Bond markets are betting that inflation will stay elevated in the years ahead, and some evidence from business surveys and forecasters points in the same direction.

Why it matters: This belief suggests the Trump administration and the Federal Reserve face a headwind in securing a return to low inflation — concerns that have escalated just in the last few weeks, as the president has threatened tariffs on a variety of U.S. trading partners.

State of play: The gap between interest rates on standard U.S. Treasury securities and inflation-protected bonds gives a window into how much bond investors expect prices to rise in the future. That gap, known as the breakeven rate, has been on a tear in recent weeks.

• Bond prices now imply 2.7% annual Consumer Price Index inflation for the next five years, up from 2.4% at the start of 2025 and 1.95% as recently as last summer.
• The only times five-year breakevens have been higher, in a data series that dates to 2003, were during the peak of the 2022 inflation surge and a brief period in 2005.

There are hints in surveys that it isn't just bond traders who are revising their inflation outlook.

• The Philadelphia Fed's survey of manufacturers in its region showed that indexes for input prices and prices they can charge both rose to their highest levels in more than two years. The New York Fed's survey of manufacturers showed the same.
• The median professional forecaster upped its projection of 2025 CPI inflation to 2.8% from 2.4% three months ago, per a separate Philly Fed survey.

Between the lines: The Fed will be reluctant to cut interest rates again if the higher inflation expectations look to become more widespread and entrenched.

Yes, but: Longer-term measures of inflation expectations look less worrying. The bond market breakeven for annual inflation, in a window of five to 10 years from now, is down slightly this year — at levels consistent with the Fed's 2% target.

Reality check: The simmering inflation occurs against a general backdrop of business optimism for growth. CEOs are broadly bullish on the outlook for the years ahead, and the stock market is scraping new highs.

• The Conference Board's survey of CEO confidence, released Thursday morning, rose to its highest level in three years.
• The improvement "was significant and broad-based," Stephanie Guichard, a senior economist at the Conference Board, said in the release.
• "CEOs were substantially more optimistic about current economic conditions as well as about future economic conditions — both overall and in their own industries."

As Donald Trump pivots away from Europe and toward Russia, he's putting at risk the deepest and most important economic relationship in the world: that between the U.S. and Europe.

Why it matters: The U.S. economy has reaped enormous dividends from the way in which the U.S. government has provided a security guarantee to Europe. If that guarantee goes away, the dividends might, too.

The big picture: "No two other regions in the world are as deeply integrated as the U.S. and Europe," per AmCham EU, which collates such figures.

• More than 60% of foreign investment into the U.S. comes from Europe, and in the other direction, more than 60% of foreign investment by the U.S. goes into Europe.
• Similarly, U.S. companies employ about 5 million Europeans, while European companies employ some 5 million Americans.
• European companies are major employers in several Trump-supporting states, including BMW in South Carolina, Volkswagen in Tennessee, Airbus in Alabama, and Siemens in Texas and the Carolinas.

Zoom out: "Security goes hand in hand with interdependence," Abraham Newman, a Georgetown University political scientist, tells Axios.

• "From the Marshall Plan to the creation of the EU, the U.S. made the bet that if you solved security issues it would generate huge new wealth for U.S. companies. And it did," he says.
• Former U.S. Treasury secretary Hank Paulson tells a story of a Chinese official saying to him that "you have all the good allies." Effectively, China has always been stymied, in terms of competition with the U.S., by the fact that America is strongly allied with Europe.

Between the lines: The depth of the U.S.-EU relationship dwarfs anything that Russia can offer. Even before Russia first invaded Ukraine in 2014, for instance, U.S. goods exports to Russia were a mere $11 billion, roughly one-third of U.S. exports to Belgium alone.

• Russia, per the New York Times, claims American losses due to pulling out of Russia have totaled more than $300 billion. But that doesn't mean there's anything close to $300 billion of opportunity in reopening Russia to U.S. business.
• Edward Fishman, a former Russia sanctions lead at the State Department, tells Axios: "The U.S. is much better at turning off economic activity than we are at turning it on."
• Even if all U.S. sanctions on Russia were lifted tomorrow, most American companies would still be extremely wary of reentering a country led by Vladimir Putin, and would likely stay away.

What's next: If Europe no longer benefits from U.S. geostrategic protection, that in turn will affect the way American companies are viewed on the continent, per Georgetown's Newman.

• As U.S. companies become increasingly viewed as a mask for U.S. power, he says, the rhetoric surrounding them will move from complaints about fair competition to worries that they represent a security threat.

The bottom line: If Europe starts seeing the U.S. as an enemy superpower, the negative consequences for the U.S. domestic economy would likely be enormous.

The Elon Musk-led DOGE's latest update on an accounting of its cost-cutting measures to date raises more questions than answers: It didn't take long before at least one major error was identified in its receipts.

Why it matters: There is uncertainty about the accuracy of the self-reported audit that could, in theory, make DOGE's moves across the federal government more transparent.

• There are already concerns about the agency's access to databases and private data typically reserved for career staffers.

The big picture: The DOGE website said it canceled a contract for the U.S. Immigration and Customs Enforcement agency — for "program and technical support for the office of diversity and civil rights" — that was purportedly worth $8 billion.

• That is a big contract that alone would all but use up ICE's $9 billion budget.
• The contract was actually worth $8 million, as the New York Times and other publications have pointed out.

The intrigue: DOGE claims that its "total estimated savings" to date are roughly $55 billion. But there are questions about whether that sum is inflated. Bloomberg says the website lists $16.6 billion in savings.

Between the lines: The website accounts for the face value of a contract but does not seem to account for funds that are spread across several years. If some of the money has already been spent, that is money that is not technically "saved."

It is also unclear how cuts in one area might affect government revenue in another.

• Take layoffs at the Internal Revenue Service — rumored to begin as soon as today — that could result in fewer tax collections.
• The Biden administration made the opposite bet: bulking up IRS staff would result in higher collections.

💭 Our thought bubble, from Axios' longtime Musk-watcher Joann Muller: Musk's accounting of the litany of accomplishments at DOGE shares a similar lack of specificity with Tesla investor calls.

• He boasts about sales volumes going up or costs going down, for example, but provides very few numbers. Musk makes confident predictions about "orders of magnitude" growth rates that are "insane," with very little to support those claims.
• It's up to investors to dig into Tesla's SEC filings — or, in this case, whatever data DOGE makes public — to get the details.

For more than a century, Congress has entrusted many policy areas to agencies that the president does not directly control. President Trump seeks to change that with an executive order Tuesday night.

