Washington Edition

This is Washington Edition, the newsletter about money, power and politics in the nation’s capital. Today, White House correspondent Josh Wingrove looks at the two overseas crises confronting the president. Sign up here and follow us at @bpolitics. Email our editors here.

Provocation

In quick succession, President Donald Trump’s bid to fashion himself as the world’s foremost peacemaker was dealt two blows.

Hours after one US Middle East ally struck a target in the capital of another, Trump faced a new provocation from Russian President Vladimir Putin.

Russian drones were shot down over Polish territory, testing Trump’s resolve to bringing an end to Moscow’s war on Ukraine as well as his commitment to a fellow NATO member.

The incident came less than a week after Trump hosted Polish President Karol Nawrocki at the White House. The two men spoke today and Poland asked allies for more air defense tools.

The Poland incursion took place just after Israel struck a Hamas target in Qatar, home to the largest US military base in the Middle East and one of Trump’s first overseas destinations after taking office.

Trump described himself as “very unhappy” and pledged to the outraged Qataris that it wouldn’t happen again.

Trump, center, with Vice President JD Vance, Secretary of Defense Pete Hegseth and Secretary of State Marco Rubio. Photographer: Saul Loeb/AFP/Getty Images

But Israel has given no such assurances. On the contrary, Prime Minister Benjamin Netanyahu warned Qatar and others that Israel reserves the right to attack Hamas officials abroad, leaving open the chance he will again test Trump’s allegiances. That has Arab leaders questioning the value of security guarantees from the US, Bloomberg’s Sam Dagher reported from Dubai.

Trump has been trying to broker a deal in the Middle East and has long pledged to quickly end the fighting in Ukraine. Instead, both efforts have dragged on — with Putin, in particular, rebuffing US efforts after a red-carpet welcome from Trump at their Alaska summit.

Trump once had high hopes for that summit. The White House hung several photos of the meeting in the West Wing in the days afterward, and Trump was caught on a live microphone telling French President Emmanuel Macron he thinks Putin “wants to make a deal for me.”

Now the world is left hanging on how Trump — who has long wrestled with how he feels about NATO’s mutual defense pact — will react to Putin’s latest challenge. His only public statement so far was a cryptic post on Truth Social: “What’s with Russia violating Poland’s airspace with drones? Here we go!”

Trump now faces questions about how to respond on both fronts, and whether those responses will be enough to push Putin off NATO’s doorstep and persuade Netanyahu to steer clear of Qatar. Nobel Prizes don’t come easy. — Josh Wingrove

Don’t Miss

Conservative activist and Trump ally Charlie Kirk was shot while he was speaking at an event at Utah Valley University and was hospitalized in critical condition.

Trump told European officials he’s willing to impose sweeping new tariffs on India and China to push Putin to the negotiating table with Ukraine — but only if EU nations do so as well.

Wholesale inflation in the US unexpectedly declined in August for the first time in four months, adding to the case for the Federal Reserve to cut interest rates when officials meet next week.

The Senate Banking Committee voted along party lines to back Trump’s nomination of adviser Stephen Miran to a short-term post as a Fed governor.

The Justice Department appealed a judge’s decision that temporarily blocks Trump from firing Fed Governor Lisa Cook over allegations of mortgage fraud, keeping the case on track to end up at the Supreme Court.

The federal judge who blocked Cook’s ouster joined the growing chorus of her lower court colleagues to reject the idea that the Supreme Court’s recent actions bind her to side with the Trump administration.

The Department of Labor’s Office of Inspector General is initiating a review of “challenges” at the Bureau of Labor Statistics regarding collecting and reporting key economic data.

Democrats are threatening to block a bill needed to avert an Oct. 1 US government shutdown unless Republicans agree to stop a sharp spike in Obamacare health insurance premiums or meet other demands.

A dominatrix who creates online adult videos is among the digital content creators who, along with waitstaff, rideshare drivers, caddies and dancers, will be reaping a benefit from Trump’s push to eliminate taxes on tips.

Harvard University said it has received notice that some of the federal research funding frozen by the Trump administration is being restarted, although the money hasn’t been restored yet.

Former Vice President Kamala Harris writes in a memoir that it was “recklessness” that led top Democrats to defer to then-President Joe Biden on whether he should seek reelection.

The Trump administration, intent on cutting costs on government contracts, is offering to pay federal employees as much as $10,000 for ideas that lead to verified savings.

Watch & Listen

Today on Bloomberg Television’s Balance of Power early edition at 1 p.m., hosts Joe Mathieu and Kriti Gupta interviewed Ernie Tedeschi, director of economics at the Yale Budget Lab, about the implications of today’s report on producer prices and the outlook for inflation.

On the program at 5 p.m., they talk with Republican Senator Mike Rounds of South Dakota about the foreign policy challenges confronting the Trump administration.

On the Big Take Assia podcast, host K. Oanh Ha talks to Bloomberg’s Daniel Ten Kate about what’s driving the surprising show of unity from the leaders of China, Russia and India and what their alignment means for Trump and the US-led world order. Listen on iHeart, Apple Podcasts and Spotify.

Chart of the Day

Tricolor Holdings, a provider of subprime auto loans that focused, in part, on undocumented immigrants, filed for bankruptcy, a potential foreshadowing. Loans held on nearly 5.4 million automobiles were seriously delinquent last quarter — meaning that they haven't been paid in at least 90 days. That could represent billions of dollars in losses among banks holding these loans. Data released by the New York Federal Reserve bank shows that there are 108 million auto loans in the US adding up to $1.7 trillion in debt. Roughly 5% are at least 90 days delinquent and close to 8% of loans are at least 30 days delinquent. — Alex Tanzi

What’s Next

The consumer price index for August will be reported tomorrow.

Initial unemployment claims for the week ending Sept. 6 also will be reported tomorrow.

The University of Michigan’s preliminary read of consumer sentiment in September will be released on Friday.

Retail sales for August will be reported on Sept. 16.

The import price index also will be reported on Sept. 16.

The Fed’s rate-setting committee meets Sept. 16-17.

Trump departs for a state visit to the UK on Sept. 16.

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