Farmers Press USDA Leadership as SDRP2 Interpretation Sparks Backlash
U.S. intercepts second merchant vessel near Venezuela as Trump escalates sanctions enforcement | UP/Norfolk Southern STB filing pitch
Link: Report: SDRP Phase 2 Design Leaves Many High-Coverage Farmers
with No Path to Payments
Link: USDA Reviewing Possible Four Inspection Sites Re: Allowing Mexican Cattle Back into U.S.
Link: Chinese Researcher Charged with Smuggling E. coli Into U.S., Raising Biosecurity Concerns
Link: Video: Wiesemeyer’s Perspectives, Dec. 20
Link: Audio: Wiesemeyer’s Perspectives, Dec. 20
Updates: Policy/News/Markets, Dec. 20, 2025
UP FRONT— Holiday shutdown shifts USDA Export Sales releases: USDA’s Dec. 24–26 closure is pushing back FAS weekly export sales report publication dates (with several weeks re-slotted into late December and early January), while daily sales postings will continue on the normal next-day basis.— Farmers press USDA leadership as SDRP2 interpretation sparks backlash: A dispute over USDA’s Stage 2 disaster aid guidance is escalating, with producers and the crop insurance industry arguing the agency’s approach deviates from congressional intent — raising pressure on Secretary Brooke Rollins and Deputy Secretary Stephen Vaden to reset the policy or prompting House and Senate Agriculture leaders to pursue a narrow legislative fix.— Trump presses insurers to cut rates as ObamaCare subsidies lapse: President Trump says he’ll summon major insurers to push premium reductions as enhanced ACA subsidies expire — risking sharp 2026 premium hikes for millions — while the industry argues premiums track underlying medical costs; the issue is poised to be a major early-2026 political and legislative fight.— USTR slams EU tech rules, flags stalled India talks: USTR Jamieson Greer is hardening rhetoric toward the EU over digital regulations affecting U.S. tech firms and signaling frustration with India talks that haven’t produced a deal — suggesting both disputes could drag into 2026 with retaliation still on the table.— Putin says Russia holds ‘strategic initiative,’ sets hard line on Ukraine peace: Putin claims battlefield momentum, praises Trump’s outreach, but reiterates maximalist conditions — especially territorial demands and “root causes” — underscoring why a near-term ceasefire remains unlikely.— Financial markets note: With year-end liquidity thinning, markets head into a holiday-shortened week with limited catalysts — though investors still get the next Q3 GDP estimate and durable goods data amid early closes and the Christmas holiday shutdown.— Delaware court reinstates Musk pay package: Delaware’s Supreme Court revived Elon Musk’s massive Tesla compensation plan, reversing a prior lower-court decision and reopening a major governance and pay precedent fight.— RealAgriculture beef market update: Cattle markets are seasonally quiet as packers pull back, attention turns to Cattle on Feed, and a key storyline is surging U.S. feeder exports to Canada — tightening dynamics amid regional feeder shortages and shifting cross-border supply flows.— Cotton AWP dips below 50 cents: The Adjusted World Price fell to 49.99¢/lb, creating an LDP signal and marking the first sub-50 reading since 2020 — an important benchmark for cotton loan dynamics.— Ag markets recap: Markets on Friday were mixed to lower with soy complex weakness and firmer cattle; weekly moves still reflect pressure in beans/products alongside resilience in some livestock contracts.— Colorado moves to shield seasonal streams after Supreme Court ruling: Colorado adopted sweeping state-level protections for intermittent waterways in response to Sackett-era limits on federal Clean Water Act reach, positioning the state as an early test case for “fill-the-gap” water regulation.— Oil prices inch higher as Venezuela risk and Ukraine war offset oversupply fears: Crude edged up on geopolitical risk headlines, but weak refining margins and persistent surplus concerns are keeping the upside capped heading into year-end.— U.S. intercepts second merchant vessel near Venezuela: Reports of a second interception reinforce the Trump administration’s tougher maritime enforcement posture tied to Venezuela sanctions, adding uncertainty to tanker flows even as details remain sparse.— USTR Greer signals shift on USMCA: Greer is dialing back pure exit talk and leaning into conditional support ahead of the 2026 review — keeping renegotiation, revision, or withdrawal options alive while emphasizing leverage over unresolved issues.— Mexico’s Sheinbaum frames 2026 as a trade-stability year: Sheinbaum is pairing tougher tariffs and industrial policy with explicit inflation “guardrails,” while downplaying USMCA renegotiation risk and signaling Mexico wants managed assertiveness — not destabilization — heading into the review year.— GOP appropriators set spending-cut line ahead of shutdown talks: Republican appropriators are unifying around a lower topline for unfinished FY 2026 bills, setting up a high-stakes negotiation with Democrats before the Jan. 30 funding deadline.— 2026 midterms take shape amid narrow margins and major deadlines: With razor-thin House control and a packed policy calendar (funding, health costs, skinny farm bill and farmer aid timing, tax/energy cliffs), both parties are entering 2026 with unusually high leverage — and little room for error.— Stefanik abandons N.Y. governor bid: Elise Stefanik is exiting the gubernatorial race (and not seeking re-election), clearing the GOP field around Bruce Blakeman but underscoring the steep climb against Hochul and reshuffling New York Republican strategy.— Sen. Cynthia Lummis to retire after one term: Lummis’ departure opens a deep-red Wyoming Senate seat and sets off early jockeying (with Rep. Harriet Hageman among potential contenders), while also removing a prominent GOP crypto advocate from the chamber.— GOP braces for potentially record wave of House retirements: A growing list of Republican exits — already outpacing the 2018 pace — adds structural risk to the party’s slim House majority as the 2026 cycle takes shape.— UP/Norfolk Southern merger pitch to STB: UP and NS are selling their “end-to-end” tie-up as service-improving and truck-competitive, touting synergies and gateway commitments, while the biggest scrutiny points will be enforceability, competition impacts, labor skepticism, and integration risk through 2026.