Why it matters: The order claims direct presidential authority over the work of federal boards and commissions designed by Congress to operate without day-to-day oversight by the White House, with especially broad implications in the financial regulatory arena.

• The order, pending legal challenges, creates more White House control of agencies, including the FDIC, SEC and CFTC.
• It covers the Federal Reserve in its role as a regulator of the banking system but explicitly excludes the setting of monetary policy from this new presidential oversight.

State of play: Independent agencies are led by presidential appointees who share the president's philosophy. But once installed, they are generally left to lead as they see fit.

• They oversee the writing of regulations and the enforcement of rules while, in many cases, navigating the politics of multimember boards with appointees from both parties.
• The idea is that agencies act on the president's big-picture agenda, but day-to-day agency decisions — how to regulate bank capital levels, for example, or which securities fraud cases to bring — are insulated from politics.

Driving the news: Trump seeks to upend all of that. The order states that these agencies' ability to exercise independent authority "undermine such regulatory agencies' accountability to the American people and prevent a unified and coherent execution of Federal law."

• The order requires previously independent agencies to submit all proposed regulations to the White House's Office of Information and Regulatory Affairs first.
• It states that the director of the Office of Management and Budget will set performance standards and objectives for independent agency heads and adjust their budgets, including stopping them from spending money on particular activities.

What they're saying: "Congress and presidents of both parties have created regulatory agencies structurally independent of the president because the bipartisan consensus for generations has held that this was in our economic interest," Aaron Klein, a senior fellow at the Brookings Institution, tells Axios.

• "This executive order upends that multigenerational bipartisan consensus."

Between the lines: The order turns the OMB director into a kind of uber-regulator, with power over agency heads across the government, including those who historically operated with little White House meddling.

The intrigue: Trump's leaving the Fed's monetary policy decision outside the purview of the new order is a relief for believers in the importance of separating control of the money supply from politics.

• But it doesn't answer some tricky questions about where the new presidential authority over the Fed's regulatory apparatus ends and its continued independence on monetary policy begins.
• Some major Fed functions, including its control of the payments systems that route trillions of dollars between banks and its lender-of-last-resort function to protect against bank runs, are at the intersection of bank regulation and monetary policy.

Europe faces two great crises — in the economic and security spheres — that are, ultimately, two sides of the same coin.

Why it matters: Europe has experienced subpar economic growth for a generation, and has underinvested in its own defense. Both problems are coming to a head, with the Trump administration's hostility as the catalyst.

• After decades of underinvestment and sluggish productivity, Europe faces receding U.S. security commitments, new tariffs on its exports, and a regulatory environment that puts domestic companies in a regulatory straightjacket.
• European elites are increasingly acknowledging that a lack of competitive fire, in both the economic and national security arenas, has resulted in overdependence both on U.S. companies to drive innovation and the U.S. government to defend Europe from Russia.

The intrigue: In a high-profile speech in Munich, European Commission president Ursula von der Leyen described a new world — one in which there is a heightened focus on geopolitical conflict and economic security.

• Von der Leyen proposed loosening the continent's fiscal rules to boost defense spending and protect member countries from possible threats from Russia — a rare move, last exercised at the COVID-19 pandemic's onset.
• "I believe we are now in another period of crisis which warrants a similar approach," Von der Leyen said.

Mario Draghi, the former European Central Bank president and Italian prime minister, said EU policies have strangled the economy more than the U.S. tariffs could.

• In an op-ed in the Financial Times on Friday, Draghi wrote that the EU has failed to address supply and demand issues caused by tough regulatory policy and depressed government investment. "Both these shortcomings — supply and demand — are largely of Europe's own making. They are therefore within its power to change."
• "Up to now, Europe has focused on either single or national goals without counting their collective cost," Draghi wrote.
• "But it is now clear that acting in this way has delivered neither welfare for Europeans, nor healthy public finances, nor even national autonomy, which is threatened by pressure from abroad," he continued. "That is why radical change is needed."

What to watch: In an extensive report on the EU's troubles, Draghi backed the idea of the continent borrowing as a whole for economic investment.

• "There are two very large systemic challenges coming down the pike," Heidi Crebo-Rediker, a senior fellow at the Council on Foreign Relations and former State Department chief economist, tells Axios.
• "It might be easier for Europe to negotiate on tariffs than to agree on a collective borrowing mechanism for the sheer amount of spending they need for their national security in as short an amount of time as possible," she adds.

A breakdown in the relationship between Europe and the United States, which has moved with breathtaking speed, is accelerating the recognition of long-developing economic problems.

Catch up quick: U.S. officials — including Secretary of State Marco Rubio — are in Riyadh, Saudi Arabia, to meet with Russian officials about the future of Ukraine. These are the first such talks since Russia's 2022 invasion.

• Absent from the talks over the continent's future are Ukrainian and European leaders, the latest blow in a recent series of events that dented U.S.-EU relations.
• President Trump has long claimed that the U.S. carried too much of the NATO burden in relation to EU countries. Last week, the administration all but said EU countries should not count on America for security.

Between the lines: In recent months, Europe's economic powerhouses have been in the midst of political chaos over budget disputes that, at least in one case, spooked the bond market.

• Germany, its largest economy, will hold an election in the coming days after different visions of how to ignite growth led to a government collapse.
• It is symbolic of Europe's already dismal economic reality — aging populations that will lead to a shortfall of workers, for instance — that now needs to adjust to higher defense spending demands.

The bottom line: "You're looking at a world where there is more uncertainty and the distance between peace and war is shorter," Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, tells Axios.

• "Europe needs a completely different industrial model but that takes time," Vistesen adds.

A core goal of President Trump's economic policy is to lower long-term interest rates. The administration has policy options to make it happen — both via Econ 101 macroeconomics and some more unconventional means.

Why it matters: If the Trump team is able to deliver on its goal, it would mean relief for homebuyers, corporate borrowers and the government itself. That said, many of the factors determining those rates are beyond the ability of even a president to control.

Catch up quick: "As it becomes clear that [the Department of Government Efficiency] is working, you will see the long-term Treasury" yields fall, Elon Musk said on X on Wednesday. All Americans "will benefit from lower interest payments on mortgages, small business debt, credit card and other loans."

• It echoed comments last week from Treasury Secretary Scott Bessent.
• These comments indicate the administration is focused not on jawboning the Fed to lower its short-term rate target, but on longer-term borrowing costs set in the global bond market.

State of play: The most straightforward, textbook way to lower long-term rates is by lowering the budget deficit. If the government can reduce deficits so that it's issuing fewer bonds in the years ahead, it would mean lower rates and less crowding out of other borrowing.

