Washington Edition

This is Washington Edition, the newsletter about money, power and politics in the nation’s capital. Today, White House correspondent Catherine Lucey looks at what came out of the trade talks with China this week. Sign up here and follow us at @bpolitics. Email our editors here.

Square One

President Donald Trump is promoting the latest trade deal with China as a breakthrough. But arguably the US is largely back to square one.

After two days of negotiations in London, tariff rates on both sides remain essentially unchanged. Rare earth shipments from China are set to return to where they were before trade tensions exploded in April. A slew of thornier issues, including trade imbalances, remain unresolved.

Trump’s team acknowledged that the London talks largely formalized terms agreed to last month in Geneva, though they argue that was the goal of the effort. To seal the deal, the US had to roll back a promised crackdown on visas for Chinese students. And the back-and-forth exposed the reliance that key US industries have on magnets sourced from China.

Trump came into office promising to radically remake the US-China trade relationship and force Beijing to open markets to more American goods. But he’s finding out just how tough it is to make that happen, a problem that vexed each of the past three presidents.

Trump Photographer: Ken Cedeno/UPI

Of course, this week’s announcement is not the final word on a China trade agreement — and it could provide a stepping stone toward a broader deal. Yet it’s also unclear the framework will even hold given that the previous accord quickly broke down.

Next steps — such as a possible meeting between Trump and Chinese President Xi Jinping — are uncertain, though the US president said he and Xi had agreed to reciprocal visits.

Trump is facing other challenges as well. The administration has been struggling to land trade deals with a range of other nations. So far, only one framework for a deal — with the UK — has been landed. Arrangements with India, Japan, the European Union and others remain works in progress.

Commerce Secretary Howard Lutnick declared yesterday that the White House is now turning to those other deals, saying on CNBC that talks are in “good shape with lots of countries.” Trump also said he intended to send letters to trading partners setting unilateral tariff levels — once again using the familiar refrain that he’ll do it within two weeks. — Catherine Lucey

Key reading:

Don’t Miss

Trump said he may raise auto tariffs in order to boost domestic auto manufacturing, a move that could further ratchet up tensions with US trading partners.

Trump said Israel “could very well” strike Iran but that he had advised against an attack while negotiations were ongoing, as the departure of US staff from the region fans concerns about a coming assault.

Democratic Senator Alex Padilla was forcibly removed from a news conference and handcuffed as he tried to confront Homeland Security Secretary Kristi Noem while she briefed reporters.

California argued in federal court that the Trump administration’s deployment of the National Guard and US Marines to respond to protests in Los Angeles was illegal and cannot continue “unchecked.”

Immigration raids rocking cities from Los Angeles to Chicago are spreading to the agriculture industry, with a meat plant in the Midwest and fruit workers in California being targeted.

Trump conceded that his immigration crackdown was hurting US businesses and said policy changes covering farmworkers and the hotel industry will be made to address worker shortages.

The House-passed version of Trump’s massive tax and spending bill would deliver a financial blow to the poorest Americans but be a boon for higher-income households, according to a CBO analysis.

The House approved $9.4 billion in Elon Musk’s DOGE federal spending cuts, with Republican moderates swallowing their concerns about cutting previously approved spending for foreign aid and public broadcasting.

Recurring applications for unemployment benefits rose to the highest since the end of 2021, adding to evidence that it is taking unemployed Americans longer to find a new job.

The president and his allies are pursuing an alternative strategy to defend against mounting court orders blocking his policies: Raise the financial stakes for those suing the administration.

HHS Secretary Robert F. Kennedy Jr.'s dismissal of a panel that advises on immunization policy is a step in implementing his blueprint to cast doubt on the effectiveness and safety of a broad range of vaccines.

Treasury Secretary Scott Bessent said that while there are a number of different assessments of the deficit impact of Republicans’ signature tax-cut bill he expects it will shrink borrowing over a decade.

Trump reiterated he doesn’t plan to fire Federal Reserve Chair Jerome Powell but went on to repeat his complaints that the Fed has not moved quickly enough to cut interest rates.

Watch & Listen

Today on Bloomberg Television’s Balance of Power early edition at 1 p.m., hosts Joe Mathieu and Kailey Leinz interviewed Michael Allen, managing director of Beacon Global Strategies and a former White House national security aide, about the risks of an Israeli attack on Iran.

On the program at 5 p.m., they talk with Democratic Senator Chris Coons about Padilla being forcibly removed from a DHS news conference and the protests over the federal immigration crackdown.

On the Trumponomics podcast, host Stephanie Flanders, Bloomberg’s head of government and economics, leads a panel from the Hong Kong Invest conference to unpack the latest round of trade talks between the US and China, exploring why Beijing may still have the upper hand and how far any decoupling of the two economies will go. Listen on Apple Podcasts, Spotify or wherever you get your podcasts.

Chart of the Day

The government's ballooning debt, which surged following the pandemic and has continued to grow, is a central point of debate on the Republicans' sweeping tax-cut bill. Data released today by the Federal Reserve show that the amount the federal government owes stood at at $31.77 trillion at the end of the first quarter -- equal to 106% of US GDP. Government debt surpassed household debt in terms of share of the GDP in 2014 and has grown by around 25 percentage points since. Meanwhile, the aggregate debt of US households has fallen to the equivalent of less than 68% of GDP. — Alex Tanzi

What’s Next

The preliminary June reading of consumer sentiment from the University of Michigan will be released tomorrow.

Retail sales for May will be reported June 17.

Industrial production in May also will be released on Tuesday.

Housing starts and building permits in May are released Tuesday.

The Federal Reserve issues its interest rate decision on Wednesday.

The 90-pause for Trump’s reciprocal tariffs on most counties is scheduled to end on July 8.

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