The Big Story 

Glimmers of optimism surrounding President Trump’s tariffs quickly faded Tuesday as the White House dug in on the threat of new levies.

© Greg Nash

As the markets erased their small morning gains, Republican lawmakers grew increasingly frustrated with what they see as mixed messages coming from administration officials.

The mood early Tuesday was more upbeat than in recent days as the market showed signs of life for the first time in days on the heels of Treasury Secretary Scott Bessent saying Trump is ready to negotiate with trading partners.

Trump helped matters by saying he had a “great call” with acting South Korean President Han Duck-soo and that South Korean officials are traveling to the U.S., while Bessent said Japanese and Vietnamese officials are also ready to strike deals.

That feeling did not last.

Trump doubled down on adding 50 percent tariffs on top of the 54 percent rate he announced for China last week, bringing the tariff set to hit at 12:01 a.m. EDT Wednesday to 104 percent and escalating the trade war between the two nations.

The Dow Jones Industrial Average fell more than 300 points, with the S&P 500 and the Nasdaq composite each posting losses in excess of 1.5 and 2 percent, respectively. 

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Welcome to The Hill’s Business & Economy newsletter, I'm Aris Folley — covering the intersection of Wall Street and Pennsylvania Avenue.

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Tax Watch 

Where does the parliamentarian stand on the ‘current policy baseline'?

Republicans are plowing ahead with their plan to advance a tax cut and spending bill, with Speaker Mike Johnson (R-La.) encouraging hardliners in the House to adopt a Senate budget resolution that has a much lower floor for spending cuts.

The momentum raises questions about whether the Senate parliamentarian has approved Republicans’ preferred accounting assumption for the bill known as the “current policy baseline,” which allows Republicans to ignore the $4 trillion to $5 trillion cost of extending their tax cuts.

The Senate parliamentarian’s office could not be reached for comment.

“If [the parliamentarian] had provided a derogatory ruling with respect to the current policy baseline, Senate Democrats would know that,” Rohit Kumar, a former top aide to former Senate Majority Leader Mitch McConnell (R-Ky.), told The Hill. “If they knew that, they would not be holding that information back.”

Republicans have also signaled they plan to bypass the parliamentarian.

— Tobias Burns

The Ticker 

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What People Think 

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