• House Republicans are currently jockeying over the parameters of a budget plan that, in its current form, would extend and expand upon Trump's 2017 Tax Cuts and Jobs Act while also cutting spending, for a net $3.3 trillion in additional deficits over the coming decade.
• "Meaningfully lower budget deficits would be the most effective way to bring long-term yields down but will also be difficult in the context of extending the TCJA and legislating additional tax cuts, even with sizeable spending cuts," wrote strategists at Deutsche Bank in a new note.

Yes, but: The Deutsche Bank team — Matthew Raskin, Matthew Luzzetti and Steven Zeng — also identified several less-conventional options the administration may wish to explore.

Zoom in: One option would involve relaxing bank regulations to exempt Treasury securities from counting toward the supplementary leverage ratio that constrains risk-taking by the biggest banks. It's a move that would incentivize those banks to buy more Treasury bonds.

• Another option is for Trump to use tariffs or other threats to coerce foreign governments into buying more Treasury bonds.
• A more dramatic move (and one that would require legislation) is eliminating federal income taxes on interest from Treasury securities, making them more attractive to individual investors.

The intrigue: The government currently owns 8,200 metric tons of gold, which are recorded on the Fed's balance sheet at the price of gold in 1973, only $11 billion. At today's price, it's actually worth more than $750 billion.

• Changing the accounting convention could create a one-time reduction in the Treasury's needed debt issuance, the Deutsche team wrote, subject to exactly how the Fed manages its balance sheet in response.
• Such a move could have negative ripple effects, however, including introducing unwelcome volatility in the government's finances as gold prices fluctuate.

Reality check: These less-conventional options "involve trade-offs with other policies and goals and are less likely to be less impactful than they might seem at first blush," Raskin, Deutsche Bank's U.S. head of rates research, tells Axios.

President Biden and a Democratic Congress took power in 2021 with a bold plan to propel the nation out of the pandemic, revitalize American industry and bolster the working class.

• It was a complete flop with voters.

Why it matters: In a scathing new essay on what went wrong with Biden-era economic policy, longtime Democratic economic adviser Jason Furman argues that the last administration was too quick to toss aside traditional economic orthodoxy around fiscal policy and other issues.

• That has implications for the new administration as well, Furman tells Axios, as the Trump team also rejects elements of mainstream economic thought on trade and tariffs.

Catch up quick: Furman, writing in Foreign Affairs, argues that the Biden administration's willingness to run the economy hot — to risk higher inflation in exchange for a turbo-charged rebound from the pandemic — turned out to be a bad bet.

• He writes that "the administration's desire to avoid repeating the mistakes of 2008 and its infatuation with the hot economy hypothesis cost the economy dearly," as inflation soared in 2021 and remains elevated four years later.
• The hot Biden-era job market did little to improve Americans' purchasing power, as inflation outstripped higher paychecks.

Meanwhile, the manufacturing revival the administration sought "has run up against the problem of crowding out," Furman argues, in which subsidies for semiconductors and green technology have been hamstrung by shortages and higher prices for materials, equipment and wages.

• High deficits, and the Fed's rate hikes meant to fight inflation, made it more expensive for companies to borrow and drove up the dollar, making U.S. manufacturers less competitive.
• The result: "The share of workers in manufacturing has continued to fall at the same rate as it did during the Obama and first Trump presidencies," he writes. "Manufacturing output has remained flat, as it has since 2014."

The intrigue: The new administration also seeks to create a manufacturing renaissance, though it's focused more on using tariffs, deregulation and pro-business tax policy to achieve it.

• Furman, who chaired President Obama's Council of Economic Advisers, argues that this approach carries similar risks to those that damaged the Biden economic legacy.

What they're saying: "President Trump is at serious risk of running headlong into the painful consequences of his choices," Furman tells Axios. "He has done even more than Biden to ignore economic analysis and trade-offs, whether they are in budgets or relations with our trading partners."

• "Unfortunately, you cannot simply pretend them away," he adds.

When President Trump demanded lower interest rates two weeks ago, it looked like a return to his 2018-vintage Fed jawboning. But his administration's stance on interest rates now looks more subtle.

Why it matters: The new administration seeks to bring long-term interest rates lower, Treasury Secretary Scott Bessent said Wednesday — and Fed rate cuts aren't necessarily the way to achieve that.

• The Fed controls short-term interest rates, but longer-term rates — which determine the federal government's borrowing costs, as well as home mortgages and many corporate borrowing rates — are set in the open market and reflect investors' expectations of how the economy will evolve.
• Bessent's case — which is consistent with Trump's recent rhetoric — is that what the economy needs is not further rate cuts from the Fed, but deregulatory and fiscal policies that improve the economy's supply-side potential.

What they're saying: Appearing Wednesday on Fox Business, Bessent said that the president wants lower rates but that "he and I are focused on the 10-year Treasury and what is the yield of that?" The Fed, he told Larry Kudlow, "did a jumbo rate cut and the 10-year rate went up."

• The president "is not calling for the Fed to lower rates," Bessent added. "He believes ... if we deregulate the economy, if we get this tax bill done, if we get energy down, then rates will take care of themselves and the dollar will take care of itself."
• "Now, I've seen, this year, despite the growth estimates going up, 10-year [yields] coming down because I believe the bond market is recognizing that ... energy prices will be lower and we can have non-inflationary growth."
• "You know, we cut the spending ... we get more efficiency in government, and we're going to go into a good interest rate cycle."

The intrigue: When the Fed elected not to cut its short-term interest rate target last week, Trump did not attack the central bank for that non-action. Instead, he slammed the Fed for allowing inflation to take off in the first place.

Between the lines: Trump has no compunction about bashing the Fed when it is running monetary policy tighter than he would like, as in 2018. But that is not the current stance of his administration.

• Bessent's observation that longer-term rates have risen since the Fed began its rate-cutting cycle in September is accurate.
• One possible factor is that bond investors believe the Fed eased policy more than was justified by economic conditions, which would imply higher rates and inflation in the years to come.
• It's the inverse of a pattern seen in late 2015 and late 2018, when the Fed raised its policy interest rate but longer-term rates fell, as traders bet that they had made a policy error that risked recession.

Of note: Bessent and other Trump allies previously sharply criticized the Biden administration for shifting the Treasury's debt issuance toward shorter-term securities, which they viewed as a politically motivated shadow monetary stimulus.

• But in the first bond issuance announcement of Trump's term on Wednesday, the Treasury Department stuck with its Biden-era balance of short-term and long-term debt.
• That contributed to a drop in longer-term yields Wednesday.