— NWS outlook: The weather picture features targeted heavy rain risk in Northern California and notable snow threats in parts of the Upper Peninsula, Cascades, and Northern Rockies — potentially relevant for holiday travel and regional ag/logistics. TOP STORIES —Holiday shutdown shifts USDA Export Sales releasesFAS adjusts weekly reporting calendar as federal offices close Dec. 24–26 USDA will be closed Dec. 24–26, creating a five-day holiday weekend for federal workers and prompting adjustments to export sales reporting by the Foreign Agricultural Service. Unpublished Weekly Export Sales Reports will be released at 8:30 a.m. ET on the following revised schedule: Week ending Dec. 4, 2025: Monday, Dec. 22Week ending Dec. 11, 2025: Tuesday, Dec. 23Week ending Dec. 18, 2025: Wednesday, Dec. 31Week ending Dec. 25, 2025: Monday, Jan. 5, 2026Week ending Jan. 1, 2026: Thursday, Jan. 8, 2026 USDA said daily export sales reported under the Export Sales reporting program will continue to be published the day after the agency is notified, unaffected by the holiday closure. —Farmers press USDA leadership as SDRP2 interpretation sparks backlashGrowers and insurers say agency guidance strays from congressional intent, fueling calls for Secretary-level intervention or a legislative fix A growing controversy over how USDA has interpreted Congress’ intent for the second stage of the Supplemental Disaster Relief Program (SDRP2) is intensifying pressure on senior USDA leadership — and spilling onto Capitol Hill. Farmers and the crop insurance industry argue that agency guidance has narrowed eligibility and payment mechanics in ways lawmakers never intended, turning a disaster backstop into a new source of uncertainty as producers head into the 2026 crop year. At the center of the dispute is whether USDA’s SDRP2 framework aligns with the statutory goal of aiding producers after weather-driven losses that were not fully covered by insurance or earlier aid. Critics say the department’s interpretation — initially crafted largely at the subcabinet level, but then approved by political appointments —has produced outcomes that penalize insured producers and distort incentives, prompting calls for decisive intervention by USDA Secretary Brooke Rollins and Deputy Secretary Stephen Vaden. Pressure builds for Secretary-level course correction. Farm groups contend that SDRP2 rules effectively substitute bureaucratic judgment for congressional direction, particularly around loss calculations and interaction with crop insurance indemnities. The result, they say, is uneven treatment across crops and regions — undercutting the program’s credibility and complicating lender conversations at a fragile moment for farm balance sheets. That dynamic has sharpened demands for Rollins and Vaden to “own” the policy and recalibrate the guidance, rather than defer to determinations made lower in the political chain. Industry leaders argue that SDRP2 is too consequential to be governed by interpretive choices that weren’t vetted against congressional intent or operational realities in the insurance market. Crop insurance industry raises red flags. Insurers warn that the current approach risks eroding confidence in the public-private risk management system by blurring lines between indemnities and ad hoc disaster aid. If producers perceive that insured losses are effectively offset — or second-guessed — by SDRP2 formulas, participation and coverage choices could shift in ways that increase systemic risk. That concern has resonated with lawmakers who view crop insurance as the backbone of farm policy. Capitol Hill drawn in. The dispute is also putting pressure on the Agriculture committees to clarify Congress’ intent. Lawmakers from both parties have been urged to consider a narrow legislative fix to realign SDRP2 with the goals debated during passage — especially if USDA declines to revise its interpretation. Attention is turning to Rep. GT Thompson (R-Pa.) and Sen. John Boozman (R-Ark.), who face calls to convene oversight hearings or advance clarifying language early in the next legislative window. Supporters of a fix argue that Congress — not agency guidance — should resolve ambiguities that materially affect eligibility, equity, and interaction with crop insurance. What comes next. Absent swift action, critics warn that SDRP2 could become a flashpoint for broader dissatisfaction with disaster policy — compounding financial stress for producers already navigating volatile prices, high input costs, and tighter credit. Whether the resolution comes via a Secretary-level reset at USDA or a targeted legislative correction, stakeholders agree on one point: leaving the program in limbo risks undermining both farmer confidence and the integrity of the farm safety net. Of note: An email I received: “Thank you for giving a voice to struggling farmers. I spoke to a farmer in southern MN last night. His banker said they are considering not renewing as much as 20% of the ag loans in their portfolio. With the tight banking regulations, it is just too risky of a loan.” Comments: I know some in USDA are saying my coverage of this has been “relentless” and are not pleased. My audience over five decades has been farmers and the ag sector. I learned a long time ago in my logic classes in college (do they even teach that any longer?) that one of the secrets to life is to admit when you are wrong, and rectify it. That is the way you grow. As the adage says: Do not kill the messenger. At this stage in my life and career, I can take the heat. I hope officials keep cool and correct a wrong.—Trump presses insurers to cut rates as ObamaCare subsidies lapsePresident says he will summon health insurers in coming weeks to blunt premium spikes facing millions of Americans in 2026 President Donald Trump said Friday he plans to convene major health insurers in the coming weeks to push them to lower premiums, as millions of Americans brace for steep cost increases after Affordable Care Act/ObamaCare subsidies expire at year’s end. Speaking to reporters at the White House, Trump said he would call insurance executives together — possibly next week while he is at Mar-a-Lago or in early January once he returns to Washington — to demand that companies rein in prices. “I’m going to see if they get their price down, to put it very bluntly,” he said, arguing insurers are “making so much money” and should accept lower profits. The pressure comes as enhanced ObamaCare subsidies lapse without congressional action, setting the stage for premiums to more than double on average in 2026 for over 20 million Americans. The looming increases threaten to price coverage out of reach for many households already squeezed by higher costs for housing, food and utilities. Markets reacted quickly to Trump’s remarks, with shares of major insurers including UnitedHealth Group, Cigna and Humana giving up earlier gains. The industry pushed back, however, with AHIP — the main health insurance trade group — stressing that premiums largely reflect underlying medical costs and that margins and administrative expenses are regulated. AHIP CEO Mike Tuffin said insurers are “doing everything in their power to shield Americans from the high and rising costs of medical care.” Trump said he still prefers a system that provides direct subsidies to consumers, but suggested negotiated premium reductions could help keep the ObamaCare exchanges viable without dismantling them. “Maybe we can have reasonable health care without having to cut them out and let it all go awry,” he said. Congress adjourned this week without extending the subsidies, leaving lawmakers little time to act when they return in January. They have less than two weeks before the Jan. 15 open enrollment deadline to resolve the issue. Democrats have already made the looming premium hikes a central political issue, spotlighting them during last fall’s six-week government shutdown and signaling they will continue to press the issue in the new