Washington Edition

This is Washington Edition, the newsletter about money, power and politics in the nation’s capital. Every Monday, Bloomberg Intelligence senior analyst Nathan Dean gives his insights into what’s been happening and what’s coming up in the nooks and crannies of government and markets. Sign up here and follow us at @bpolitics. Email our editors here.

Time Is Relative

Happy Cinco de Mayo! When I drive to work, I alternate between 90’s alternative (this morning was Foo Fighters and Smashing Pumpkins) and Bloomberg Radio. And the subject on Bloomberg Surveillance today was tariffs and trade deals. My colleagues at Bloomberg News reported over the weekend that, Trump Suggests Some Trade Deals May Come as Soon as This Week. Based on my conversations in New York last week, the expectation from Wall Street is India, South Korea and Japan are first.

Trump Photographer: Jim Lo Scalzo/EPA

But then I saw this headline: Japan Seeks US Trade Deal in June Amid Standoff on Car Exports. June isn’t that far away for DC standards, but when Wall Street navigates by the hour, it may be too far away.

Now, it may well happen that some kind of deals with these countries get done soon. Given that there’s a lot of sentiment riding on it (see Stocks Fall After Historic Run as Trade Risks Loom: Markets Wrap), my “Spidey” sense has me wondering, What happens if it those deals don’t happen quickly? As Bloomberg News’ Shawn Donnan points out here, there seems to be a disconnect between markets and the emerging economic reality — “investors are betting on tariffs going away when they seem to be here to stay.” Like I said, my “Spidey” sense is tingling on this one.

President Trump also released his “skinny” budget last week where the White House called for $557 billion in non-defense spending, down $163 billion from current levels. My view? I didn’t even write a note on it. White Houses releases budgets, Congress ignores them. It happens every year. Now, we are still expecting a $9 billion (ish) package of cuts for the current fiscal year, which I’m keeping an eye on. But I think we still have some time to figure that one out as Congress tackles the Republican tax bill.

Speaking of which, in our view, things are still going as planned on Republican negotiations. Whether it’s Medicaid or the Inflation Reduction Act, coming to agreement on things to cut is hard. Bloomberg Intelligence held a call last week (available on Apple and Spotify) where we discussed it, but just remember, the House likes to include as much as they can initially before political realities and the Senate scales back ambitions.

Tidbits:

Canadian Prime Minister Mark Carney is scheduled to meet with Trump tomorrow, so maybe there’s some tariff-news coming?
Bloomberg’s cocktail and spirits expert – yes, we have one – released her Under-the-Radar Value ‘Mezcals’ Are New Option Amid Tariff Chaos.
My family was overjoyed that the 2027 NFL Draft is coming to Washington. My wife and I will be wearing Chicago Bears gear, my son will be in Minnesota Vikings garb, and my daughter will be flying Washington Commanders colors. Call us happily confused. — Nathan R. Dean

Don’t Miss

The Trump administration is offering undocumented migrants $1,000 and paid travel if they agree to leave the US voluntarily, the latest effort to ramp up mass deportations and slash enforcement costs.

Trump said he would meet with Hollywood executives after confounding the US film industry over his proposal to impose a 100% tariff on movies made overseas.

The IRS lost 31% of its auditors from buyouts and layoffs tied to Elon Musk’s Department of Government Efficiency, departures that are likely to hamper the agency’s ability to go after tax cheats.

Activity at service providers in the US accelerated in April after a slumping in the prior month, while prices for materials increased in response to escalating tariffs.

The Army is suspending helicopter training flights around the Pentagon and Reagan National Airport as authorities investigate an incident that saw two passenger jets abort landings to avoid a Black Hawk in the area.

Air traffic controllers guiding planes bound for Newark Liberty International Airport lost radar and radio communication for more than a minute early last week before flights at the key hub were snarled for days.

TeleMessage is investigating a hacker’s claim to have stolen data from the app, which former National Security Adviser Michael Waltz allegedly used to communicate with other members of the Trump administration.

Treasury Secretary Scott Bessent touted the US as the “premier destination” for global capital and argued that the Trump administration’s policies will solidify that position.

A bipartisan alliance backing stablecoin legislation shattered in the Senate as a group of Democrats threatened to block a bill that Republicans had hoped to pass this month — unless “numerous” fixes are made.

Watch & Listen

Today on Bloomberg Television’s Balance of Power early edition at 1 p.m., host David Gura interviewed New Mexico Governor Michelle Lujan Grisham about the impact of proposed cuts to Medicaid, immigration and working with the White House.

On the program at 5 p.m., David and Julie Fine talk with Democratic Representative Brendan Boyle of Pennsylvania about the congressional fights over Trump’s defense budget and the future of Medicaid and the state and local tax deduction.

On the Big Take podcast, Bloomberg’s Sri Taylor and Aaron Gordon discuss why advocates now fear many transit systems are on the verge of a so-called “death spiral” — a vicious cycle of less funding, low ridership and cuts to services that could impact everyone’s commute. Listen on iHeart, Apple Podcasts and Spotify.

Chart of the Day

Businesses aren't shedding workers is great numbers, but belt tightening is under way nevertheless. Concern about the impact of tariffs on costs and supply chain, availability along with general uncertainty, is creating a more apprehensive attitude among firms. Data from financial technology company Ramp data shows 61% of retailers froze or reduced ad spending last month. Lower advertising may cause diminished growth forecasts going forward. Retailers and professional service firms are showing the greatest pullback, according to Ramp, which aggregates data from $55 billion in annual spending across more than 30,000 businesses. — Alex Tanzi

What’s Next

The nation’s trade balance in March will be reported tomorrow.

The Federal Reserve will announce its decision on interest rates at 2 p.m. Wednesday, followed by a news conference with Chair Jerome Powell.

March data on consumer credit will be released on Wednesday.

Treasury Secretary Scott Bessent testifies about the state of the international financial system before the House Financial Services Committee Wednesday.

Wholesale sales and inventories for March will be reported Thursday.

The Bureau of Labor Statistics’ productivity estimate for the first quarter will be released on Thursday.

Seen Elsewhere