Financial markets have looked better. But for now, Republicans in the House and Senate are taking a wait-and-see approach to the Trump administration’s economic agenda.
Markets dove on Monday after trending downwards in recent weeks. The reality of a trade war is weighing on investors, who also see risks of a recession building in labor markets and beyond.
For now, most congressional Republicans are holding back on economic critique for President Donald Trump.
“I’m not going to give him any advice on that right now,” Sen. John Cornyn (R-Texas) said to reporters Monday night after being asked about the market’s downward trend. Cornyn deferred to the wisdom of Cabinet members like Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick, “who’ve done very well in the market – see what their conclusions are,” Cornyn said.
The Trump administration’s approach to tariffs appears to be fueling much of the market’s worries. That’s not lost on GOP senators. Senate Majority Leader John Thune has been openly wary of tariffs, and he continued to signal those worries Monday night.
“You all know my views on tariffs,” Thune told reporters. “I’m obviously in a different place on that. But I’m hoping the tariffs, when they have achieved their stated objective, will be temporary in nature.”
Others are more strident, to put it mildly. Sen. Rand Paul (R-Ky.) posted a very red infographic of the Dow Jones, Nasdaq and S&P 500 to X on Monday night, saying:
“The stock market is comprised of millions of people who are simultaneously trading. The market indexes are a distillation of sentiment. When the markets tumble like this in response to tariffs, it pays to listen.”
Most Republicans we spoke to said it was too early to determine whether the U.S. economy was poised to enter a recession. Sen. James Lankford (R-Okla.) said talk of a recession was “premature, to say the least.”
“A couple of days, a couple of weeks even, doesn’t drive the market forever, as we know through history on that,” Lankford added.
Other Republicans are trying to take solace from conversations with policymakers like Federal Reserve Chair Jay Powell.
“As Powell was saying, a lot of the fundamentals, in his view, are sound. I would say that is writ large probably true,” Rep. Bill Huizenga (R-Mich.) said. “I think the long-term effects are going to be positive, where we’re going, because it’s less regulation, it’s better energy policy, it’s the tax reform that we’re doing.”
Meanwhile in crypto: The Senate Banking Committee is moving ahead with a markup of major crypto legislation this week. A bill to regulate stablecoins will be the main draw during Thursday’s session, though the panel will also weigh an industry-backed bill that would eliminate the use of “reputational risk” as a component of bank supervision.
The GENIUS Act, led by Sen. Bill Hagerty (R-Tenn.), has undergone some significant changes since being introduced as a discussion draft earlier this year. The latest version of the bill carves out stablecoin projects that generate interest from the definition of “payment stablecoin.” There are also new requirements for anti-money laundering controls and sanctions compliance features that will need to be finalized by the Treasury Department. Read the latest draft here.
This draft had a lot of input from Democrats, including Sens. Kirsten Gillibrand (N.Y.), Mark Warner (Va.) and Ruben Gallego (Ariz.). But we don’t expect progressives like Sen. Elizabeth Warren (Mass.) to sign on without more significant amendments.
Meanwhile in tax: Bessent made an appearance at House Ways and Means Republicans’ full-day meeting on Monday to talk through tax bill plans. GOP members of the committee huddled through most of the day and are set to pick back up Wednesday.
Bessent is taking on a notable voice in the tax debate. He’s called for the 2017 Trump tax cuts to be extended permanently in the GOP’s tax bill. And Bessent and National Economic Council Director Kevin Hassett are holding regular meetings with the top Republican leaders and tax writers.