year. Meanwhile, Trump said Friday that his administration has struck a deal with nine pharmaceutical companies that is expected to lower prescription drug prices. The deal is in response to letters Trump sent to the leaders of 17 major drugmakers in July, urging them to offer most-favored-nation prices to Medicaid. Five of those leaders have already agreed to cut some of their prices. Patients who buy drugs through Medicaid (health care for the poor) or through a planned TrumpRx website (linking to manufacturers’ direct-buy pages) will be charged prices comparable to those in other rich countries. In exchange the companies received three-year exemptions from threatened tariffs. —USTR slams EU tech rules, flags stalled India talksGreer warns of retaliation over EU digital regulation and says months of negotiations with India have yet to deliver a dealThe Trump administration’s top trade official is sharpening his criticism of two major U.S. partners as difficult negotiations with both the European Union and India show little sign of resolution heading into the new year. U.S. Trade Representative Jamieson Greer said he raised “strong concerns” with the EU over regulations targeting American technology companies during talks Thursday with EU trade commissioner Maros Sefcovic, arguing the rules are discriminatory against U.S. firms. Greer said the measures — framed by Brussels as part of its digital regulatory push — disproportionately capture American companies despite supposedly neutral revenue thresholds. Greer’s office has gone further, threatening retaliation against the European Union over proposed digital taxes and regulations. U.S. officials have cited firms such as Accenture, Siemens and Spotify as potential targets if the dispute escalates. At the center of the clash are EU efforts to rein in major U.S. tech companies, including Alphabet, Meta Platforms and Amazon — rules critics say could slow innovation and function as a revenue grab. EU officials reject that view, with Sefcovic saying the bloc is determined to protect its “tech sovereignty.” Greer also expressed frustration with talks involving India, noting that negotiations launched earlier this year have yet to yield an agreement even as Washington has concluded deals with other partners. His remarks follow a recent call between Donald Trump and Indian Prime Minister Narendra Modi, the fourth such conversation since Trump imposed 50% tariffs on Indian goods in August. Despite the high-level engagement and renewed diplomatic efforts, Greer said trade negotiators have made limited progress in resolving core differences, suggesting that both the EU tech dispute and the India trade talks are likely to extend well into 2026.—Putin says Russia holds ‘strategic initiative,’ sets hard line on Ukraine peaceRussian leader praises Trump’s outreach but insists territorial demands and “root causes” must be addressed before war can endVladimir Putin, at his marathon year-end press conference, claimed Russian forces continue to advance in Ukraine, arguing Moscow has seized what he called the “strategic initiative” on the battlefield. Putin said any negotiations remain premature unless what Russia describes as the “root causes” of the conflict are resolved.Putin offered guarded praise for Donald Trump, saying Trump’s efforts to explore an end to the war were constructive. However, he made clear that Moscow’s conditions for peace remain unchanged, including demands that Ukraine cede significant portions of its eastern territory to Russia.The remarks underscored the gap between diplomatic overtures and Russia’s maximalist negotiating stance, signaling that any near-term ceasefire remains unlikely without major concessions from Kyiv. |
| FINANCIAL MARKETS |
—With just seven trading days remaining in 2025, markets are heading into a quiet, holiday-shortened stretch. No tier-one economic releases are scheduled for next week, and there are no major corporate earnings reports on the calendar. Trading on both the Nasdaq and the New York Stock Exchange will close early at 1 p.m. ET on Wednesday, with markets shuttered entirely on Thursday in observance of Christmas. Even so, investors will still receive a handful of economic updates during the abbreviated week, including the third-quarter GDP growth estimate from the Bureau of Economic Analysis on Tuesday and the Census Bureau’s durable goods report.
—Equities yesterday:
| Equity Index | Closing Price Dec. 19 | Point Difference from Dec. 18 | % Difference from Dec. 18 | Weekly Change |
| Dow | 48,134.89 | +183.04 | +0.38% | -0.67% |
| Nasdaq | 23,307.62 | +301.26 | +1.31% | +0.48% |
| S&P 500 | 6,834.50 | +59.74 | +0.88% | +0.10% |
—Delaware’s Supreme Court reinstated a $56 billion pay package for Elon Musk, boss of Tesla, after a seven-year legal fight. In 2024 a judge found that the world’s richest person had improperly influenced board members who came up with the record compensation. The high court found that Musk is entitled to a stock-based compensation plan worth $140 billion.
| AG MARKETS |
— RealAgriculture.com: Beef markets quiet into year-end as cross-border cattle flows reshape supply
Packers pull back amid margin pressure, U.S. feeder shortages contrast with surging exports to Canada, and cow-calf producers close 2025 on strong footing
In the final Beef Market Update of 2025 (link) from RealAgriculture.com, U.S. cattle markets have settled into a seasonally quieter tone as packers pull back after earlier buying at elevated price levels. Cash trade held roughly steady with live cattle around $228 in the North and dressed trade at about $357, while the Choice beef cutout dipped 85 cents to $357.25. Traders are now focused on the December 1 U.S. Cattle on Feed report, where placements are expected to be about 8% lower and on-feed inventories down about 2%, reflecting limited feeder cattle supplies and constrained flows from Mexico.
A notable shift in feeder cattle trade is underway between the U.S. and Canada. In September, nearly 65,000 U.S. feeder cattle entered Canada, up 34% from a year ago and the second-highest September total on record. With fourth-quarter data pending, the 2025 total has reached about 294,000 head, running 20% ahead of 2024 year-to-date and placing Canada on pace to surpass last year’s record of roughly 400,000 feeder cattle imports. RealAgriculture sources Gateway Livestock Exchange’s Anne Wasko in noting that strong demand from Western Canadian feedyards and favorable economics are driving this northward movement.
Domestic contrasts are evident — Texas is experiencing feeder cattle shortfalls linked to Mexican screwworm, and U.S. packers are processing fewer cattle amid negative margins. As Wasko notes, “when they’re not making money, they don’t kill cattle,” underscoring weaker slaughter activity.
Despite these pressures, cow-calf producers are finishing 2025 in robust shape: Alberta fed cattle prices are up about 20% from last year, and calves commanded roughly 50% higher prices during the fall run.
Overall, RealAgriculture highlights a tightly interwoven cross-border beef supply chain, with this year standing out particularly for cow/calf producers and shifting feeder cattle trade patterns.