When President Trump signed an executive order on Monday calling for the creation of a U.S. sovereign wealth fund, it contradicted years of conservative thought.

The big picture: Trump wants the ability to invest public resources, using the type of fund that is more commonly deployed by countries with huge surpluses (frequently due to oil wealth) that need to be directed somewhere productive.

• Conservative and libertarian thinkers have traditionally been hostile to the idea of the government taking on such a role.

What they're saying: "The potential for cronyism with a sovereign wealth fund is dizzying, and the record of current government efforts to direct investment should not give anyone confidence that it would be competently or fairly managed," wrote Dominic Pino in National Review yesterday.

• "The United States has a ton of wealth," he adds. "The federal government is a poor steward of the chunk of it that it already controls. It should control less, not more."

Flashback: In 2005, the George W. Bush administration sought to add private accounts to Social Security that would allow individuals to invest their program contributions in the stock market.

• But it did not propose the government simply invest some of the Social Security trust fund in stocks, reflecting concern about government meddling in the private sector.
• In 2001, Federal Reserve chair Alan Greenspan endorsed tax cuts on the logic that then-forecast budget surpluses meant the United States was at risk of paying off the national debt and then investing surpluses in the private sector.
• "I believe, as I have noted in the past, that the federal government should eschew private asset accumulation because it would be exceptionally difficult to insulate the government's investment decisions from political pressures," Greenspan said.

Go deeper: Raising tariffs would hit working-class Americans harder

The Federal Reserve left interest rates unchanged on Wednesday after three consecutive cuts since late last year.

Why it matters: The Fed is halting rate cuts as inflation looks more persistent, with some officials worried Trump's economic agenda might further ignite price pressures.

Between the lines: The Fed's policy statement released on Wednesday hinted that recent indicators have pointed to a bumpy process in bringing inflation down.

• The policy statement, which is closely watched for subtle changes, no longer included December's language that inflation "has made progress" toward its 2% target. The statement said only that inflation "remains somewhat elevated."
• But the policy statement suggests that Fed officials have upgraded their assessment of the labor market as hiring continues to keep pace. "The unemployment rate has stabilized at a low level in recent months, and labor market conditions remain solid," according to the policy statement.
• In the previous statement, the Fed said hiring conditions had "eased" and that the unemployment rate had moved up, though it remained historically low.

What they're saying: "I think policy is well positioned," Powell said in his post-statement news conference, noting that the unemployment rate has been "broadly stable now for six months" and inflation falling.

Driving the news: The Fed's decision leaves interest rates at a range of 4.25% to 4.5% — higher than the ultra-low borrowing costs that preceded the pandemic but roughly a full percentage point below last year's peak rates.

• The decision was unanimous. Two separate officials dissented in September and December.

The intrigue: The rate decision is the first since the inauguration of President Trump, who initially nominated Fed chair Jerome Powell in 2017.

• Fed officials last month projected they would cut rates twice in 2025, half as many cuts as previously estimated.
• Those projections also showed inflation remaining elevated for a longer period — a result some Fed officials expect to come from Trump's deportation and tariff policies, according to minutes from the central bank's December policy meeting.

What to watch: The decision sets up renewed criticism of the Fed from the White House, which dates back to Trump's first stint in office.

• Speaking virtually at the World Economic Forum, Trump said he would demand that the Fed lower interest rates — a threat that undermines the central bank's political independence.
• Asked about Trump's demand, Powell did not directly address his comments, saying "I'm not going to have any response or comment whatsoever on what the president said."
• Powell did say he has had no contact with Trump.

Go deeper: What to know about Trump's ability to move interest rates

Editor's Note: This story has been updated to add the Fed's news conference.

The Trump administration has directed agencies to suspend all federal grants and loans starting at close of business Tuesday.

Why it matters: The new administration is showing signs — in its unilateral actions and legislative strategy — that it is more serious about fiscal austerity than the last time President Trump was in office.

• That implies a very different fiscal policy for Trump 2.0, with pain ahead for federal funding recipients as well as downward pressure on inflation and interest rates.

Driving the news: The new directive is an audacious and legally dubious move, instructing agencies to "temporarily pause all activities related to obligation or disbursement of all Federal financial assistance, and other relevant agency activities" that could be affected by executive orders.

• Payments to individuals — including Social Security and Medicare — are exempted from the order.
• There is great uncertainty about how widely it will be applied, how long it will last, and whether it will be upheld by the courts. Legal scholars are skeptical.
• In effect, the administration is seeking to suspend billions in spending that was passed by both houses of Congress and signed by President Biden with a two-page memo from the acting director of the Office of Management and Budget.

Yes, but: Whatever happens next with this specific order, it's only the latest sign that this administration is dead-set on slashing federal outlays — and willing to tolerate any political backlash it may cause.

• Congressional Republicans are looking to spending cuts, particularly for Medicaid and Biden-era climate initiatives, to help offset the fiscal cost of tax-cutting plans.
• Treasury Secretary Scott Bessent has set a goal of a budget deficit of 3% of GDP, achieved through spending reductions. That implies hundreds of billions of dollars a year in cutbacks.
• Elon Musk's Department of Government Efficiency has pivoted its emphasis somewhat in recent weeks toward internal operations of agencies, but it has set reducing spending as a major goal.

Flashback: In Trump's previous term, his administration offered big cutbacks in its budget proposals — but didn't achieve them in practice.

• Discretionary federal spending was 13% higher in 2019, on the eve of the pandemic, than it was in 2016 before he took office. It was little changed as a percentage of GDP.

Between the lines: While meaningful spending reductions would be good for the government's medium-term fiscal trajectory, they would also impede growth in the near term.

• It would, all else equal, exert a downward tug on inflation and justify lower interest rates from the Fed to offset that drag.
• Kevin Warsh, a potential Fed chair nominee, recently accused Fed officials of "cherry-picking" by fretting about the inflationary impact of tariffs while failing to factor in the possibility that spending cuts would "materially reduce inflationary pressures."

In case you were placing bets on how long into his second term it would take for President Trump to start weighing in on interest rate policy, we learned the answer Thursday: 71 hours.

Why it matters: Trump telling the Fed what he thinks it should do is nothing new. But the details of the president's message about interest rates, inflation, and oil prices are worth parsing.

• They shed light on how his administration views energy markets as central to its broader macroeconomic agenda.

Catch up quick: Speaking virtually to the World Economic Forum, Trump said he'll "demand that interest rates drop immediately."

