USTR Nominee Greer’s Trade Priorities: Market Access, Biofuels, and China Review

— Stocks, bonds and the dollar fluctuated in narrow ranges as traders looked ahead to the monthly U.S. jobs report out later this morning to help decide the path for interest rates.

On Thursday, U.S. stock markets close mixed (S&P 500 +0.4%, Dow -0.3%, Nasdaq +0.5%).

— India lowers interest rates for first time in five years, according to newly appointed Governor Malhotra. The move signals a shift in monetary policy aimed at boosting economic growth.

— Oil prices rise in early trade after the U.S. imposed sanctions on an international network facilitating the shipment of Iranian crude to China to ramp up pressure on the Middle Eastern country. Brent crude is up 0.9% at $75 a barrel, while WTI rises 0.8% to $71.18 a barrel.

Oil prices on Thursday declined as Trump reaffirms U.S. production push. Oil prices fell Thursday after President Donald Trump reiterated his commitment to increasing U.S. oil production, unsettling traders. Brent crude declined $0.32 (0.4%) to $74.29 per barrel, while WTI dropped $0.42 (0.6%) to $70.61. Earlier gains, driven by Saudi Arabia raising crude prices for Asia and new U.S. sanctions on Iranian oil shipments, reversed after Trump’s comments. A larger-than-expected 8.7-million-barrel rise in U.S. crude inventories added further downward pressure. Market volatility is expected to continue, with Trump’s policies on tariffs, sanctions, and energy influencing prices. Analysts remain skeptical about whether U.S. producers will expand drilling despite Trump’s push to lower energy costs.

— Budget battle heats up. Next week is shaping up to be a high-stakes showdown over competing budget plans. House Republicans, led by Speaker Mike Johnson (R-La.), are scrambling to finalize their one-bill proposal, with details expected Monday. Meanwhile, Senate Budget Chair Lindsey Graham (R-S.C.) is pushing ahead with a two-bill approach, with key GOP senators set to discuss the strategy with former President Donald Trump at Mar-a-Lago this evening. Graham’s budget resolution includes $150 billion for defense, another $150 billion for border security and energy policy changes. This amount would be fully offset. House proposals aim to extend the 2017 tax cuts. One of the biggest sticking points for House Republicans has been the level of spending cuts. House GOP leadership had initially proposed $500 billion to $1 trillion, but conservative hardliners have been pushing for at least $2 trillion or more in spending reductions to maintain budget neutrality. There reportedly is consensus that they will need to cut more than $1 trillion in order to get conservative hardliners on board. House Budget Committee action is tentatively set for Tuesday but could slip later in the week.

Of note: Republicans agree that Trump’s 2017 tax cuts should be permanently extended. Trump also laid out several other tax priorities he wants to see in the package, including eliminating taxes on tips, Social Security benefits and overtime pay. And Trump threw in new tax priorities like getting rid of sports team owners’ tax breaks.

Trump told Republican lawmakers that he wants to eliminate the carried interest tax break, a long-standing benefit for private equity fund managers and venture capitalists. His goal is to use the revenue from this change to help offset a multi-trillion-dollar tax cut that Republicans aim to pass before the end of the year. The carried interest loophole allows fund managers to pay lower capital gains tax rates (20%) on their earnings rather than the higher income tax rate (37%). Given past Republican resistance, it remains unclear whether he will succeed this time.

— More Senate votes next week on Trump nominees. Expect the Senate to move through several nominations throughout the week, including Tulsi Gabbard for director of national intelligence, Robert F. Kennedy Jr. for HHS secretary, Howard Lutnick for secretary of Commerce, Brooke Rollins for USDA secretary and Kelly Loeffler to be administrator of SBA.

— Vought confirmed as OMB director in party-line Senate vote. The Senate confirmed Russ Vought as the Director of the White House Office of Management and Budget (OMB) in a 53-47 party-line vote on Thursday. Vought, a key figure behind the conservative Project 2025, faced strong opposition from Democrats, who attempted to delay the vote with an all-night protest. As each Democratic senator cast their vote, they stood by their desk in the chamber and named a program or project in their state that may be impacted by OMB’s attempted freeze of federal funds. “Why doesn’t government run like a business?” asked Sen. Brian Schatz (D-Hawaii) in one floor speech. “Let me tell you why: because if you ran government like a business, you would shut down every rural hospital.”

