One quick note. We’ll hear from House Republicans and Democrats today.
At 10am ET, speaker Mike Johnson will hold his weekly press conference with other GOP lawmakers. Then, at 10:45am ET, we’ll hear from minority leader Hakeem Jeffries and Democratic House members.
We’ll bring you the latest from both, particularly as more Republicans buck the ongoing criminal investigation in Federal Reserve chair Jerome Powell.
New inflation data shows that prices rose by 0.3 % in December
The latest inflation data from the Bureau of Labor Statistics shows that consumer prices rose 0.3 % in December and were up 2.7 % from the year prior.
It still is a far cry from the Federal Reserve’s desired 2 %, but ultimately remains constant with November’s rate. But data collection for that report was muddied due to the record-breaking US government shutdown.
A reminder that my colleagues are tracking the latest in our dedicated business blog:
Linked to the administration’s focus on affordability, we’ll have a key marker on how Americans are coping with the cost of good shortly, when the Bureau of Labor Statistics releases its latest inflation report.
Trump to tout manufacturing message in Detroit
Donald Trump is heading to Detroit, Michigan today, where he’ll tour a Ford factory in Dearborn.
The president will deliver remarks to the Detroit Economic Club at 2pm ET, to continue his “affordability” tour, where he’s expected to tout the administration’s commitment to revitalising manufacturing and keeping costs down.
We’ll bring you the latest lines as that gets under way.
US supreme court to hear trans athletes cases that could erode key protections
The top court is considering the rights of transgender youth athletes on Tuesday in a major hearing on state laws banning trans girls from girls sports teams.
Oral arguments center on two cases of trans students who sued over the Republican-backed laws in Idaho and West Virginia prohibiting them from participating in girls athletic programs.
The cases could have far-reaching implications for civil rights, with a ruling against the athletes potentially eroding a range of protections for trans youth and LGBTQ+ people more broadly.
In West Virginia v BPJ, 15-year-old Becky Pepper-Jackson challenged the state’s 2021 law banning her from track.
In the second case, Little v Hecox, Lindsay Hecox, a trans college student pursuing track, sued to overturn Idaho’s first-in-the-nation 2020 law categorically banning trans women and girls from women’s sports teams.
Twenty-seven states have now restricted trans youth access to school sports – most with laws targeting trans girls, but some applying to all trans youth.
Powell has been unflinching in the face of Trump’s attacks
Surrounded by a group of staunch loyalists, Trump has met little resistance in enacting his economic policies – except when it came to interest rates.
The White House’s campaign to get the Fed to lower rates has fallen on deaf ears, and Trump has directed most of his ire onto Powell. From vitriolic social media posts to handwritten missives in thick marker, Trump has called the man he first chose to lead the Fed “a stupid person”, and floated firing him multiple times.
Powell has been unflinching in the face of these attacks. At press conferences, he politely declines to answer any question he considers political. The most he’s given away was when Trump paid a visit to active construction at the Fed’s headquarters last summer, as allies of the president attempted to stir controversy surrounding the project. Addressing reporters side by side, Powell grew visibly frustrated as Trump misreported the cost of renovations.
After a long season of restraint, it is an unprecedented criminal investigation – reportedly focused on those renovations – which appears to have pushed Powell over the edge.
In his statement on Sunday, Powell for the first time outlined the extraordinary campaign that the White House has undertaken to push the Fed to lower rates – an incredible violation of the central bank’s independence.
World's central banks offer ‘full solidarity’ to Powell
Eleven central bank leaders have issued an extraordinary joint statement offering “full solidarity” to the US Federal Reserve chair, Jerome Powell, in the face of the latest threat to his independence from Trump’s White House.
“The independence of central banks is a cornerstone of price, financial and economic stability in the interest of the citizens that we serve. It is therefore critical to preserve that independence, with full respect for the rule of law and democratic accountability,” the statement said.
Trump has repeatedly criticised Powell, whom he appointed in 2018, for failing to cut interest rates fast enough. The Fed has cut interest rates three times since last summer, but Trump has urged it to move faster, and personally attacked Powell as a “numbskull”.
The bank’s governors pay testament to Powell’s “integrity” and “unwavering commitment to the public interest”, calling him a “respected colleague who is held in the highest regard by all who have worked with him”.
Powell is due to step down as chair of the Fed board in May, and Trump is expected to announce his successor in the coming weeks.
Former US Fed chairs Alan Greenspan, Ben Bernanke and Janet Yellen condemned the threat to Powell on Monday, saying the move could have “highly negative consequences”.
“This is how monetary policy is made in emerging markets with weak institutions, with highly negative consequences for inflation and the functioning of their economies more broadly,” their statement said.
The US Fed Chair released his own video on Sunday to announce that he was facing investigation by federal prosecutors and that the Federal Reserve had been served with subpoenas.
Powell is being investigated over costly renovations of Federal Reserve buildings – which he says is a politically-motivated pretext.
“This new threat is not about my testimony last June or about the renovation of the Federal Reserve buildings. It is not about Congress’s oversight role; the Fed through testimony and other public disclosures made every effort to keep Congress informed about the renovation project. Those are pretexts.
The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President.
Vance and Rubio to meet Danish and Greenland FMs tomorrow
Vice-president JD Vance and secretary of state Marco Rubio will meet the foreign ministers of Denmark and Greenland on Wednesday, the Danish foreign minister said on Tuesday, amid Trump’s push to take control of the Arctic island.