—Cotton AWP dips below 50 cents. The Adjusted World Price (AWP) for cotton eased to 49.99 cents per pound, effective Dec. 19, down from 50.39 cents per pound and the first time under 50 cents since Sept. 11, 2020, when it was 49.77 cents. The AWP means there is a 2.01 cent LDP available.
—Agriculture markets yesterday:
| Commodity | Contract Month | Closing Price Dec. 19 | Change from Dec. 18 | Weekly Change |
| Corn | March | $4.43 3/4 | -$0.0075 | +$0.03 |
| Soybeans | January | $10.49 1/4 | -$0.03 | -$0.275 |
| Soybean Meal | January | $297.60 | -$0.80 | -$4.90 |
| Soybean Oil | January | 47.90¢ | -21 pts | -217 pts |
| Wheat (SRW) | March | $5.09 3/4 | +$0.02 | -$0.195 |
| Wheat (HRW) | March | $5.15 1/4 | -$0.0175 | -$0.0275 |
| Spring Wheat | March | $5.78 | +$0.05 | +$0.03 |
| Cotton | March | 63.75¢ | +24 pts | -8 pts |
| Live Cattle | February | $230.80 | +$2.40 | +$1.25 |
| Feeder Cattle | January | $345.60 | +$5.325 | +$6.50 |
| Lean Hogs | February | $84.50 | +$0.375 | -$0.025 |
| WATER POLICY |
—Colorado moves to shield seasonal streams after Supreme Court ruling
State adopts nation’s first broad water protections to counter limits imposed by the Sackett decision on the Clean Water Act
Colorado has approved first-of-its-kind state water protections designed to safeguard streams and wetlands that flow only seasonally — an explicit response to a 2023 U.S. Supreme Court ruling that narrowed the reach of the federal Clean Water Act.
The bipartisan Water Quality Control Commission (WQCC) voted to adopt the new rules after months of negotiations among environmental advocates, farmers, water providers, and industry groups. State officials and environmental leaders said the measures were necessary after the Supreme Court’s Sackett v. EPA decision limited federal protections to waters that flow year-round, leaving many Western waterways unregulated. “These rules create a robust program for protecting Colorado waters,” said Joro Walker, a senior attorney at Western Resource Advocates, noting the benefits for wildlife habitat, recreation, flood mitigation, water quality, and long-term water supplies.
The action comes as the Trump administration’s Environmental Protection Agency pursues further federal deregulation of water rules, increasing pressure on states to fill regulatory gaps. In Colorado, that pressure is acute: much of the state’s hydrology depends on seasonal snowmelt, meaning many streams and wetlands fall outside the Supreme Court’s narrower federal definition.
The new regulations were authorized by House Bill 1379, passed in 2024 with overwhelming bipartisan support. While the process nearly unraveled after 16 months of contentious hearings—and last-minute objections from industry groups—the commission ultimately moved forward during its December meeting.
Supporters argue the rules are critical as Western states confront long-term water scarcity, particularly in the Colorado River Basin, which supplies water to roughly 40 million people across seven U.S. states, Mexico, and tribal nations, and is heavily relied upon for agriculture.
By acting at the state level, Colorado has positioned itself as a national test case for how states may respond to federal limits on environmental regulation — especially in regions where water flows are intermittent but essential to ecosystems, farming, and municipal supplies.
| ENERGY MARKETS & POLICY |
—Friday: Oil prices inch higher as Venezuela risk and Ukraine war offset oversupply fears
Crude markets steady above recent lows, with traders balancing geopolitical risks against weak refining margins and persistent surplus concerns
Oil prices edged higher Friday as markets weighed the risk of potential supply disruptions from a proposed U.S. crackdown on Venezuelan oil shipments while awaiting clearer signals on efforts to end the war between Russia and Ukraine. Brent crude rose 65 cents, 1.1%, to $60.47 a barrel, while West Texas Intermediate gained 51 cents, 0.9%, to $56.66.
Despite the session’s gains, both benchmarks remained about 1% lower on the week, extending a softer trend after roughly 4% losses last week. The pullback reflects lingering concerns about global oversupply and subdued demand signals.
Refining margins continue to act as a drag on sentiment. U.S. gasoline futures recently slid to a four-year low, while crack spreads fell to their weakest levels since February, underscoring pressure across the downstream sector. Analysts say crude prices appear to be stabilizing just above recent lows as traders look for direction from Ukraine peace negotiations and clarity on how aggressively Washington may enforce restrictions on Venezuelan oil exports.
Geopolitical uncertainty remains a key driver. European leaders have agreed to provide additional financial support to Ukraine, while Moscow has shown little willingness to compromise on its terms for ending the conflict. Ukraine has also expanded attacks on Russian-linked oil shipping, raising risks to energy infrastructure tied to the war.
Uncertainty also surrounds enforcement of Washington’s proposed tanker blockade targeting Venezuela. While tensions have risen, some cargoes continue to move, and mixed signals on sanctions enforcement have capped the geopolitical risk premium. Venezuela accounts for roughly 1% of global oil supply, making it an important — but not dominant — factor in global balances. See the next item for an update on this situation.
In the U.S., supply-side questions resurfaced as the Permian Basin rig count fell to its lowest level since August 2021, a trend that could point to slower production growth if sustained.
—U.S. intercepts second merchant vessel near Venezuela as Trump escalates sanctions enforcement
Latest action follows December tanker seizure and comes amid administration’s warning of a de facto blockade on sanctioned oil shipments
U.S. military forces have stopped a second merchant vessel operating in international waters off the coast of Venezuela, according to reports citing two American officials familiar with the operation. The interception occurred Saturday and remains ongoing, with officials declining to disclose details about the ship’s cargo, ownership, or destination.
The move comes days after President Donald Trump announced what he described as a “blockade” aimed at oil tankers tied to sanctions violations as they enter or leave Venezuela. It also follows the Dec. 10 seizure of an oil tanker off Venezuela’s coast by U.S. forces, signaling an apparent intensification of maritime enforcement tied to the administration’s sanctions strategy.
Officials said the latest operation is still active and declined to comment publicly on its scope or objectives, underscoring the sensitivity surrounding the administration’s efforts to disrupt oil flows linked to sanctioned Venezuelan entities.
| TRADE POLICY |
—USTR Greer signals shift on USMCA: From exit talk to conditional support and renegotiation options
USTR recalibrates message on North American trade pact amid 2026 review, leaving options open for renegotiation, revision, extension — or even withdrawal
U.S. Trade Representative Jamieson Greer in recent days has moved away from earlier remarks suggesting a possible U.S. withdrawal from the United States–Mexico–Canada Agreement (USMCA) and has emphasized a more nuanced, conditional approach as the pact approaches its mandatory 2026 review.
