France's Economy Shows Resilience Amid Political Gridlock

President Donald Trump is still pursuing his plan to send $2,000 tariff rebate checks to Americans, but the timeline has been pushed back, and he now suggests he may not need congressional approval to do so. This signals a potential strategy to overcome lawmaker opposition to the program.

Figure 1: President Donald Trump has floated a new timeline for his proposed tariff rebate checks, suggesting they could arrive late in the year.

In a recent interview with The New York Times, Trump indicated a new target for the payments. "That's coming in, that I'll be able to do $2,000 sometime. I would say toward the end of the year," he said.

This marks a delay from his previous estimate. In mid-November, Trump had told reporters the checks would likely be issued "somewhere prior to probably in the middle of next year, a little bit later than that."

Who Qualifies for the Tariff Rebate?

The proposed "tariff dividend" is intended to put cash directly into household budgets to help boost consumer spending. The program targets low- and middle-income earners.

While details remain fluid, Treasury Secretary Scott Bessent has speculated that eligibility could be capped at individuals with incomes of no more than $100,000.

Funding Questions: Tariff Revenue vs. Program Cost

A key point of contention is the program's funding. U.S. Customs and Border Protection reported that revenues from import taxes reached $216 billion in the 2025 fiscal year after new tariffs were introduced.

However, economists estimate the cost of the rebate checks would be significantly higher, with projections ranging from $279 billion to $600 billion, depending on the final distribution model.

Trump has disputed the official revenue figures, arguing that tariffs are generating more income than reported. "We have taken in, and will soon be receiving, more than 600 Billion Dollars in Tariffs," he wrote on Truth Social on January 5.

Economists suggest this higher figure may include private sector investments pledged to the U.S. by foreign countries during tariff negotiations. Erica York, vice president at the Tax Foundation, noted in November that "private sector investment" is "very different from tax collections that flow to the Treasury."

Bypassing Congress? Trump Questions Need for Approval

The program's cost has drawn criticism from some lawmakers, who argue the revenue should be used to reduce the national debt, which now exceeds $38 trillion.

In his New York Times interview, Trump downplayed the idea that Congress could block the checks. When asked if he needed legislative approval, he replied, "No, I don't believe we do. We have it coming in from other sources."

This statement contradicts previous remarks from other White House officials. On December 21, National Economic Council Director Kevin Hassett told CBS News that congressional action would be necessary. "Congress is going to have to send those money to those peoples," he said.

The rebate plan faces another potential hurdle: an upcoming Supreme Court ruling on tariffs could strike down some of the import taxes, threatening the primary funding source for the checks.

President Donald Trump has dismissed the significance of the North American trade pact he signed in 2020, signaling a turbulent and uncertain future for the US-Mexico-Canada Agreement (USMCA) as it heads for a critical review.

Speaking during a tour of a Ford Motor Co. plant, Trump described the agreement as having "no real advantage" for the United States. His comments represent a significant challenge to the stability of the trade relationship between the U.S. and its two largest trading partners, creating fresh anxiety in Ottawa, Mexico City, and the American auto industry.

"We could have it or not, it wouldn't matter," Trump told reporters, adding that the deal is "irrelevant." He claimed the primary beneficiary is Canada and that the U.S. doesn't "need their product" because manufacturing is returning stateside.

A "Don't Care" Stance on a Signature Deal

Trump’s recent remarks are a stark departure from the praise his administration once had for the USMCA, which was touted as a signature achievement of his first term. The agreement replaced the 1992 North American Free Trade Agreement (NAFTA), a deal Trump frequently criticized.

When asked if he still supports the pact, Trump’s response was blunt. "I think they want it," he said, referring to Canada and Mexico. "I don't really care."

He elaborated on his position by targeting the auto sector directly. "I don't even think about USMCA," Trump said. "We don't need cars made in Canada. We don't need cars made in Mexico. We want to make them here. And that's what's happening."

This rhetoric aligns with previous actions during his second term, where he imposed new tariffs on Mexican and Canadian goods, citing fentanyl trafficking as a justification, before later exempting products covered by the USMCA.

What's at Stake: The USMCA Review Clause

The trade agreement now faces a mandatory review this year, and Trump's posturing introduces major complications. The pact’s future hinges on the outcome of this review process:

• 16-Year Extension: If all three countries agree to renew the deal before July 1, it will be extended for another 16 years.

• Annual Reviews: If there is no agreement, the countries must hold annual joint reviews until they either approve an extension or the pact expires in 2036.

Beyond the review, any country can withdraw from the USMCA with just six months' written notice. It remains unclear if Trump intends to trigger this clause, but the threat alone injects significant leverage into any negotiations and leaves the path forward ambiguous.