• Later, taking questions in the Oval Office, he added that "when oil prices come down, everything's going to be cheaper for the American people," and that lower energy prices are "going to knock out a lot of the inflation. That's going to automatically bring the interest rates down."
• He said he will speak to Fed chair Jerome Powell about rates policy "at the right time." Compared to the Fed, he said, "I think I know interest rates much better than they do, and I think I know it certainly much better than the one who's primarily in charge of making that decision."
• "If I disagree, I will let it be known," he added, a statement nobody who has paid any attention would doubt.

Zoom out: As in his first term, Trump rejects the modern norm of presidents not publicly commenting on or recommending interest rate policy. What's new is his emphasis on energy abundance as the reason he believes the Fed should cut rates.

• The new administration is all in on encouraging more domestic production of oil and gas.
• Also on Thursday, Trump pressured Saudi Arabia and other OPEC countries to pump more oil to bring down prices.
• Domestic producers will be reluctant to amp up output if prices are falling due to higher output overseas.
• But internal contradictions aside, there's little doubt that Trump views bringing energy prices down as the key mechanism by which he intends to reduce overall inflation.

State of play: The Fed is likely to leave its target interest rate unchanged at a meeting concluding this coming Wednesday. As of mid-December, the median official of the central bank saw two rate cuts on the way this year.

• Further clear progress toward inflation coming down would accelerate those plans.
• Energy prices are perhaps the easiest set of prices to monitor in real time. Crude oil futures trade minute by minute, and retail gasoline prices are updated every day. So if Trump succeeds at bringing down energy prices, the Fed will know it and can quickly factor it into policy decisions.

Yes, but: If energy prices were to drag down overall inflation this year, the Fed may not react as aggressively as Trump hopes.

By the numbers: Energy only constitutes 6.4% of the Consumer Price Index. While gasoline prices and home heating bills loom large in the public consciousness, they are a relatively modest portion of people's total spending.

• Moreover, central banking's conventional wisdom is that moves in energy and food prices tend to be one-off shifts, rather than reflections of underlying inflation trends, and don't demand a policy response.

That said, lower energy prices would have some impact on other prices across the economy — lower airfare, shipping costs, and more — helping bring core inflation down as well.

• So at the margins, at least, it would support the case for more rate cutting.

The intrigue: Right now, Fed officials are particularly attuned to ensuring that consumer and business inflation expectations reanchor at their 2% target after four consecutive years of overshooting that target.

• A drop in fuel prices, even if it's a one-time occurrence, could help that cause — at a minimum, it could help offset any one-off surge in some prices due to higher tariffs.

What's next: Powell is set to take questions from the media Wednesday afternoon following the Fed's policy meeting. We can look forward to questions about how the Fed intends to react to the president's pressure.

Economic orthodoxy is out. Rule-busting and experimentation are in. That's a key takeaway from this week's gathering of top executives and world leaders at the World Economic Forum in Davos, Switzerland.

Why it matters: Economic mini-experiments are happening in nations big and small as government officials embrace tariffs, protectionism, anti-immigration and other policies.

• The goal is to invigorate economic growth after tried-and-true policies have failed, despite warnings from mainstream economists that such approaches will damage the economy.
• However, the conventional wisdom around the economic benefits of free trade and a more interconnected world became that for a reason — and risks abound.

Driving the news: "My message to business is simple: Come make your product in America, and we will give you the lowest tax rate on Earth. But if you don't make the product here, you will have to pay a tariff," President Trump told the gathering in a virtual appearance — a reminder that the world's largest economy is led by a figure who rejects the mainstream economic view that tariffs are harmful.

What they're saying: Top executives may not love the prospect of big tariffs but say they believe the set of policy changes on the way will be good for the economy on net.

• "Lower regulatory burden will result in higher profit margins, will then allow us to manage the tariff burden differently," Bank of America CEO Brian Moynihan said in an interview with Axios on Thursday, so long as tariffs are used "in moderation."
• "We absorbed the tariffs put in during the first Trump administration and they never came off. Ten years later, we're talking about outsized economic growth relative to trend and relative to the rest of the world," Moynihan said.
• Or as JPMorgan CEO Jamie Dimon put it to CNBC on Wednesday when asked about tariffs, "If it's a little inflationary but it's good for national security, so be it. I mean, get over it."

The intrigue: For the second year in a row, Argentine President Javier Milei gave a special address at Davos criticizing mainstream economic thought.

• "I say to all global leaders, it is time to break free of the script," Milei said. "The truth is that there is something badly mistaken about the ideas that have been promoted through forums such as this one."
• "It is essential to break these ideological chains if we want to usher in a new golden age," he added, borrowing a phrase from Trump's inaugural address.

What to watch: European leaders face a harsh reality about their economy: Take a new approach, or fall even further behind after its yearslong slog.

• Officials in Germany are debating whether to upend a longtime debt rule enshrined in their constitution to jumpstart the stagnant economy.
• Speaking in Davos, German Chancellor Olaf Scholz pushed to expand borrowing to invest in infrastructure — an idea that helped tank the government last year.
• The nation's top central banker backed the idea, telling a German newspaper that the longstanding debt rule has worked well. "But now we live in a world of tectonic change and we have to address that. ... We have to start thinking outside the box."

When nations raise economic barriers as tools of foreign policy, it could lead to a meaningful economic cost, a report out Thursday from WEF and consultancy Oliver Wyman finds.

State of play: The report examines the likely consequences if world leaders continue their march toward greater use of sanctions, export controls, tariffs and other tools of statecraft that create bigger economic barriers between nations.

• In particular, it looks at the risk of falling into an increasingly bifurcated world, with separate financial systems for China and Russia versus the West.

By the numbers: Financial system fragmentation — dividing the world into fully separate blocs — would reduce global GDP by up to 5%, or $5.7 trillion a year, the report finds.

• The hit would be disproportionately felt in smaller emerging economies, which could see GDP losses of up to 11%.

Between the lines: In the United States, the use of sanctions as a geopolitical tool has ramped up steadily for two decades, across administrations. Trump imposed tariffs in his first term in office that the Biden administration kept in place.

• The last many years have been, in effect, a one-way ratchet toward a world with more barriers to the flow of money, goods and people.
• This has made countries with which the U.S. has hostile relationships more eager to develop financial networks of their own, even at a cost of efficiency.

The bottom line: "We're not saying that these type of economic statecraft tools shouldn't be used," Daniel Tannebaum, an author of the report and partner at Oliver Wyman, tells Axios, "but that they should be used smartly and to ensure no unintended consequences to the global economy."

President-elect Trump's administration will be intently focused on making the U.S. border more secure and deporting people who are in the country illegally, but may prove more open to legal immigration of highly skilled workers.