Danish foreign minister Lars Lokke Rasmussen and his Greenlandic counterpart Vivian Motzfeldt had requested the meeting after Trump last week stepped up threats to take over Greenland, an autonomous territory under the Kingdom of Denmark.
Trump first floated the idea of the US taking over Greenland in 2019 during his first term in office and ramped up pressure last week after his administration kidnapped and removed the Venezuelan leader Nicholas Maduro.
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Top central banks defend Fed's Powell
Eleven of the world’s top central bankers have released a statement of support for Fed chair Jerome Powell, after the US Department of Justice opened a criminal investigation into him which he argued was politically driven.
In an unprecedented move, top central bank chiefs including the Bank of England’s Andrew Bailey, and Christine Lagarde of the European Central Bank, have backed Powell, and warned against undermining central bank independence.
The heads of the Swedish, Denmark, Swiss, Australian, Canadian, South Korean, and Brazilian central banks have also signed, as have two top officials at the Bank of International Settlements (known as the “central bank for central banks”). Others may yet sign the letter.
The bank chiefs say:
We stand in full solidarity with the Federal Reserve System and its Chair Jerome H. Powell.
The independence of central banks is a cornerstone of price, financial and economic stability in the interest of the citizens that we serve. It is therefore critical to preserve that independence, with full respect for the rule of law and democratic accountability.
Chair Powell has served with integrity, focused on his mandate and an unwavering commitment to the public interest. To us, he is a respected colleague who is held in the highest regard by all who have worked with him.
The letter is signed by:
Christine Lagarde, President of the European Central Bank on behalf of the ECB Governing Council
Andrew Bailey, Governor of the Bank of England
Erik Thedéen, Governor of Sveriges Riksbank
Christian Kettel Thomsen, Chairman of the Board of Governors of the Danmarks Nationalbank
Martin Schlegel, Chairman of the Governing Board of the Swiss National Bank
Michele Bullock, Governor of the Reserve Bank of Australia
Tiff Macklem, Governor of the Bank of Canada
Chang Yong Rhee, Governor of the Bank of Korea
Gabriel Galípolo, Governor of the Banco Central do Brasil
François Villeroy de Galhau, Chair of the Board of Directors of the Bank for International Settlements
Pablo Hernández de Cos, General Manager of the Bank for International Settlements
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China condemns new Iran-linked tariff
China has threatened to retaliate against Donald Trump for the new 25% tariffs on any countries doing business with Iran.
Trump, who is still reviewing a range of military options against the Iranian regime, said the new tariffs would be “effective immediately”, without providing further details about whether there would be any exemptions, including for countries that only trade humanitarian goods such as medicines.
More than 140 countries still trade with Iran, according to the World Bank, but sometimes only in minuscule amounts.
China though is by far Iran’s biggest trading partner, buying 77% of its oil exports in 2024, according to the data firm Kpler. It has just ended a tariff war with Trump.
Liu Pengyu, the spokesperson for the Chinese embassy in Washington, said Beijing would “take all necessary measures” to safeguard its rights and interests.
Liu wrote on X: “Tariff wars and trade wars have no winners, and coercion and pressure cannot solve problems. Protectionism harms the interests of all parties.”
Other countries that trade heavily with Iran are India, the United Arab Emirates, Japan and South Korea. Japan and South Korea have just completed free trade deals with the US after a bruising confrontation over tariffs. Both countries ended up with a baseline 15% tariff, but now find themselves back in a potential crisis.
Welcome
Good morning and welcome to our US politics live blog.
Donald Trump has announced a 25% tariff on any countries doing trade with Iran – which at first glance would appear to apply to China, India, United Arab Emirates and Turkey among others.
This is the first concrete action from the US president who on the weekend had said he was considering taking “very strong” military action against Tehran for its deadly crackdown on anti-regime protesters.
Yesterday, White House press secretary Karoline Leavitt said that although diplomacy remained Trump’s “first option”, he was “unafraid to use the lethal force and might of the United States military if and when he deems that necessary”.
Elsewhere, central banks around the world have rallied around Fed chairman Jerome Powell, long criticised by Trump for refusing to lower interest rates and now facing federal investigation. The banks have issued a statement in recent hours calling for the independence of the Fed in setting monetary policy to be protected.
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Trump warns of ‘complete mess’ if supreme court rejects tariffs
Trump’s wider policy of imposing tariffs through executive order is under legal pressure as the US supreme court is considering striking down a broad swathe of the president’s existing tariffs.
Donald Trump has said “it would be a complete mess” if the US supreme court were to strike them down.
In a lengthy post on social media, the US president said “WE’RE SCREWED” if the supreme court rules against the tariffs. The decision is expected as soon as Wednesday. It is a crucial legal test of his controversial economic strategy and his power.
Trump said it would be difficult to reverse the tariffs as businesses and countries could claim refunds, saying “it would take many years to figure out what number we are talking about and even, who, when, and where, to pay”. He added: “It would be a complete mess, and almost impossible for our Country to pay.”
In November, the supreme court appeared sceptical of the legal basis of the Trump administration’s sweeping global tariff regime when justices questioned the president’s authority to impose the levies. Justices heard oral arguments on the legality of Trump’s tariffs.
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