Auto Sector Braces for Supply Chain Disruption

The prospect of the USMCA unraveling would deliver a major shock to the Canadian and Mexican economies and disrupt critical industries that have built their business models around the agreement.

The auto manufacturing sector is particularly vulnerable. Decades of free trade have created deeply interconnected supply chains across North America, which would be upended if Trump terminates the deal.

U.S. automakers have urged the White House to negotiate a stable North American trade framework to maintain a competitive edge. Ford CEO Jim Farley highlighted the impact of trade policy, noting that tariff breaks for Japanese exports gave Toyota a cost advantage of $5,000 to $10,000 on SUVs compared to Ford, even though Ford builds its SUVs in the United States.

Trump’s indifference toward the USMCA leaves the future of North American commerce hanging in the balance, with major economic consequences for all three nations.

UNDER ATTACK

Source: Reuters

Russia has launched one of its most advanced ballistic missiles against Ukraine, a move that analysts believe is driven as much by strategic messaging as by tactical goals. The weapon, an Oreshnik intermediate-range ballistic missile, was fired at the city of Lviv, marking only its second known use in the conflict.

This deployment suggests Russia is using its high-end munitions sparingly, likely due to a limited stockpile.

A Coordinated Barrage to Overwhelm Defenses

The Oreshnik missile, which traveled nearly 900 miles to its target, was not fired in isolation. The attack followed Russia's standard operational playbook, involving a massive, coordinated strike designed to saturate Ukrainian air defenses.

According to the Ukrainian Air Force, the assault included approximately 200 munitions in total, combining suicide drones, cruise missiles, and other ballistic missiles aimed at several cities. The strategy behind such a large-scale barrage is to overwhelm defense systems, increasing the likelihood that some weapons will penetrate and strike their targets.

The Strategic Motive Behind the Launch

Beyond its military impact, the Kremlin appears to have used the Oreshnik launch to send a political signal. The British Ministry of Defence assessed that the strike was almost certainly a form of "strategic messaging."

This message followed Russia's unsubstantiated public claims that Ukraine had attacked President Putin's residence in Novgorod on December 29, 2025. Western intelligence has disputed Moscow's narrative. A CIA assessment concluded that Russia fabricated the attack, likely in an attempt to undermine ongoing peace negotiations and erode international support for Ukraine.

International Condemnation and Support for Ukraine

In the wake of the missile strikes, British Defence Secretary John Healy visited Kyiv to discuss diplomatic efforts to end the war. He strongly condemned the attack.

"Russia's barrage of attacks on Ukraine overnight, including firing an Oreshnik ballistic missile at Lviv, are another attempt by Putin to terrorise Ukraine and threaten Europe's security," Healy stated. "My visit to Kyiv today underlines the UK's resolute support for a just and lasting peace."

Ukrainian President Volodymyr Zelenskyy thanked the United Kingdom for its support, emphasizing the urgent need for more air defense capabilities. "Moscow is trying to use cold weather as a tool of terror," he said. "We know which partners have the relevant missiles and equipment, and I am sincerely grateful to the United Kingdom for its readiness to help."

The United Kingdom has been a key provider of military and diplomatic aid to Ukraine throughout the war.

Peace Talks and Future Security Guarantees

The attack comes amid sensitive peace negotiations. As part of these talks, several European nations, including the UK and France, have indicated a willingness to deploy troops to Ukraine as a security guarantee after the conflict ends.

President Zelenskyy confirmed discussions around this possibility. "We also discussed how a British contingent could be deployed to operate alongside French forces if diplomacy works to end the war," he added. "It is crucial that the framework for ending the war includes a clear response from the allies should Russian aggression be repeated."

Former President Donald Trump is set to interview BlackRock CIO Rick Rieder for the position of Federal Reserve Chair, a move that could signal a major shift in U.S. monetary policy and directly impact cryptocurrency markets like Bitcoin and Ethereum. The high-stakes meeting is scheduled to take place at the White House on Thursday.

The Race to Lead the Federal Reserve

Rieder has emerged as one of four finalists for the top job at the central bank, which will become vacant when current Chair Jerome Powell's term concludes in May. The other contenders for the position are Kevin Warsh, Kevin Hassett, and Christopher Waller.

The interview will involve key figures from Trump's inner circle, including chief of staff Susie Wiles, Treasury Secretary Scott Bessent, and deputy chief of staff Dan Scavino, who will join the discussion on the future of monetary policy.