• Done right, that would be an economic boon, a new paper argues.

Why it matters: The report, out Tuesday morning from the centrist Economic Innovation Group, finds that when some of the world's most talented and entrepreneurial people are allowed into the United States, the results are faster growth, higher wages for native-born citizens, and lower fiscal deficits.

• It is America's "not-so-secret weapon," they write, while identifying numerous weaknesses in current policy that prevent those benefits from fully accruing.

State of play: MAGA world has been roiled in recent weeks by a clash between Trump allies (led by Elon Musk and Vivek Ramaswamy) who want more legal immigration of highly skilled workers and the nativist right (including Steve Bannon and Laura Loomer) who want less.

• Trump sided with the pro-skilled immigration crowd last month.
• While that conversation specifically focused on the H-1B visas, it implies some broader openness to rethinking how America might open its doors to the world's best and brightest, as Musk and Ramaswamy seek.

By the numbers: The authors calculate that under the current H-1B program, the typical skilled immigrant pays more than $32,000 per year in federal taxes, while consuming only about $3,500 worth of government services.

Zoom in: "Our high-skilled immigration system should be designed first and foremost to advance the national interest of the United States and the interests of its communities and workers," write Adam Ozimek, Connor O'Brien and John Lettieri.

• "Designed well, immigration policy can make our workers more productive, make American industry more globally competitive, spark new growth in left-behind parts of the country, and improve living standards nationwide," they add.
• They argue that the system should be based on bringing in workers with the highest earnings, as opposed to the lottery system used in the H-1B program or offering visas based on education.
• This, they argue, would ensure it's the immigrants with unique skills and the greatest ability to add to economy-wide productivity who are allowed in — not just undercutting wages of native-born workers.
• The authors also advise abandoning quotas by country, further pushing toward a system based on merit that brings in tippy-top talent.

What they're saying: "The fact that the president-elect has reaffirmed his support for high-skilled immigration presents a very interesting moment where what has been an afterthought in our broader immigration has a chance to become a centerpiece, as we think it should be," Lettieri, the president of EIG, tells Axios.

• "There's enormous pressure to turn the tide on the fiscal outlook of the country and to find ways to boost the economy that don't carry a huge price tag," he adds. "There are very few levers to pull that meet those criteria."

The multitrillion-dollar bond market is sending a message to President-elect Trump and the new Congress: There is no fiscal free lunch to be had.

Why it matters: A surge in longer-term borrowing costs over the last couple of months may reflect deepening concern about high fiscal deficits among global investors who buy U.S. government debt.

• Regardless of the cause, it implies that as Republicans seek to extend Trump's tax cuts beyond this year, markets will pressure them to find spending cuts or other deficit-reducing offsets.

Driving the news: The yield on 10-year U.S. Treasury notes reached 4.71% Wednesday morning, up from 3.62% in mid-September.

• Bloomberg cites evidence from futures markets that traders are positioning themselves for protection if rates were to rise further, to north of 5%.

The intrigue: This upward shift in longer-term rates has come despite a full percentage point of Fed interest rate cuts since September — with most Fed officials expecting a couple more rate cuts this year.

• It is a reminder that while the Fed controls short-term interest rates, longer-term rates are set in the bond market based on the outlook for inflation, growth, deficits and more.
• The details of why long-term rates are on the rise are important. This surge in rates has mostly not been driven by a changing inflation outlook, at least based on the relative prices of inflation-protected bonds.
• What appears to be happening is a rise in the "term premium," the compensation investors demand for the risk of buying longer-term debt.

State of play: It is impossible to know for sure why the term premium moves as it does, and technical factors around supply and demand for bonds are likely in play. But investor wariness of looming deficits is a textbook reason.

• Asked about the rise in yields at an event in Paris this morning, Fed governor Christopher Waller noted "more and more attention, concern about fiscal deficits."
• Waller also affirmed that he expects further Fed rate cuts to be justified this year, and said he doesn't expect tariffs to have a "significant or persistent effect on inflation."

What they're saying: "The market is telling us something, and it is very important for investors to have a view on why long rates are going up when the Fed is cutting," writes Apollo's Torsten Slok, noting it is a "highly unusual" situation.

Between the lines: Regardless of exactly why yields have surged, the fact that they have points to a very different macroeconomic environment than the nation faced eight years ago, when Republicans passed sweeping tax cuts in the first Trump term.

• In January 2017, the 10-year yield was a mere 2.4%.
• Borrowing costs are now meaningfully higher than forecast in the Congressional Budget Office's most recent projections. CBO's June budget forecasts assumed the 10-year yield would be 4.1% in 2025 and lower thereafter.

The bottom line: With rates higher, any given deficit-expanding policy will come at a higher cost — in terms of interest expense and higher rates — than it did when Trump was last in the Oval Office.

The outgoing Biden administration has pointed to its investments in U.S. manufacturing as signature economic achievements. One big question now is how much of that the new Trump administration will change or scrap.

• As it happens, an 11-month-old paper offers a preview.

Why it matters: The man tapped to be President-elect Trump's top White House economist published a detailed critique of President Biden's industrial policies last February. It offers a sense of the strategies for reindustrializing the U.S. economy sought by those with the president-elect's ear.

• Stephen Miran, Trump's designee to chair the Council of Economic Advisers, argued that industrial policy should focus on supply-side reforms that make it easier for companies to invest in factories, and be driven by demand from the defense industry.
• He is critical of heavy subsidies for electric cars and labor, environmental, and other regulations that, in Miran's view, make the U.S. too inhospitable to manufacturing.

What they're saying: "Bidenomics not only imposes onerous costs on industry in various ways — from incentives for unionization to special environmental restrictions — that raise the cost of production and work against the stated goal of expanding our industrial plant," Miran wrote for the Manhattan Institute, where he is an adjunct fellow.

• "[It] does so while targeting sectors of the economy for which there would be very little demand, absent government support to artificially lower prices," he adds.
• "A more robust form of reindustrialization would instead combine aggressive supply-side reform with demand support from defense-driven procurement," he wrote, "which would produce enormous positive economic spillovers."

Zoom in: Among other specific policies he critiques as counterproductive are EPA rules governing chipmakers, the Davis-Bacon Act (which includes wage requirements for public projects) and Occupational Safety and Health Administration rules on worker safety that he argues go overboard.

Flashback: Biden has made revitalizing U.S. manufacturing central to his domestic agenda — and his political identity.