In statements to lawmakers and in closed-door briefings, Greer conveyed that the administration will not automatically renew the USMCA but will pursue changes and improvements as part of the joint review process, conditioned on resolving a list of around 20 outstanding issues with Canada and Mexico. Greer told Congress that while the pact has delivered benefits and retains broad support, it is “not an unqualified success” and therefore must be scrutinized before any decision on extension or revision.
Earlier this month, in an interview with Politico, Greer indicated that President Donald Trump could consider withdrawing from the USMCA next year if terms were not satisfactory, underscoring that the built-in review mechanism was designed to allow revision or even exit.
At the same time, Greer has signaled openness to bilateral negotiations with Canada and Mexico within the broader framework, noting that economic relationships with each partner differ substantially and might warrant tailored approaches during the review.
These more recent comments suggest a shift from blunt exit framing toward a strategy that keeps multiple pathways on the table — including renegotiation or targeted reform — while still preserving the core trilateral trade architecture if changes can be secured.
—Mexico’s Sheinbaum frames 2026 as a trade-stability year
Mexico signals tariff flexibility, defends industrial policy, and downplays USMCA renegotiation risk ahead of 2026 review
President Claudia Sheinbaum used her Friday mañanera to preview her 2026 priorities with an unusually heavy emphasis on trade policy, tariffs, and Mexico’s positioning ahead of next year’s review of the United States–Mexico–Canada (USMCA) Agreement. Her message to markets and trading partners was twofold: Mexico will defend a more protectionist industrial strategy, but it intends to manage tariffs carefully to avoid inflation, supply-chain disruptions, or a destabilizing fight with Washington.
Tariffs as industrial policy — with inflation guardrails. Sheinbaum defended Mexico’s newly approved tariff regime, which raises duties as high as 50% on imports from countries without free-trade agreements, including China, India, South Korea, Indonesia, Brazil and South Africa. The measures take effect Jan. 1 and are designed to reinforce Plan México, her government’s 2025-30 development strategy.
Crucially, she framed the tariffs not as blunt protectionism but as targeted industrial policy. She stressed repeatedly that her administration does not want tariffs to trigger inflation or disrupt domestic production — a signal aimed squarely at manufacturers and financial markets.
Economy Secretary Marcelo Ebrard has estimated the tariff impact at just 0.2 percentage points on inflation. To support that claim, officials emphasized that the tariff schedule is skewed toward finished goods, while sparing many intermediate inputs that Mexican factories rely on to assemble and export products — particularly into the U.S. market.
Sheinbaum also underscored that Congress significantly softened the original tariff proposal she submitted in September after consultations with manufacturers and other stakeholders. Importantly, she noted that the Economy Ministry retains legal authority to lower tariffs further if inflationary pressures or supply disruptions emerge, reinforcing the message that policy remains adjustable.
Quiet diplomacy with Asia — but few near-term concessions. Sheinbaum confirmed that Mexico is already in discussions with China, India and South Korea over the new tariffs, led jointly by the Economy Ministry and the Foreign Ministry. Those governments have publicly sought clarity and potential relief for their exporters. However, her remarks suggested limited appetite for quick compromises. While she left the door open to future “schemes” or arrangements short of full trade agreements, she was explicit that Mexico’s priority is national development, not appeasing external suppliers.
The strategic objective is clear: reduce reliance on Asian imports, expand domestic manufacturing, and create 1.5 million jobs by 2030. Ebrard has already signaled that the tariff law is “quite reasonable” and unlikely to change materially in the short term, reinforcing expectations that talks will be more about managing fallout than reversing policy.
USMCA: Review, not renegotiation — and cautious optimism. On North American trade, Sheinbaum pushed back firmly on the idea that the USMCA faces a wholesale renegotiation in 2026, despite repeated suggestions to that effect from President Donald Trump. “The agreement says review, not renegotiation,” she said, stressing that the treaty’s text governs the process.
Her tone was notably optimistic, even as she acknowledged that the Trump administration has imposed multiple tariffs this year, including on Mexican and Canadian goods. She cited recent testimony by U.S. Trade Representative Jamieson Greer, paraphrasing him as saying the agreement “has been very good” but requires updates in certain areas (see related item above). That assessment, combined with ongoing bilateral talks, leaves Mexico confident it is “on the right track,” Sheinbaum said — a clear attempt to reassure investors that North American trade rules will remain broadly intact through 2026.
Trade strategy embedded in broader 2026 agenda. While trade dominated the press conference, Sheinbaum tied it explicitly to her broader 2026 agenda: expanded public investment, continued security efforts, and sustained social spending. The subtext was that trade stability — particularly with the U.S. — is foundational to financing those priorities. Her message heading into 2026 is one of managed assertiveness: Mexico will press ahead with tariffs and industrial policy to reshape its import profile, but it will do so cautiously, keeping inflation contained, factories supplied, and the USMCA framework largely intact. For trading partners and markets alike, the takeaway was clear: Mexico is hardening its trade posture — but not recklessly, and not at the expense of North American integration.
| CONGRESS |
—GOP appropriators set spending-cut line ahead of shutdown talks
Republicans lock in a lower topline for unfinished FY 2026 bills, teeing up tense negotiations with Democrats before the Jan. 30 deadline
Lead Republican appropriators have agreed that any funding deal for the remainder of the fiscal year must come in below current spending levels, sharpening the stakes as Congress races to finish nine unresolved appropriations bills before the government’s stopgap funding expires on Jan. 30.
The GOP gameplan. House Appropriations Chair Tom Cole (R-Okla.) and Senate Appropriations Chair Susan Collins (R-Maine) said Saturday that the topline for unfinished bills should fall beneath the level set in the current continuing resolution. Cole framed the agreement as a fiscal reset aligned with Donald Trump’s push to curb federal spending.
The move sets up high-pressure talks with Democrats, who control key votes needed to avert a shutdown. Spokespeople for Senate Appropriations Vice Chair Patty Murray (D-Wash.) and House Appropriations Ranking Member Rosa DeLauro (D-Ct.) did not immediately comment.
