Washington Matters

Washington Matters

Welcome to this edition of Washington Matters, Ananta’s insights on the United States. From domestic politics and economic trends to foreign policy shifts and cultural currents, we explore the issues shaping America today.

• India-U.S. Tariff Standoff Escalates as Talks Stall
• Breaking Down the Big Beautiful Bill
• America’s Critical Minerals Push
• Musk’s “America Party”
• A US Army Transformation Initiative is underway
• Texas and California’s Congressional Redistricting Battle
• Quad Foreign Ministers Meeting 2025
• SCOTUS Summer of ’25

The collapse of a mini-trade deal between India and the United States has set off the steepest tariff escalation in decades, with Washington imposing a total 50% duty on Indian exports: 25% already in place and an additional 25% “reciprocal” levy announced on August 6. The move, framed by the Trump administration as retaliation for India’s “persistent trade barriers” and continued imports of Russian oil despite U.S. warnings, has already squeezed margins in export-driven industries such as textiles, gems, electronics, and auto components, while U.S. consumers are beginning to face higher prices on groceries, clothing, and electronics.

At the core of the dispute is India’s refusal to grant market access in agriculture and dairy, economically vulnerable and politically sensitive sectors. This red-line, drawn early into the negotiations by India, was seemingly brought back on the table after a tense 35-minute phone call in June between PM Modi and President Trump, during which Modi rejected any suggestion of mediation by the US in the ceasefire between India and Pakistan announced in May.

Anticipating potential punitive measures on energy imports, India had moved to strengthen its strategic position earlier this year. The 2025 Union Budget allocated ₹55.97 billion (about $647 million) to expand the nation’s Strategic Petroleum Reserves, with new facilities planned in Odisha and Karnataka to cushion against supply shocks and price volatility.

Moody’s projects that the standoff could slow India’s manufacturing growth by about 0.5 percentage points, adding to the pressure on exporters already recalculating their competitiveness in the U.S. market. The asymmetry of Washington’s approach has also sharpened political friction. Despite being a major buyer of Russian oil, China has been spared similar penalties, a decision Indian officials and analysts see as evidence of strategic selectivity in U.S. trade enforcement.

Political rhetoric on both sides has hardened. Modi has called the tariffs “unjustified” and pledged not to compromise on farmer welfare, while Trump has branded India’s trade barriers “obnoxious” and threatened further escalation.

Attention now turns to a U.S. delegation expected in New Delhi on August 25 for what both sides acknowledge will be difficult talks. Before that, Trump is scheduled to meet Russian President Vladimir Putin in Alaska on August 15, a summit India supports wth the hope that a positive step towards ending the war in Ukraine will ease energy-related tariff policy. With Indian consumers facing a 21-day delay before the new tariffs hit and U.S. prices already climbing, September to October seems like the earliest realistic window for a provisional agreement.

The passage of the “One Big Beautiful Bill Act” by the U.S. Congress on July 4, 2025, marks one of the most sweeping domestic overhauls in recent U.S. legislative history. The lower house of the US Congress voted by a margin of 218 to 214 in favour of the bill on Thursday. All 212 Democratic members of the House opposed the bill. They were joined by Representatives Thomas Massie of Kentucky and Brian Fitzpatrick of Pennsylvania, who broke from the Republican majority. The Senate narrowly passed the bill by a 51–50 vote, with the deciding vote cast by Vice President JD Vance.

Marketed as a tax reform and industrial revitalization package, the bill carries a range of provisions that will reverberate far beyond U.S. borders.

In all, the legislation contains about $4.5 trillion in tax cuts. The Congressional Budget Office (CBO) projects that the Act will add $3.8 trillion to the U.S. deficit over the next decade. Independent analyses claim even higher deficits but if the CBO’s  modeling is treated as the reasonable baseline, it would push America’s debt-to-GDP to 124% by 2035 per the credit rating agency Moody. The US treasury’s long term projections, which assume the current rate of government spending will continue indefinitely, forecast that the ratio will reach over 200% by 2050 and 535% by 2100. The IMF has flagged rising global financial volatility in its April 2025 stability report. Emerging markets are particularly vulnerable: Argentina, Turkey, and India have seen capital outflows as investors shift to dollar-denominated assets. The fiscal trajectory may constrain U.S. foreign aid capacity further, undercutting soft power just as strategic competition with China and Russia intensifies.

