to ratchet back his initial proposals in recent weeks have tempered some of this uncertainty. While the exact path forward for his America First approach to geoeconomics and geopolitics has not yet become fully clear, it appears to be more transactional in nature than based on any grand strategy.
• DOGE founder Elon Musk is taking a step back in the Trump administration but Office of Management and Budget Director Russ Vought is poised to carry the torch on spending cuts.

How Do Trump and the GOP Reconcile Their Legislative Agenda?

One Big, Beautiful Bill. House GOP lawmakers finally unveiled last week the tax, healthcare, and nutrition-related policy proposals that will form the cornerstone of the party’s domestic policy agenda, better known as the One Big Beautiful Bill Act.

• The tax portion of the GOP’s reconciliation bill centers around a permanent extension of several of the individual provisions from President Trump’s 2017 Tax Cuts and Jobs Act (TCJA), all of which were set to expire in December. Measures such as the TCJA’s higher standard deduction and enhanced Child Tax Credit received further temporary increases through 2028. Most importantly for certain small businesses, the TCJA’s deduction for the owners of qualifying pass-through businesses was increased to 23 percent and made permanent. For multinational corporations, the bill permanently staves off an increase of the TCJA’s tax rates on foreign income.
• To boost the tax bill’s economic impact, House GOP tax writers proposed a number of new or restored business breaks. Those include a temporary restoration of a trio of deductions for business’ equipment, research, and net interest costs, a boon for companies with large manufacturing or R&D costs. A new upfront deduction for factory and refining structures was included in an homage to President Trump’s request for a lower corporate rate for domestic manufacturers.
• To offset the cost of the roughly $5.7 trillion in new and extended tax policies, House GOP tax writers repealed or phased out large portions of the Inflation Reduction Act’s green energy tax credits, hiked taxes on university endowments and nonprofits, and imposed a new five percent tax on remittances, among other measures. On the spending cut side of the bill, lawmakers skipped over some of the most dramatic Medicaid reforms that had been under discussion, but new Medicaid work requirements, a freeze on Medicaid provider taxes, reforms to state-directed payments, and a new cost-sharing requirement for certain Medicaid beneficiaries are projected to raise more than $700 billion. An additional $300 billion in proposed savings would come from changes to the way the Supplemental Nutrition Assistance Program (SNAP) is administered, primarily through a first-of-its-kind requirement that states share the cost of SNAP allotments beginning in 2029.

Too Big to Fail. By packaging major reforms to federal spending and taxation into one bill, House GOP leadership is hoping that every ideological corner of the GOP caucus will have a reason to vote for the legislation on the House floor.

• With only a three-vote margin in the House, GOP leadership needs every incentive for lawmakers within the party to vote for the bill despite their concerns with some of its provisions. Failure to pass an extension of the TCJA would hike taxes on roughly 62 percent of Americans according to the Tax Foundation. That’s a major issue for GOP lawmakers in swing districts who, as members of the president’s party entering a midterm year in 2026, are already facing an uphill battle to keep their seats.
• Even so, pockets of resistance within the House GOP are creating headaches for leadership. Fiscal hawks used a procedural vote in the Budget Committee last week to prevent the bill from passing the House on leadership’s timeline, instead forcing weekend negotiations to speed up the bill’s phase-in date for the new Medicaid work requirements. GOP lawmakers representing districts in blue-states along the coast have sharply critiqued the bill’s tripling of the cap on the State and Local Tax Deduction as inadequate. While both camps of opposition want to pass the bill, each also wants to secure the best possible version for themselves ahead of negotiations with the Senate GOP.

The Senate Carving Knife. A wide array of Senate GOP lawmakers are warning that they won’t vote to advance the reconciliation bill without major changes to the House’s version of the legislation.

• As House GOP lawmakers unveiled the health, nutrition, and tax policy portions of the bill last week, Senator Josh Hawley (R-MO) told the Hill that the freeze on Medicaid provider taxes and the new Medicaid cost-share requirement for certain beneficiaries likely wouldn’t fly in the Senate. Senate Agriculture Committee members have similarly cautioned that the House’s state cost-sharing program for SNAP could be a bridge too far. A separate set of GOP senators told Politico that the House bill’s phase out of a number of tech-neutral green energy tax credits was overly aggressive. Meanwhile Punchbowl News reports that Senate Finance Committee members are interested in making more of the business deductions permanent.
• Still, Senate GOP lawmakers need to be cautious in their efforts to modify the bill so as to avoid axing provisions pivotal to the legislation’s support within the House GOP. House Speaker Mike Johnson (R-LA) has acknowledged that he expects the Senate to change aspects of the bill, but he’s also warned GOP senators against a massive overhaul. Both Johnson and Senate Majority Leader John Thune (R-SD) will need President Trump’s direct intervention to squelch opposition from holdouts in their respective chambers. And with Trump and congressional Republicans looking to use the reconciliation bill also to raise the debt limit without having to negotiate with Democrats, the final bill will need to get to the president’s desk before Congress’ August recess.

What Does America First Actually Mean in Practice?

Let’s Make a (Trade) Deal. While President Trump has backed away from his reciprocal tariffs, questions still linger about the president’s ability to secure trade deals before his 90-day pause ends and future tariff threats remain.