Previously serving in the role during the first Trump administration, Vought’s views on executive budgetary power have drawn scrutiny, especially amid the Elon Musk-led Department of Government Efficiency’s aggressive agency cuts. House Speaker Mike Johnson (R-La.) praised his confirmation, calling him a “conservative force” against the establishment. “The president ran on the notion that the Impoundment Control Act is unconstitutional,” Vought told lawmakers in his confirmation hearing last month before the Budget Committee. “I agree with that.”

— USTR nominee Greer’s trade priorities: Market access, biofuels, and China review. Jamieson Greer, President Trump’s nominee for U.S. Trade Representative, outlined key trade policy goals, focusing on agricultural markets, biofuels, and China’s Phase 1 trade deal.

· Agricultural markets: Greer wants to open new markets for U.S. agricultural exports, targeting high tariff barriers in countries like India and Turkey. He specifically highlighted countries like India and Turkey as having high tariff barriers that need to be addressed. His goal is to ensure that American agricultural producers, whom he considers the most competitive in the world, have access to markets that match their competitiveness. “For many decades, we have had a trading system where the United States opens its market over and over again, and others do not,” Greer told lawmakers.
· China review: He pledges to reassess China’s compliance with the Phase 1 trade deal, which fell short of purchase commitments. By the end of 2021, China had only met about 58% of its purchase commitments under the agreement.
· Biofuels: Greer seeks to lower tariff barriers, particularly addressing Brazil’s ethanol tariffs and the UK’s potential restrictions on crop-based biofuels.
o Brazil has imposed an 18% tariff on American ethanol, while Brazilian ethanol receives duty-free treatment in the U.S. This imbalance has been a point of contention for U.S. producers.
o UK: Despite increased U.S. ethanol exports to the UK following its E10 mandate, there are concerns about future restrictions on crop-based biofuels starting in 2027.
o Sustainable Aviation Fuel (SAF): With the global SAF market expected to grow significantly, Greer and U.S. lawmakers see an opportunity for American biofuel feedstocks to meet this demand.
· Trade strategy: His approach leans toward targeted trade policies rather than sweeping tariffs, drawing from his experience with the U.S.-Mexico-Canada Agreement. This aligns with concerns from some industry representatives about potential retaliation if the U.S. implements across-the-board tariffs.

— China makes another trade move against U.S. firms. China’s gov’t added two American firms — biotech company Illumina and fashion retailer PVH Group, owner of Calvin Klein and Tommy Hilfiger — to its unreliable entities list, saying they “violated normal market trading principles.” The move significantly hampers the companies’ ability to do business in China.

Morgan Stanley economists think President Trump will add additional tariffs on Chinese products, above the additional 10% tariffs announced this week, given that on the campaign trail he vowed to go as high as 60%. “We still expect the U.S. will levy more tariffs on China later this year as part of its larger trade policy goals,” they said in a note to clients. That will likely invite more retaliation from China.

— Veterinarian and health expert expected to lead White House Pandemic Office. The Trump administration reportedly has appointed Gerald Parker, a veterinarian and former top U.S. health and security official, to lead the White House Office of Pandemic Preparedness and Response Policy. The office was created by Congress in 2022 following the Covid-19 pandemic. The White House has not yet commented on the appointment, which was first reported by CBS News. With over 30 years of experience in global health, national security, and pandemic preparedness, Parker has held key roles in the Departments of Health and Human Services, Homeland Security, and Defense. Most recently, he was the associate dean for Global One Health at Texas A&M, advising lawmakers on the U.S. bird flu outbreak.

— Judge limits DOGE Treasury access amid controversy. A federal judge has temporarily restricted the Department of Government Efficiency’s (DOGE) access to sensitive Treasury payment records, following concerns over improper data access. The ruling comes as Marko Elez, a key Musk-affiliated DOGE member, resigned after reports surfaced linking him to offensive social media posts. U.S. District Judge Colleen Kollar-Kotelly issued a restraining order limiting DOGE’s access to the Treasury Department’s Bureau of Fiscal Service, which processes 90% of federal payments. The order follows a lawsuit from government employee unions alleging Treasury Secretary Scott Bessent improperly granted Elon Musk’s team access to sensitive financial data (see related item below). Only two DOGE-affiliated special government employees — Tom Krause and Marko Elez — were granted read-only access. They cannot modify data or share information outside the Treasury.

Marko Elez, one of the two employees granted access, resigned after reports from the Wall Street Journal linked him to a deleted social media account featuring racist and extremist posts. These included calls for a “eugenic immigration policy” and the repeal of the Civil Rights Act. Elez, a former Musk company employee, has not responded to inquiries.

The developments have sparked concerns about Musk’s influence in government efficiency initiatives and the vetting of his appointees. Treasury Secretary Bessent defended DOGE, while Musk claimed on social media that fraud persists within Treasury payments. The restraining order remains in effect until Feb. 24, 2025.

