Musk stated that the goal of the 'Government Efficiency Department' is to 'rationally adjust' the government, and he is investigating federal employees who, despite low salaries, have high net worths, suggesting they might be 'enriching themselves at the taxpayers' expense.'
Article author: Luo Zilin
Source: (Caixin)
1. Musk appears in the President's Office to jointly defend DOGE with Trump.
On February 11 local time, Musk, the current Secretary of the 'Government Efficiency Department' (DOGE), held his first press conference since joining the Trump administration alongside President Trump in the Oval Office. At the same time, Trump signed an executive order directing federal agencies to coordinate with Musk's 'Government Efficiency Department' to reduce the federal workforce and limit hiring to critical positions.
In response to accusations of maliciously taking over the government in an opaque manner, Musk stated that the people voted in support of significant government reforms, and they will receive what they voted for; that is the essence of a democratic regime; the actions of the 'Government Efficiency Department' represent 'maximum transparency.'
Musk stated that the goal of the 'Government Efficiency Department' is to 'rationally adjust' the government, and he is investigating federal employees who, despite low salaries, have high net worths, suggesting they might be 'enriching themselves at the taxpayers' expense,' while the current federal government does not need so many people working for it. He claimed that the efforts of the 'Government Efficiency Department' to cut spending are not 'severe or radical,' but necessary for 'the United States as a country to maintain solvency.'
Regarding whether his government work would create conflicts of interest with businesses, Musk responded that all actions of the 'Government Efficiency Department' are completely transparent, and he fully expects to face continuous scrutiny like 'routine inspections,' but also stated that the 'Government Efficiency Department' would make mistakes but would correct them quickly. Trump also responded to this issue, stating that he would not allow Musk to be involved in areas of conflicting interests.
2. Powell: The Federal Reserve is not in a hurry to cut interest rates.
On February 12 local time, Federal Reserve Chairman Powell stated at the semi-annual monetary policy hearing that the economic situation in the United States is quite good, and the Federal Reserve hopes to achieve more progress in controlling inflation. The Federal Reserve's policy interest rates are in a good position, and there is no reason to rush to lower rates further.
From September to December 2024, the Federal Reserve will consecutively lower interest rates in three meetings, totaling a reduction of 100 basis points. In January 2025, the Federal Reserve paused the rate cuts, stating it would observe future economic data before making further decisions.
At the hearing, Powell defended the rate cuts in 2024 as a necessary adjustment in the Federal Reserve's policy stance to account for improvements in inflation and a cooling labor market.
A congressman asked Powell why the Federal Reserve cannot control long-term interest rates. Powell stated that the reason long-term interest rates remain high is not particularly closely related to the Federal Reserve's policies.
At the hearing, a congressman warned that the DOGE team led by Musk has access to the Treasury's payment system, which could have implications.
Powell explained that the Federal Reserve acts as the 'Fiscal Agent' for the Treasury in the federal government's payment system, without deciding how and why to spend, merely processing payments. Powell stated that he believes the federal government's payment system is secure.
In response to questions, Powell hinted that he does not want to get involved in partisan disputes. He stated that if the Federal Reserve focuses solely on its own work and stays away from politics, it can formulate better policies and reduce inflation.
3. The United States will impose a 25% tariff on imported steel and aluminum starting March 12.
On February 10, 2025, the Trump administration announced via presidential proclamation the reinstatement of a 25% tariff on all imported steel and raised the tariff on aluminum from 10% to 25%. These tariffs apply to goods entering the United States for consumption or withdrawn from warehouses for consumption on or after March 12, 2025, and revoke specific country exemptions and quota arrangements established in the original Section 232 tariff negotiations in 2018. Therefore, all previously exempted or quota-managed countries—including Australia, South Korea, Canada, Mexico, Brazil, Japan, the UK, and the EU—will now face a 25% tariff on their steel and aluminum exports to the United States.
The American law firm Holland & Knight analyzes that this decision is expected to have far-reaching impacts, not only on American manufacturers relying on imported steel and aluminum but also on global trade relations.
On February 11 local time, a White House official stated that President Trump plans to impose a 25% tariff on steel and aluminum imported from Canada, after previously threatening to impose a comprehensive 25% tariff on Canadian imports. If these planned measures are implemented, these two tariffs would be cumulative, resulting in a 50% tariff on Canadian steel and aluminum exports to the US.
4. US Secretary of Commerce nominee Lutnick: Considering 'trade tools' against European ESG rules.
According to Bloomberg, Lutnick, the nominee for US Secretary of Commerce, stated at the confirmation hearing on January 29 that the US may use 'trade tools' to retaliate against European environmental, social, and corporate governance (ESG) regulations impacting American companies.
Lutnick specifically mentioned the EU's Corporate Sustainability Due Diligence Directive (CSDDD), stating that it imposes a significant burden on American companies.
According to the CSDDD, if a company's value chain is found to violate ESG conditions, the company will face litigation risks. Like most ESG regulations in the EU, the CSDDD is designed to require large companies outside the group to comply if they target European clients.
Lutnick stated at the hearing that he would consider using all available trade tools at the Department of Commerce as appropriate.