• Trump’s most significant relief from the trade war sparked by his reciprocal tariffs was the agreement reached with China, which saw the US reduce the increase imposed by Trump since coming into office on the country to 30 percent from 145 percent. The de-escalation was necessary to end the effective embargo between the world’s two largest economies, and now the two sides are expected to use the 90 days of lowered duties to look for a more permanent agreement. What this next deal may look like is not clear, but while the White House accepts that an embargo is too painful, it’s still pursuing a strategic decoupling from China.
• Trump’s detente with China also buys critical time for his administration to continue negotiating frameworks for future trade deals with other countries. So far, only the UK has reached an agreement with the US. Still, the Trump administration is working to secure several others before the July expiration of its 90-day pause, with a focus toward its Indo-Pacific allies. However, many of these agreements are proving more complicated than the UK deal due to the US’s interest in targeting China through these frameworks. And the president acknowledged last week that his team doesn’t have the bandwidth to negotiate trade deals with everyone.
• Aside from these negotiations, the Trump administration has several Section 232 investigations that are expected to lead to future sectoral tariffs or other actions intended to bolster domestic production, such as export limits. So far, duties have been imposed on steel, aluminum, and automobiles. Future action is expected to hit pharmaceuticals, semiconductors, lumber, copper, rare earth minerals, trucks, and aircraft imports. These announcements will likely be rolled out in the coming months, as the investigations conclude and the Commerce Department makes its policy recommendations to Trump. Exemptions are expected to be limited, but Trump’s recent partial relief for auto parts suggests that the chances for targeted relief are not zero.

Conducting Business in a World on Fire. Trump entered office seeking easy solutions to several geopolitical challenges but has yet to find a path forward, which will continue to consume significant attention. Meanwhile, he has shown more interest in conducting international transactions than international diplomacy.

• On the campaign trail, Trump suggested he would find a quick ceasefire in the war between Russia and Ukraine. However, such a solution has so far proven fleeting. The prolonged contest has put increased pressure on Trump’s desire to pull back the US’s global commitments and support of Ukraine.
• In addition to the war in Europe, the other conflict that Trump has sought to resolve is the fighting in Gaza between Israel and Hamas. With the last American hostage now freed by Hamas, Trump appears to be losing some interest in Israel’s continued offensives and has pushed for a ceasefire and to begin moving toward rebuilding of the lost infrastructure. Still, Trump is finding that he has less leverage than he perhaps thought he would during the campaign.
• While Trump has not been able to secure the quick victories and resulting plaudits from ending thorny geopolitical conflicts that he had hoped, he has gained headlines for the high-profile international transactions he has overseen recently. He made a point of taking his first scheduled overseas trip to the Persian (aka Arabian) Gulf last week, where he focused on announcing deals involving purchases of US arms and technology.
• The other deal that Trump is looking to reach in the Middle East though is one on Iran’s nuclear capabilities. Trump has eschewed military action, despite invoking the threat of an attack, and his interest in negotiations rather than strikes appears to have been one of the reasons why Mike Waltz was dismissed as national security advisor. These talks are still in their opening phase but both sides remain engaged even if concrete agreements remain elusive.

Who Controls the Power of the Purse?

Musk to Vought. Elon Musk may be stepping back from DOGE but White House Office of Management and Budget (OMB) Director Russ Vought is also committed to cuts.

• Vought is unlikely to make the same headlines as Musk, the world’s richest person, but he may be more effective in cutting federal spending. Returning to government after serving in the same role during President Trump’s first term, Vought had four additional years to prepare to execute Trump’s agenda.
• Vought has a track record of fiscal conservatism. He was an author of Project 2025, in which he argued that “the President should use every possible tool to propose and impose fiscal discipline on the federal government. Anything short of that would constitute abject failure.” Vought has declared that he sees a federal law prohibiting impoundment, the practice of the president withholding funding appropriated by Congress, as unconstitutional.

Impoundment. The Trump administration is expected to pick a fight over the power of the purse.

• With reconciliation taking up bandwidth, Congress has been slow to codify DOGE cuts. The Washington Post reported that GOP moderates have concerns about some of the cuts, including Senate Appropriations Committee Chair Susan Collins’ (R-ME) opposition to cuts to the President’s Emergency Plan for AIDS Relief.
• If the Trump administration faces hurdles in formalizing DOGE cuts in legislation, impoundment could provide another means of pursuing cuts. “Obviously, we have never taken impoundment off the table, because the president and myself believe that 200 years of the president and Executive Branch had that ability,” an OMB official told “We’ve been able to achieve what we’ve been able to achieve without going down that path but that’s not to say we wouldn’t consider using it if the situation called for it,” the source said.
• Efforts to impound funds would spark a major legal fight. The Supreme Court ruled against the White House in its bid to keep foreign aid frozen while allowing the Department of Education to cancel $65 million in grants, and it has not directly ruled on the legality of impoundment this term.

Funding Fight. Vought is poised to oversee a battle over FY26 spending.

• Trump’s first budget request to Congress under Vought’s second tenure at OMB would cut nondefense spending by nearly 23 percent and keep discretionary spending for the Department of Defense flat (excluding a one-time increase expected via reconciliation) — a cut in real terms. This gives fuel for opposition for Democrats and GOP defense hawks alike.
• Senator Kevin Cramer (R-ND) pointed the finger at Vought in a Wall Street Journal interview for the lack of a more substantial defense increase. “Russ has a lot of sway as the OMB director,” he said. “He’s got a very sharp pencil.” The budget indicates Vought’s willingness to defy some in his own party in his efforts to cut spending.
• The release of the “skinny budget” kicks off the FY26 appropriations and a major battle over spending that lies ahead of the expiration of federal funding at the end of the fiscal year on September 30th. If Congress doesn’t accede to Trump’s desired cuts, a fight over the power of the purse could come to a head.