— Unions sue Trump administration over USAID shutdown. Unions representing government employees filed a lawsuit against the Trump administration on Thursday to block efforts to dismantle the U.S. Agency for International Development (USAID). The lawsuit follows actions by Elon Musk’s Department of Government Efficiency (DOGE), which locked staff out of internal systems and placed thousands on administrative leave. The administration reportedly slashed USAID’s workforce from over 10,000 to fewer than 300 employees. The American Foreign Service Association (AFSA) and the American Federation of Government Employees (AFGE) are seeking an injunction to halt the agency’s shutdown, citing a global humanitarian crisis and risks to U.S. national security. The suit demands the restoration of USAID’s operations, including staffing, funding, and digital infrastructure.

— Iran’s supreme leader rules out talks with Donald Trump. Ayatollah Ali Khamenei says negotiations President Trump “neither wise, nor prudent, nor dignified” after Trump said he wanted a new nuclear deal with the Islamic Republic. Khamenei did not rule out talks with the U.S. but said that Trump chose to tear up the nuclear deal and Washington violated the agreement by not fully implementing sanctions relief.

— Global food prices decline in January on cheaper sugar and oils. Global food prices dropped by 1.6% in January, driven by falling sugar and vegetable oil costs, according to the UN’s Food and Agriculture Organization. Sugar prices fell 6.8% due to improved supply conditions in Brazil and India’s decision to resume exports. Vegetable-oil prices dropped 5.6%, led by declines in palm and rapeseed oils. Meat prices also dipped 1.7%, while cereal prices edged up 0.3%. However, dairy prices surged 2.4%, with cheese prices rising sharply. Despite the monthly decline, food prices remain 6.2% higher year-over-year.

— Panama’s leader stands firm against Trump’s Canal takeover threat. Panamanian President José Raúl Mulino, a conservative and staunch ally of the U.S., now finds himself in an unexpected position — resisting President Trump’s push to reclaim control of the Panama Canal. Mulino, a seasoned lawyer and former anti-Noriega activist, has vowed that the canal will remain under Panamanian control despite mounting pressure from Washington.

As Trump makes the canal a priority, Mulino faces a crucial test in a call today with Trump. While Panama has already made concessions, including restricting Chinese influence and cooperating on border security, Mulino’s only leverage lies in legal arguments, diplomacy, and a strategic appeal to Trump’s interests, the Wall Street Journal reports (link). It says that while Panama remains one of the U.S.’s closest allies in the region, Mulino’s leadership will be tested as he navigates this high-stakes geopolitical showdown.

— DOJ freezes funding to sanctuary cities amid immigration crackdown. U.S. Attorney General Pam Bondi has ordered the Department of Justice (DOJ) to halt federal funding to sanctuary cities — jurisdictions that protect undocumented immigrants from arrest — until a full review is completed. In a memo, Bondi stated that any agreements violating federal law or contributing to waste, fraud, or abuse would be terminated, and funds could be clawed back if necessary.

Bondi also directed the DOJ to investigate potential obstruction of federal immigration operations and assess grants supporting services for undocumented immigrants. The move echoes former President Trump’s attempt to block funding to sanctuary cities, which courts struck down as unconstitutional.

Meanwhile, the U.S. House Oversight Committee plans a March 5 hearing featuring mayors from Boston, Chicago, Denver, and New York City to examine the impact of sanctuary policies.

Additional DOJ orders from Bondi include a review of prosecutions related to Trump and the Jan. 6 Capitol breach, aiming to assess potential political bias in past DOJ actions.

— USDA grant freeze sparks congressional inquiry. Democratic lawmakers are pressing USDA for answers regarding a sudden funding freeze that has halted payments from major programs, including grants already awarded under the Partnerships for Climate-Smart Commodities. Democratic Reps. Angie Craig (Minn.), Chellie Pingree (Maine), and Sanford Bishop (Ga.) expressed deep concerns over the unexpected stoppage, which has affected USDA’s National Institute of Food and Agriculture and multiple organic initiatives. While funding portals for some organic programs have reportedly reopened, climate-smart grant recipients remain uncertain about their status.

— NWS weather outlook: Moderate to heavy snow across parts of the Northern Intermountain Region and the Northern Rockies... ...Moderate to heavy snow from the Northern High Plains to the Lower Great Lakes and moderate to heavy snow over parts of the Northeast... ...Rain/freezing rain from the Ohio Valley to the Mid-Atlantic on Saturday.

(NWS)