WASHINGTON – Americans are closely watching President Donald Trump’s sweeping tariff threats and deep cuts to the federal government. Now they can add rising fears of a recession and a possible government shutdown to the list.
Congress faces a Friday deadline to keep the government’s doors open and dodge a painful shutdown. The House already passed a spending bill to temporarily fund the government until September, but the Senate hasn’t come to an agreement.
Senate Minority Leader Chuck Schumer, D-N.Y., said Thursday he would vote for a GOP-backed funding extension, significantly increasing the chances that enough Democratic senators will side with Republicans to avert a shutdown.
And what’s next for U.S. trading partners? The president vowed on Thursday that he would not back down on imposing major reciprocal tariffs next month. Trump also dismissed several days of volatility in the stock market – and ensuing concerns that a recession will rock the U.S. this year.
The Trump administration also made federal agencies submit plans this week for large-scale layoffs in its push to shrink the government. However, a California judge ordered six agencies to reinstate thousands of recently hired employees who were fired as part of the purge.
Keep up with live updates from the USA TODAY Network.
The Senate is set to vote Friday afternoon on a budget bill called a continuing resolution that will fund the government into September. The vote is expected sometime after 1 p.m.
The bill, which passed in the House of Representatives earlier this week, poses a bitter choice for Senate Democrats, who want to avoid a shutdown but disagree with provisions that could lead to big cuts in Medicaid and other programs.
Senate Minority Leader Chuck Schumer, D-N.Y., has said he’ll vote for the bill. He needs seven other Democrats to join him for the Senate to reach a required threshold of 60 Senators that will allow the resolution to come to the floor for a vote.
−Dan Morrison
China is “laughing” over the tariff war between the U.S. and its allies, Kaja Kallas, the European Union’s top diplomat, told Bloomberg Television.
On Thursday, Trump threatened to slap 200% tariffs on Champagne, wine and other alcoholic beverages from France and other European countires. Kallas, speaking Thursday on the sidelines of the Group of Seven meeting in Canada, said the escalating measures would only benefit Beijing.
“Who is laughing on the side or looking at the side is China,” she told Bloombert. “It’s really benefiting from the US having a trade war with Europe.”
−Dan Morrison
U.S. stocks are headed for a higher open, with futures up in pre-market activity.
At 6:40 a.m. ET, futures tied to the broad S&P 500 index rose 0.66%, while blue-chip Dow futures jumped 0.44%. Tech-heavy Nasdaq futures gained 0.91%.
−Medora Lee
Former central banker Mark Carney will be sworn in as Canada’s 24th prime minister Friday morning, taking the reins from Justin Trudeau. Carney, the head of Canada’s ruling Liberal Party, steps into an escalating and bitter trade war with the U.S.
Trump’s aggressive moves have unleashed a furious nationalism in Canada – and revived the fortunes of the Liberal Party, which had not led the opposition Conservatives in national polls since 2022.
−Dan Morrison
Trump won’t say whether he thinks his sweeping tariff plan could help push the country into a recession. But the threat of tariffs and the-already rising costs of everyday items are raising concerns about where the economy is headed.
A recession could happen if more people are out of work, large companies see lower profits, the stock market slips and home prices tumble, according to the International Monetary Fund.
Generally, a recession is marked by an extended period of many months or more of economic downturn. And even when a recession is acknowledged by experts and officials, not everyone agrees on when it started or when it ends.
−Damon C. Williams, Zachary Schermele
A tariff is a form of tax imposed on imports from another country.
Economists generally agree that trade barriers raise consumer prices and negatively impact economic output and income, according to the Tax Foundation, a nonpartisan tax policy nonprofit.
Tariffs create more demand for domestic manufacturers, but those companies are also part of the global supply chain and therefore also impacted by tariffs, experts have previously explained to USA TODAY.
Trump’s motivation for implementing tariffs is to get help from China, Canada and Mexico to curb the flow of migrants and illegal drugs into the U.S. The president has insisted that the countries have not done enough to help address what he sees as core issues for his administration.
–Kinsey Crowley and Jonathan Limehouse