• His signature legislation — the Inflation Reduction Act, Bipartisan Infrastructure Law, and CHIPS and Science Act — were meant to deploy hundreds of billions of dollars to encourage domestic manufacturing.
• But even some allies were critical of a thicket of rules attached to those dollars that may have made it cumbersome for manufacturers to take advantage. For example, chip manufacturers are required to make child care accessible to employees.
• On net, manufacturing employment is not meaningfully higher than it was before the pandemic (12.9 million jobs in December, versus 12.8 million in February 2020).

Reality check: Miran's will be one voice among many seeking to influence Trump on industrial policy, and the CEA job is more advisory than responsible for carrying out programs.

• Much of the policy detail of the Biden-era legislation is carried out by the Commerce Department, Treasury Department, and others.
• Should Trump seek to change or repeal the laws, it will require action from a closely divided Congress in which many Republican states have benefited from the investments.

The biggest question marks for the 2025 outlook involve how the incoming Trump administration's policy agenda will reverberate through the U.S. and global economies.

Why it matters: The incoming administration has big plans in areas including trade policy, fiscal policy, immigration and more. These objectives are likely to create complex crosscurrents for the economy, making it hard to confidently predict how it will all net out.

• The U.S. economy was broadly stable in 2023 and 2024, with growth chugging forward, a solid but cooling job market, and downshifting inflation. 2025 looks to be a year with a wider range of possibilities.
• In converting the president-elect's campaign trail promises into policy, his appointees will face hard tradeoffs.
• The resolution of those tensions will determine the course of growth, the labor market, inflation, and interest rates over the next four years.

The big picture: In some of the most economically important policy areas, Trumpism contains internal contradictions that must be resolved.

• Are new tariffs going to be tactical and limited, meant to achieve specific strategic aims, or broadly applied and long-lasting? The result will determine how much disruption occurs in global supply chains and whether tariffs stoke inflation.
• Will Trump and the Republican Congress cut the budget deficit, as the incoming Treasury secretary seeks and Elon Musk's budget-slashing goals imply? Or will they follow the playbook of Trump's previous term of cutting taxes, keeping spending levels steady, and borrowing to cover the difference? The answer will shape interest rates going forward.
• Will the new administration's focus on tightening border security and deporting people who are illegally in the U.S. reach a sufficient scale to seriously crimp the labor supply? If so, it would mean slower GDP growth and disruptions to industries reliant on immigrant labor, like agriculture and construction.

Between the lines: Trump will hear from factions on all sides of these questions, both from inside his own administration and from business leaders and Republican lawmakers. But how they play out will depend on the whims of a president who is confident in his own instincts.

State of play: These uncertainties play out at a moment when the economy has significant momentum — which Trump's deregulatory push could help fuel.

• CEOs have become more optimistic about the outlook since the election, which could bode well for hiring and capital spending. Despite recent bumps, the stock market has remained near record highs.

Yes, but: Resilient growth and uncomfortably high inflation have led the Federal Reserve to back off its plans for further interest rate cuts this year. An up-in-the-air policy environment adds to uncertainty about what the 2025 economy will look like.

Outside the United States, the economies of some U.S. allies and adversaries alike — including Canada, France, Germany and China — are already slowing.

• The global economy is in a weaker position than it was in 2018 to contain the fallout from Trump's trade policies or any number of potential shocks.
• Central bankers are uncertain about how much further to cut interest rates — or whether they will do so at all, given still-simmering inflationary pressures.

What to watch: Across Europe, far-right populists are gaining political power and stoking political chaos that — at least, in the case of France — has led to higher interest rates.

• France has to cobble together a budget as investors revolt over widening deficits. Its parliament collapsed late last year after the far-right demanded fewer spending cuts.
• Germany will hold elections next month after its governing coalition fell apart, with swelling popularity for the Alternative for Germany (AfD) that just got Musk's endorsement.

Canada is in the grips of its own political chaos ahead of a trade war. Chrystia Freeland, the nation's finance minister who had been preparing the nation's Trump trade response, quit abruptly, and Prime Minister Justin Trudeau's political standing is tenuous.

Zoom out: China faces the harshest tariff threats of any other nation. Other countries besides the U.S. are threatening to impose tariffs of their own, citing fears that China is overproducing clean energy products and harming domestic industries.

• The Chinese government has implemented stimulus measures aimed at pulling the world's second-largest economy out of a deflationary, slow-growth malaise. What was once an engine of global growth is on shakier footing.

The bottom line: The global economy is already showing cracks that Trump threatens to widen. Ripple effects from the incoming administration's policy could hit financial markets, warp global trade patterns and reignite inflation that policymakers worked to crush.

The past two days on Capitol Hill raise the prospect of a more unpredictable period for U.S. fiscal policy than seemed likely a few days ago.

Why it matters: Economists' hope has been that unified Republican control of the White House would create similar tax and spending outcomes as when they controlled those branches in 2017 — tax cuts paired with steady-as-she-goes spending.

• But after this week, volatility is the only safe prediction.
• Elon Musk appears to have remarkable power over Congressional Republicans and is dead-set on large spending cuts.
• There are also doubts about the ability of House Speaker Mike Johnson (or anyone else who might take his place) to manage a fractious caucus with a narrow majority.

Catch up quick: We defer to our friends at Axios' Hill Leaders newsletter to fill you in on the details, but the upshot is that negotiations were done on a large, complex, bipartisan bill to fund the government in the short term.

• Musk and his Department of Government Efficiency co-chair Vivek Ramaswamy came out against it, and persuaded a critical mass of House Republicans that it spends too much money and yields too much to Democratic priorities. Now both a government shutdown and Johnson losing the speakership are in play.
• To add complexity, President-elect Trump dared Congress to shut down the government if they don't raise the debt ceiling, betting that President Biden will get blamed.
• All of this is occurring at a moment when Biden is still president, Democrats control the Senate, and Johnson needs Democratic votes to pass pretty much any spending bill.

Between the lines: Musk and Ramaswamy are serious about exerting leverage on Congress, enabled by Musk's ownership of X, to achieve their DOGE spending cut goals.

• Using that leverage to seek the kinds of vast spending cuts they talked about on the campaign trail would put them on a collision course with Congress and raise the possibility of significant macroeconomic effects.
• It further raises the possibility that Musk and Ramaswamy will have significant influence on other fiscal policy decisions, such as the tax reform legislation Republicans consider an urgent priority next year.

What they're saying: "[T]his week's developments in Congress are just an appetizer for next year's main course on Capitol Hill," wrote Brian Gardner, chief Washington policy strategist at Stifel, in a note.

• "Investors and managements should be prepared for a year that could lead to a few upset stomachs," he added.