Congress left Washington for the holidays having made little progress since early November, when the government reopened after a record-long shutdown. Most agencies remain funded at flat levels under the stopgap measure.
Cole said lawmakers would have time to review final bills and that measures would move in packages rather than all at once. Still, the path is narrow: Senators departed without floor action on a five-bill package covering Defense, Labor–HHS–Education, Transportation–HUD, Commerce–Justice–Science, and Interior, while the House also failed to advance its own narrower bundle.
On Friday, Senate Republicans rolled out a Homeland Security proposal that would boost Immigration and Customs Enforcement by more than $700 million, alongside GOP funding plans for FEMA, Customs and Border Protection, the Secret Service, TSA, and the Coast Guard — underscoring policy divides that will complicate endgame negotiations as the deadline approaches.
—2026 midterms take shape as narrow majorities, policy deadlines, and high-stakes races collide
A National Journal preview outlines razor-thin congressional margins, key battleground districts, and a packed legislative calendar that will define Washington’s agenda heading into November 2026.
With control of Congress hanging on slim margins, lawmakers are heading into the 2026 midterm election cycle facing both an unforgiving political map and a dense set of legislative deadlines that could shape campaign narratives well before voters head to the polls.
According to a 2026 congressional preview produced by National Journal, the 119th Congress begins the year with Republicans holding a narrow 220–213 edge in the House, alongside two vacancies, while the Senate stands at 53 Republicans, 45 Democrats, and two independents who caucus with Democrats.
Democrats would need to flip just three House seats and four Senate seats to reclaim control — an unusually low threshold by historical standards.
Key races to watch. The preview highlights 10 House races likely to draw outsized attention in 2026, including open or highly competitive seats in Nebraska, Maine, Pennsylvania, Arizona, and Texas. Retirements in districts such as NE-02 and ME-02 create open contests, while incumbents in swing districts like PA-07, IA-01, and AZ-06 are expected to face well-funded challengers.
With campaign ad spending projected to reach $10.8 billion, the midterms are shaping up to be among the most expensive in U.S. history, fueled by tight margins and nationalized policy debates.
A crowded legislative calendar. Beyond electoral politics, lawmakers face a series of hard deadlines in 2026 that could force action — or stalemate — well before Election Day. Among the most consequential:
• Jan. 30, 2026: Funding for the federal government expires under the current continuing resolution, raising the risk of another shutdown.
•Early 2026: Debate is expected to begin on a potential Farm Bill rewrite, though time constraints may push major decisions into appropriations instead.
•June 2026: Key Inflation Reduction Act energy and property tax credits expire.
•Sept. 30, 2026: Surface transportation authorizations and other major programs sunset at the end of FY26.
•Dec. 31, 2026: Medicare physician payment increases expire, requiring congressional action to avoid cuts
Policy priorities in a midterm year. The preview outlines a broad set of policy priorities likely to dominate Capitol Hill in 2026, including FY 2026 and FY 2027 spending fights, a possible second budget reconciliation package, healthcare reform tied to expiring ACA subsidies, and surface transportation reauthorization.
Agriculture policy also looms large. While the farm bill has been extended through FY 2026, many provisions still reflect 2018 law, leaving open the possibility of a “Farm Bill 2.0” early in the year. Another possible farmer aid package is being discussed. Meanwhile, tariff policy affecting agricultural exports — particularly following an expected Supreme Court decision on IEEPA authorities — could further complicate the landscape.
Other topics: Energy, permitting reform, FDA user fee reauthorizations, and national security issues tied to AI, supply chains, and outbound investment are also expected to move through must-pass vehicles such as appropriations bills and the National Defense Authorization Act.
A volatile run-up to November. Taken together, the National Journal preview paints a picture of a Congress operating under intense pressure, with little margin for error and limited time before campaign season overtakes legislating. With both parties defending narrow majorities — and voters focused on health costs, energy prices, and economic security — the choices lawmakers make in early 2026 may prove just as important as the races themselves when November arrives.
| POLITICS & ELECTIONS |
—Stefanik abandons gubernatorial run as New York GOP coalesces around Blakeman
Exit reflects primary calculus, Trump-era dynamics, and steep odds against Gov. Hochul in a deep-blue state
Rep. Elise Stefanik (R-N.Y.) announced Friday that she is suspending her campaign for New York governor and will not seek re-election to her upstate House seat, ending a bid she launched in November to challenge Democratic Gov. Kathy Hochul.
In a statement, Stefanik said she had strong, broad support but concluded that waging a “protracted Republican primary” would be an inefficient use of time and resources in a state that already poses formidable general-election hurdles for Republicans.
Her decision follows the late entry of Nassau County Executive Bruce Blakeman, another Trump ally, which threatened to split GOP support and force an expensive intraparty fight.
Stefanik’s path had been complicated months earlier when President Donald Trump endorsed Rep. Mike Lawler’s re-election, narrowing Stefanik’s room to maneuver. While Trump has publicly praised both Stefanik and Blakeman, the party establishment quickly rallied behind Blakeman after her exit, with New York GOP Chair Ed Cox endorsing him as the candidate best positioned to compete statewide.
A longtime rising star, Stefanik first won her rural, Canada-bordering House district a decade ago and evolved from a Paul Ryan–style conservative into a prominent Trump defender, gaining national visibility during Trump’s first impeachment. She was later nominated by Trump to serve as UN ambassador, but that bid was withdrawn earlier this year amid concerns about the GOP’s slim House majority. Turning to Albany, she framed Hochul as the “worst governor in America,” but early polling underscored the challenge: a Siena University survey showed Hochul with a 19-point lead.
Her departure leaves Blakeman as the lone Republican in the race as the party tries to break a 24-year statewide losing streak in 2026. Still, Blakeman faces hurdles of his own, including limited name recognition outside Long Island and the task of building support in northern New York — terrain Stefanik cultivated for years. Hochul’s campaign swiftly claimed vindication, arguing Stefanik’s withdrawal reflected the political reality of running against an incumbent Democrat in New York.
Stefanik’s move also caps months of tension in Washington, including a recent public clash with House Speaker Mike Johnson (R-La.), after which some Republicans privately signaled relief at her exit from the gubernatorial contest.