Rieder's Vision: A 3% Interest Rate Target

A key focus of the discussion will be Rieder's public stance on interest rates. As the Chief Investment Officer of BlackRock, he has advocated for a less restrictive monetary policy.

"The Fed has got to get the rate down to 3% - I think that is closer to equilibrium," Rieder stated in a recent interview.

This position suggests a more dovish approach, aimed at easing financial conditions and potentially stimulating economic activity.

Market Impact on Crypto and Risk Assets

A pivot towards a 3% interest rate would have significant consequences for financial markets. Lower borrowing costs typically encourage investment in higher-risk assets. Analysts are closely watching this development for its potential to boost valuations for cryptocurrencies, particularly Bitcoin and Ethereum.

Any change in Fed leadership, especially one involving a figure with a clear policy preference like Rieder, is a critical event for traders and investors across both traditional and digital asset markets.

Gauging the Odds and Historical Precedent

While Rieder is a serious contender, prediction markets still see his nomination as an outside shot. On the platform Kalshi, his chances of being nominated are currently priced at 8%.

Historically, the appointment of a new Federal Reserve Chair often precedes major shifts in financial and economic trends. If Rieder were to be nominated and confirmed, his advocacy for lower rates could herald a new chapter for global markets and cryptocurrency valuations.

Productivity Surge Sparks Rate Cut Debate

Federal Reserve officials are signaling they will hold interest rates steady, pushing back against arguments that a recent surge in U.S. productivity is enough to justify a policy shift.

While higher productivity can allow companies to produce goods more cheaply and help cool inflation, top central bankers remain unconvinced that the trend is permanent. They reiterated this week that they need more conclusive evidence of easing price pressures before considering rate cuts.

This cautious stance puts the Fed at odds with the Trump administration, which sees the strong productivity numbers as a clear reason to lower borrowing costs. Administration officials, buoyed by hopes of further gains from artificial intelligence, argue that the central bank should act now.

However, Fed policymakers have made it clear they believe it is too early to factor a sustained productivity boom into their monetary policy outlook, suggesting rates will likely remain on hold.

Fed Officials Urge Patience, Citing Inflation Risks

St. Louis Fed President Alberto Musalem articulated the central bank's cautious view, stating that while he is hopeful for a new era of higher productivity, it is too soon to make that call.

"It's certainly too early to outsource our job of bringing inflation back towards 2%," Musalem said during a webcast. "I see little reason for near-term further easing of policy."

He described the Fed's current policy rate of 3.50%-3.75% as roughly neutral. In his view, a rate cut would only be necessary if the resilient labor market starts to weaken or if inflation falls back to the 2% target faster than anticipated.

Recent data shows underlying consumer inflation held steady at 2.6% year-over-year in December. However, the report also revealed a sharp monthly jump in food prices—the largest in over three years—alongside persistent housing inflation.

The White House View: "Cut Interest Rates, Meaningfully"

In response to the latest inflation data, President Donald Trump declared that there was "very low inflation" and urged the Federal Reserve to "cut interest rates, MEANINGFULLY."

This perspective is shared by key administration officials. Top economic adviser Kevin Hassett, a potential successor to Fed Chair Jerome Powell, and Fed Governor Stephen Miran have both publicly argued that the productivity trend will help moderate inflation and warrants lower borrowing costs. The productivity data itself is strong, showing a 4.9% year-over-year jump in the third quarter of last year, which helped drive down unit labor costs to nearly 2%.

The market does not expect the Fed to cut rates at its upcoming January 27-28 meeting. Speculation is growing that the central bank may keep rates on hold for the remainder of Powell's term, which ends in May. The policy debate has intensified amid mounting tension between Trump and Powell, who disclosed on Sunday that he had been threatened with a criminal indictment over congressional testimony from last June.

Echoes of the 1990s: A Flawed Comparison?

The current policy dilemma has drawn comparisons to the mid-1990s, when then-Fed Chair Alan Greenspan correctly anticipated that rising productivity would help contain inflation, allowing him to resist calls for rate hikes.

However, some Fed officials believe the parallel is imperfect. New York Fed President John Williams, who was an economist at the central bank's board during that period, acknowledged the similarities but pointed to key differences.

Figure 1: New York Fed President John Williams argues that while productivity gains are welcome, the economic conditions of the 1990s are not fully comparable to today's.

Williams noted that the 1990s benefited from other disinflationary forces, such as expanding globalization, which are not present today. "I love positive shocks and supply shocks," he said, "but I think there were other factors that were helping keep inflation low" that are not the same now.

"I do not think the parallels are complete," Williams concluded, aligning with Musalem's view that there is no compelling reason to cut rates in the near term.