Musk stated that the goal of the "Department of Government Efficiency" is to "reasonably adjust" the government, and he is investigating federal employees who have high net worth despite low salaries, as they may be "enriching themselves at the expense of taxpayers".

Author: Luozilin

Source: Caixin

1. Musk Appears in the Oval Office, Defends DOGE with Trump

On February 11, local time, Musk, the current "Secretary of the Department of Government Efficiency" (DOGE), held his first press conference since joining the Trump administration, together with US President Trump in the Oval Office. At the same time, Trump signed an executive order on the spot, instructing federal agencies to coordinate with the "Department of Government Efficiency" led by Musk, in order to reduce the size of the federal workforce and limit hiring for critical positions.

Regarding the external accusations of "maliciously taking over" the government in an opaque manner, Musk responded that the people voted for major government reforms, and the people will get what they voted for, which is the essence of a democratic system; and the actions of the "Department of Government Efficiency" are "the utmost transparency".

Musk stated that the goal of the "Department of Government Efficiency" is to "reasonably adjust" the government, and he is investigating federal employees who have high net worth despite low salaries, as they may be "enriching themselves at the expense of taxpayers", and the federal government currently does not need so many people working for it. He claimed that the "Department of Government Efficiency's" efforts to cut spending are not "harsh or radical", but are necessary for the United States as a nation to maintain solvency.

Regarding whether his government work will conflict with his business interests, Musk responded that all actions of the "Department of Government Efficiency" are completely open, and he fully expects to be under constant scrutiny like a "daily audit", but at the same time he stated that the "Department of Government Efficiency" will make mistakes but will also correct them quickly. Trump also responded to this issue, saying that he will not let Musk get involved in areas where there are conflicts of interest.

2. Powell: The Fed is in No Rush to Cut Rates

On February 12, local time, Federal Reserve Chairman Powell said at the semi-annual monetary policy hearing that the US economic situation is quite good, the Fed hopes to make more progress in controlling inflation, the Fed's policy rate is in a good position, and there is no reason to rush to further lower interest rates.

From September to December 2024, the Fed cut interest rates by a total of 100 basis points over three consecutive policy meetings. In January 2025, the Fed paused the rate cuts, saying it would observe future economic data before making a decision.

At the hearing, Powell defended the rate cuts in 2024, saying they were a necessary adjustment in the Fed's policy stance, taking into account the improvement in inflation and the cooling of the labor market.

A senator asked Powell why the Fed cannot control long-term interest rates. Powell said the reasons for the persistently high long-term interest rates are not particularly closely related to the Fed's policies.

At the hearing, a senator warned that the DOGE team led by Musk has access to the Treasury's payment system, which could have an impact.

Powell explained that at the federal government's payment system, the Fed only acts as the Treasury's "Fiscal Agent", not deciding how and why to spend, but only processing payments. Powell said he believes the federal government's payment system is secure.

In answering questions, Powell hinted that he does not want to get involved in partisan disputes. He said that if the Fed focuses only on its own work and stays away from politics, it can formulate better policies and reduce inflation.

3. The US Will Impose 25% Tariffs on Imported Steel and Aluminum Starting March 12

On February 10, 2025, the Trump administration announced through a presidential proclamation the reinstatement of a 25% tariff on all imported steel, and an increase in the aluminum tariff from 10% to 25%. These tariffs will apply to goods entering the US for consumption or withdrawn from warehouse for consumption on or after March 12, 2025, and revoke the specific country exemptions and quota arrangements negotiated under the original Section 232 tariffs in 2018. As a result, all previously exempted or quota-managed countries - including Australia, South Korea, Canada, Mexico, Brazil, Japan, the UK and the EU - will now be subject to a 25% tariff on their steel and aluminum exports to the US.

The law firm Holland&Knight analyzed that this decision is expected to have far-reaching implications, not only for US manufacturers dependent on imported steel and aluminum, but also for global trade relations.

On February 11, local time, a White House official said that US President Trump plans to impose a 25% tariff on steel and aluminum imports from Canada, after the Trump administration had previously threatened a 25% across-the-board tariff on Canadian imports. If these planned measures are implemented, these two tariffs will be stacked on top of each other, resulting in a 50% tariff on Canadian steel and aluminum exports to the US.

4. US Commerce Secretary Nominee Raimondo: Considering "Trade Tools" Against European ESG Rules

According to a Bloomberg report, US Commerce Secretary nominee Raimondo said at her January 29 confirmation hearing that the US may use "trade tools" to retaliate against European environmental, social and governance (ESG) regulations that impact US companies.

Raimondo specifically mentioned the EU's Corporate Sustainability Due Diligence Directive (CSDDD) and said the CSDDD imposes a huge burden on US companies.

Under the CSDDD, if a company's value chain is found to have ESG violations, the company will face litigation risks. Like most of the EU's ESG regulations, the CSDDD is designed to require large non-EU companies to comply if they target European customers.

At the hearing, Raimondo stated that she will consider using all available trade tools under the Commerce Department's purview.