—Sen. Cynthia Lummis to retire after one term, opening Wyoming Senate seat
Crypto advocate cites exhaustion as she steps aside; Rep. Harriet Hageman weighs a 2026 run
Sen. Cynthia Lummis (R-Wyo.) announced Friday that she will not seek re-election, ending her Senate career after a single term and creating an open seat in Wyoming.
In a statement, Lummis said the decision followed a demanding fall session that clarified she did not have “six more years” in her. “I am a devout legislator, but I feel like a sprinter in a marathon,” she said, calling the energy required for another term a mismatch. Lummis had previously secured President Donald Trump’s endorsement for reelection.
First elected to the Senate in 2020, Lummis — Wyoming’s first woman senator — became a leading Republican ally of the digital assets industry, earning the nickname “Crypto Queen.” At 71, she has been central to crafting industry friendly policy, serving as a lead GOP negotiator on a bipartisan stablecoin bill that became law in July and participating in talks on a broader crypto regulatory framework long sought by the sector. She acknowledged this week that the stalled negotiations, now pushed to 2026, have been “exhausting.”
Attention is already turning to potential successors. Rep. Harriet Hageman (R-Wyo.) is considering a bid for the seat and could announce as early as next month, according to reports.
—GOP braces for potentially record wave of House retirements ahead of 2026
Punchbowl News analysis finds Republican departures already outpacing the last Trump-era midterm at the same point in the cycle
House retirement season has arrived early — and it’s flashing warning signs for Republicans as they look toward what’s shaping up to be a difficult 2026 midterm.
With lawmakers back home for the December recess, party leaders are increasingly focused on who may decide not to return to Washington. That concern sharpened this week after Rep. Dan Newhouse (R-Wash.) announced he will not seek re-election, becoming one of the most recent Republicans to exit the House. Newhouse is also one of the last two House Republicans who voted to impeach President Donald Trump, underscoring how the party continues to shed members tied to that moment.
According to Punchbowl News, the sheer volume of GOP retirements is becoming the bigger story. While many of the departures so far are from members in safe Republican districts — limiting immediate electoral damage — there are notable exceptions, including Reps. Don Bacon (R-Neb.) and David Schweikert (R-Ariz.), who represent more competitive terrain.
What has alarmed Republican strategists is how quickly the exits are piling up compared with past cycles. Punchbowl’s review of Ballotpedia data shows that the last high-water mark for GOP retirements came in 2018, the previous midterm during a Trump presidency. That year ultimately saw nearly four dozen Republicans retire or resign, fueling a Democratic wave. By December 2017 — the same point in the cycle — 23 House Republicans had announced retirements or resignations.
As of Dec. 19, Punchbowl reports that 27 House Republicans have already announced plans to retire or have resigned ahead of 2026. While some are seeking higher office rather than leaving politics entirely, the raw number still exceeds the 2018 pace.
If the trend continues, Punchbowl warns that the 2026 cycle could rival — or even surpass — the historic GOP exodus seen eight years ago, further complicating Republicans’ efforts to defend their House majority in what is already expected to be a challenging midterm environment.
| TRANSPORTATION & LOGISTICS |
—UP/Norfolk Southern STB filing pitch: “End-to-end” merger, $2B net revenue synergies, and a bid to flip freight from highway to rail
On a Dec. 19 conference call hosted by Union Pacific CEO Jim Vena and Norfolk Southern CEO Mark George, executives argued their proposed transcontinental tie-up clears the STB’s bar by expanding single-line service, keeping gateways open, and investing $2.1B to avoid disruption — while critics and labor groups circle
Union Pacific and Norfolk Southern used a Dec. 19, 2025, investor call to frame their newly filed Surface Transportation Board (STB) merger application as a pro-competition, pro-growth “end-to-end” deal — one that executives say will create America’s first true transcontinental railroad while shifting freight off highways and into a single-line rail network. The presentation and Q&A featured Union Pacific CEO Jim (Vincenzo) Vena, Norfolk Southern President/CEO Mark George, and senior commercial, operating, and finance leaders including Kenny Rocker, Ed Elkins, Eric Gehringer, John Orr, Jennifer Hamann, and Jason Zampi, fielding questions from analysts across Wells Fargo, Evercore ISI, Bernstein, UBS, Wolfe, TD Cowen, Barclays, and BofA.
A filing designed to answer the “why” and the “how”. Vena opened by emphasizing the application’s sheer scope — nearly 7,000 pages — and presented the deal as a once-in-a-generation network redesign aimed at reliability, speed, and fewer “touch points.” The core sales pitch was consistent throughout: railroads lose share to trucking because interline handoffs, inconsistent technology systems, and fragmented accountability slow service and complicate pricing and shipment visibility. A single railroad, they argue, can fix those frictions in ways “partnerships” can’t.
George sharpened the competitive argument beyond Class I rivalry: trucks operate on a seamless, taxpayer-funded network while railroads fund their own infrastructure. In that framing, the merger is positioned as a tool to regain share from trucking and “stop and reverse” rail’s longer-term freight share erosion.
The headline operational claim: fewer handlings, fewer miles, less delay. A recurring theme was the idea that fewer interchanges and fewer yard touches improve both safety and service. Vena cited routing and blocking changes meant to reduce daily car/container handlings and eliminate unnecessary “drags.” Management highlighted that interchange can add 24–48 hours per shipment and pointed to Chicago as an emblem of the congestion penalty embedded in today’s interline system.
Operations leaders Gehringer and Orr said their integration blueprint starts with a “base plan” of two standalone networks, then builds an “optimized plan” that reroutes traffic to bypass intermediate handlings and reduce the risk and variability created by repeated switching and yard work. Their stated logic: every handling is time, cost, and exposure.
A concrete example offered: a proposed daily intermodal service routing Southern California–to–Northeast traffic through Kansas City and onto Norfolk Southern’s route to Butler, Indiana, cutting distance and promising a 20+ hour transit-time improvement versus current routings. They also described other corridor ideas—like routing SoCal–to–Southeast intermodal via Shreveport/Meridian rather than Memphis—where they claim dramatically faster timing is possible once the network is designed as one railroad rather than two.
The commercial pitch: convert interline lanes, then pry open “watershed” markets. Commercial executives Rocker and Elkins emphasized lane conversion and “single line” simplicity as the mechanism to unlock growth. Their headline promise: converting thousands of lanes from interline to single-line service so customers deal with one commercial team, one contract, one invoice, and one accountable carrier.