By the numbers: Musk et al. spoke on the campaign trail of $2 trillion in spending cuts, more than the U.S. government spent on all discretionary spending last year ($1.7 trillion).

• It would be hard to get anywhere close to that without major cuts to programs beloved by Republican constituencies, such as defense, support for agriculture interests, and programs to support rural areas.
• It would also be a huge hit to aggregate demand — nearly 7% of projected 2025 GDP. It would be good for long-term fiscal sustainability but bad for near-term economic activity.

Flashback: The last time Trump was president, Congressional Republicans were in the driver's seat shaping tax legislation.

• Despite austere presidential budget requests, discretionary spending was about 13% higher in 2019 than in 2016.

The intrigue: Senators and representatives who were elected to public office and spent years climbing through the ranks may not take kindly to taking orders from private citizens who are new to the details.

• It is hard to know how Trump will react once specific spending cuts end up on the table — with associated political blowback.

The Federal Reserve cut its target interest rate by a quarter percentage point Wednesday, while releasing new projections that signal less rate-cutting is on the way in 2025 than envisioned three months ago.

Why it matters: The Fed is entering a more cautious phase after cutting rates for three straight meetings, reflecting sluggish progress in bringing inflation down.

Driving the news: The policy-setting Federal Open Market Committee reduced the target range for the federal funds rate to between 4.25% and 4.5%, which makes for a full percentage point reduction in the target since rate cuts began in September.

• However, in September, the median top Fed official projected it would be appropriate to cut rates to 3.4% by the end of 2025. Now, that median projection is 3.9%.
• That implies only two rate cuts ahead next year, not the four signaled by previous projections. Fourteen of 19 top Fed leaders believe two or fewer rate cuts are likely to be justified in 2025.

What they're saying: "Today was a closer call, but we decided it was the right call," Fed chair Jerome Powell told reporters at a press conference on Wednesday, referring to the decision to cut rates.

• "We are at or near a point at which it will be appropriate to slow the pace of further adjustments," Powell added.

The intrigue: The S&P 500 fell as much as 2% during Powell's press conference. The yield on the 10-year Treasury note jumped to just over 4.5%, the highest level in more than six months.

Between the lines: Powell said that there is more uncertainty around inflation than previously believed. "It's kind of common sense thinking that when the path is uncertain, you go a little bit slower," he said.

• "It's not unlike driving on a foggy night or walking into a dark room full of furniture, you just slow down."

By the numbers: Fed officials bumped up their projections for GDP and inflation, reflecting the evolution of economic data since September.

• The median official now expects 2.5% growth for 2024, up from 2% in September.
• But the officials now expect core inflation to be 2.8% for the year, higher than the 2.6% projected three months ago.
• The officials also increased their 2025 and 2026 inflation projections, now seeing 2.5% inflation next year (up from 2.1% in September).

What to watch: After pushing rates sharply higher in 2022 and 2023 to try to combat inflation, the Fed is now moving to adjust them to a more neutral stance, neither stimulating nor restraining the economy.

• The economy faces a complex set of tailwinds and headwinds next year. The incoming Trump administration promises deregulation, tax cuts, and a growth-friendly approach — but also tariffs and deportations that are outside the Fed's control.
• Powell said some Fed officials began to incorporate "highly conditional estimates" of the economic effects that might play out from Trump's policy in their forecasts.

Of note: Beth Hammack, who became president of the Cleveland Fed earlier this year, dissented from the decision, preferring not to cut rates at this meeting.

• In a recent speech, she favorably cited past times when the Fed has cut interest rates by three-quarters of a percentage point — as it did in the last two meetings — before then pausing to assess conditions.

Editor's Note: This story has been updated with market reactions to the Fed decision.

Social media posts don't carry the force of law, even when they're from a soon-to-be president. That is a reality to keep in mind in assessing how and when the incoming Trump administration will enact new tariffs.

Why it matters: Presidents have expansive power over trade policy — but that power is derived from specific legal provisions that dictate multistep processes for deploying that power.

• That means that businesses may not face the overnight imposition of large-scale tariffs but instead have time to prepare their supply chains, and the opportunity to seek exclusions for goods they have no choice but to import — at least, to the extent President-elect Trump follows his first-term trade playbook.

Flashback: In Trump's previous term, authority for tariffs came from Sections 201 and 301 of the Trade Act of 1974, allowing the president to target practices by trade partners that hurt U.S. businesses, and Section 232 of the Trade Expansion Act of 1962, on national security grounds.

• Each statute describes a process for how the authority can be invoked.

For example, Section 301, which both the Trump and Biden administrations have used to target Chinese goods, requires that the Office of the U.S. Trade Representative complete an investigation that includes consultation with the foreign government involved and allows U.S. interest groups to comment.

• This detailed report from the Congressional Research Service spells it out.
• Biden announced the expansion of Section 301 tariffs on China in May, and USTR received more than 1,100 public comments, leading to several changes.
• Some of the tariffs went into effect this past September, but some are not scheduled to take effect until 2026.

Of note: Jamieson Greer, a trade lawyer and Trump's nominee for U.S. trade representative, is well-versed in the importance of following the legal processes laid out by the relevant laws, as opposed to shooting from the hip.

• Over the summer, Greer spoke to JPMorgan clients about what to expect from a Trump 2.0 trade policy, and the bank's economics team released excerpts of his comments this month.
• Greer said that "the Trump administration was very good about having public hearings, taking on comments, letting people rebut comments and going through the required process."
• "Now we are in a situation where there are a lot of legal tools to allow the President to exercise a lot of authority over import regulation," he said, according to the research note. "We also have a lot of jurisprudence now very recently saying Trump was allowed to do what he did."

The incoming administration may want to move more quickly and explore options that involve more speed — but also more legal questions.

State of play: One approach, Cato Institute trade scholar Scott Lincicome tells Axios, would be to elect not to start a new Section 232 or 301 case, but to adjust rates on existing tariffs.

• "The current measures could be quickly 'modified' to change tariff rates or product coverage — and courts have signed off on that broadly," he says, such as by increasing tariffs on Chinese products already covered by Trump-Biden policies.
• Section 232 tariffs on steel could be modified to cover Mexican imports or expanded to other steel products, he adds.

Trump could also try to use laws with fewer procedural restrictions, particularly the International Emergency Economic Powers Act, which gives the president powers over commerce in times of national emergency.

• It grants the president power in response to an "unusual and extraordinary threat."

The bottom line: Corporate supply chain managers will have a busy next four years trying to adapt to higher trade barriers — but how quickly they will have to react depends on whether Trump turns to his first-term trade playbook or pushes boundaries further.