They described three major growth vectors:
1. Intermodal as the primary growth engine. Management claimed the combined railroad could add more than 1.4 million annual intermodal loads, anchored by new premium lanes running seven days a week and faster routings that reduce miles and hours.
2. Carload growth across multiple industrial sectors. They projected roughly 425,000 annual carloads of incremental volume across agriculture, food, chemicals, forest products, coal, metals, and other merchandise/bulk categories—supported by new manifest trains and fewer handlings.
3. The “watershed” bet. Executives repeatedly pointed to the “watershed” (roughly 250 miles on either side of the Mississippi River) as a region where rail “underperforms” because two-railroad service often produces an “economic mismatch” and forces freight to truck. Elkins argued the merger removes that friction by eliminating the interchange problem, enabling a single-line product that can win business where rail share is currently low.
When pressed on whether projected volume is “net new” or diversion from other railroads, Vena and George both acknowledged it would be a mix — but stressed that the majority is expected to come from the highway. George repeated the call’s key ratio: about 75% of forecast conversion is expected to come from truck-to-rail diversion.
Competition and concessions: the “Committed Gateway Pricing” gambit. One of the most important — and most scrutinized — elements of the call was management’s explanation for why they believe the deal enhances competition without large concessions.
Rocker described Committed Gateway Pricing (CGP) as an extension of an existing UP/BNSF corridor program and said the concept would allow competitors (specifically naming BNSF and CSX) to quote “competitive rates” through gateways to reach customers that are otherwise “solely served” by UP or NS. The argument is that CGP would be “additive”: it doesn’t remove existing routing options, but creates a formulaic, contract-capable way for competitors to market into otherwise captive endpoints, preserving interline competition even after the networks are combined.
This matters because CFO Jennifer Hamann disclosed a major modeling change: management’s estimated net revenue EBITDA synergies increased to up to $2 billion by year 3, and part of that increase was tied to removing a previously assumed $750 million in concessions. Hamann said the company initially carried the concession assumption conservatively; after further analysis — and with CGP and “open gateways” in the filing — they no longer believe large concessions are necessary to secure approval.
That shift drew multiple analyst questions because it effectively upgrades the synergy outlook while implying management expects fewer regulatory “givebacks.” Hamann’s bottom line: the end-to-end nature of the merger plus the competitive access tools in the application meet the STB test, allowing them to model a stronger outcome.
Economics: $2B net revenue EBITDA synergies, ~$1B cost synergies, $2.1B integration capex. Finance executives Hamann and Zampi reinforced the deal’s financial storyline:
•Net revenue EBITDA synergies: up to $2 billion by end of year 3 (up from the July framing).
• Cost synergies: still about $1 billion.
• Integration capital: $2.1 billion over three years (up slightly versus earlier estimates), with:
- about $1.0B for capacity (mainlines + terminals),
- about $1.1B for technology integration and other investments.
• Capital synergies: about $133 million annually (claimed from more efficient combined network/fleet utilization).
They also leaned heavily on expert analyses submitted as “verified statements” in the STB application, naming:
• Oliver Wyman (traffic and service/market opportunity work),
• Econic (antitrust/competition assessment),
• Charles River Associates (competition policy analysis),
•UP’s environmental management analysis on emissions reduction.
A key pricing argument emerged from this expert framing: Zampi said Oliver Wyman’s research suggests interline moves can be materially more expensive than single-line moves (he cited a roughly 35% higher revenue-per-ton-mile metric for certain interline general merchandise moves), and argued that greater efficiency will create “downward pressure” on pricing relative to the status quo — pushing back on the idea that consolidation equals inflation.
Service assurance and integration: phased execution, buffers, and IT “do no harm.” Given the history of rail mergers producing service meltdowns, management devoted significant airtime to process. The operating team emphasized:
• Phased operational cutovers (no “big bang” routing flip),
• Resource buffers to handle temporary strains,
• Alternative dispute resolution for merger-related service disputes (voluntary, meant to be faster than traditional escalation),
• Maintaining existing IT systems immediately after approval to prevent disruption, while building cross-visibility and then integrating systems gradually.
Gehringer highlighted UP’s modernization of core operating systems and both railroads’ prior “seamless” technology cutovers as evidence they can integrate without customer harm — positioning IT execution as a merger differentiator, not a risk.
Labor and politics: job guarantees as both shield and sword. Vena addressed labor criticism directly, repeatedly claiming that every union employee on day one of closing will “have a job for life,” contrasting that promise with the time-limited protections of traditional merger labor frameworks. He portrayed Teamsters resistance as bargaining tactics, while noting agreements with other unions (and explicitly naming SMART-TD as a major union partner already aligned).
George added a political messaging layer: much opposition, he argued, surfaced before the application was public and relied on “poor assumptions.” Now that the full filing and commitments are on record, he suggested critics will find it harder to sustain claims about reduced competition or degraded service.
Timeline: a long 2026 in front of the STB. Management said the STB has a 30-day acceptance review period, after which the process extends through 2026. Vena promised “hand-in-hand” engagement with the Board and framed the filing as only the start of a longer persuasion campaign — aimed at regulators, shippers, labor, short lines, and elected officials.
What to watch next. The call made clear where the merger case is strongest — and where the fights will be:
1. Strongest pillars of the argument:
• End-to-end structure (minimal overlap),
• Single-line service benefits (speed, reliability, simplicity),
• Gateway commitments and CGP as competition safeguards,
• Upfront capacity and terminal investment meant to preempt service failures.
2. Likely points of attack:
• Whether CGP is enforceable and durable over time (the “will it stick?” question),
• Whether projected truck-to-rail diversion is realistic at the scale promised,
• Labor skepticism—especially from unions not yet aligned,
• Whether “open gateways” and reporting commitments truly preserve interline competition in practice.
Bottom Line: The executives’ posture was confident — at times combative — arguing that competitors’ objections are less about public interest and more about fear of having to compete on service instead of price. But the regulatory test will be empirical: the STB will judge the enforceability of commitments, the credibility of modeling, and the merger’s real-world implications for shippers who rely on competitive rail options.
| WEATHER |
— NWS outlook: There is a Moderate Risk of excessive rainfall over parts of Northern
California on Sunday… …Heavy snow over parts of the Upper Peninsula of Michigan… …Heavy snow for the Cascades and Northern Rockies.