The Act raises the investment tax credit for semiconductor fabrication to 35% for projects launched before 2027. The goal is to re-anchor advanced chip production onshore and reduce dependence on East Asian hubs. TSMC’s Arizona expansions will benefit and Intel may be incentivized to bring up construction timelines to launch their Ohio plant before 2027, currently slated to go online by 2030 after repeated delays. Countries like Taiwan and South Korea may see reduced demand for outsourced capacity if this holds steady. The bill also neglects necessary investments in STEM education and local infrastructure, giving way to fabs without a sufficient indigenous workforce. Without comprehensive supply chains and talent strategies, the U.S. may still find itself reliant on foreign subcontractors for packaging and materials, diluting strategic self-reliance.

Although the Act emphasizes mineral supply chain security, it revokes the production tax credit for applicable critical minerals used in domestic manufacturing components, enshrined under Section 45X of the Biden era Inflation Reduction Act. This provision seems inconsistent with the White House’s policy approach to facilitate domestic mineral production as outlined in an Executive Order by President Trump from March 2025. It also comes only a few short days after a critical minerals initiative was announced under the Quad, at the Foreign Ministers meeting hosted by the U.S. Secretary of State Marco Rubio.

The $150 billion defence allocation includes funding for naval modernization, shipbuilding, and a “Golden Dome” for missile defence, among other things. The Trump administration hopes to push $113 billion of the $150 billion pot into Pentagon coffers in fiscal year 2026, resulting in the $1 trillion total payout for defence spending, long chased by DOD, while allowing the base budget to remain flat. Aerospace and defence manufacturers stand to gain more procurement contracts, with a major chunk expected to go to legacy contractors like Lockheed Martin, Boeing and Raytheon as well as emerging military tech firms like Anduril. While the increased spending will indirectly benefit U.S. allies engaged in joint defence production (notably Japan, Israel, and the UK), cooperative frameworks, particularly in the Indo-Pacific, remain underdeveloped.

The Act reverses core Inflation Reduction Act incentives, sunsetting tax credits for EV purchases, solar panel production, and green hydrogen projects. This move weakens the investment case for multinational firms that had ramped up U.S. operations under a predictable clean tech regime. South Korea’s Hyundai and Europe’s VW have paused planned factory expansions in Georgia and Tennessee respectively. Simultaneously, the law opens pathways to expand oil and gas drilling by requiring 30 lease sales in the Gulf of Mexico over 15 years, more than 30 annually on federal lands across nine states, and opening access to Alaska. This is consistent with other actions taken by the White House over the last few months to center fossil fuels back in the energy matrix of the U.S. and taking actions to ease permitting and licensing for relevant industries.

Domestically, the Act  loosens regulatory oversight over hospital billing and insurance mandates, and eliminates penalties for non-compliance with the Affordable Care Act. It also caps federal Medicaid growth, shifting cost burdens to states. While these changes are largely domestic in effect, they have indirect global consequences. International medical device and pharmaceutical companies, many of which operate under the U.S. reimbursement system, may face pricing volatility and reduced predictability.

The bill allocates $65 billion to Immigration and Customs Enforcement (ICE) and border wall expansion. This allocation reflects a shift toward hardline enforcement, increased detention capacity, biometric surveillance programs, and expanded worksite raids. Internationally, it raises alarms among regional partners. Mexico, Honduras, El Salvador, and Guatemala, whose cooperation is essential for migration management, have already voiced concern over the unilateral nature of these measures.

A provision that grabbed many headlines is the removal of federal income tax on tips, welcomed by workers and small businesses in hospitality and service industries. Combined with a corporate tax cut from 21% to 18%, these changes make the U.S. modestly more attractive to international retail and restaurant chains. However, critics point out that these revenue losses come without accompanying productivity gains.

In 2025, the United States has intensified efforts to secure critical mineral supplies crucial for national security, clean energy, and economic resilience. On March 20, President Trump signed a landmark executive order invoking emergency powers to expedite domestic mining on federal lands, prioritizing minerals including copper, uranium, gold, and potash. The order also established a National Energy Dominance Council (NEDC) to oversee streamlined permitting processes with strict approval timelines, and leveraged the Defense Production Act along with the U.S. International Development Finance Corporation to boost funding and investment for mineral projects.

Furthering this initiative, an April 24 executive order targeted offshore seabed minerals such as nickel, cobalt, and rare earths, emphasizing international cooperation and expanding U.S. deep-sea mining capacity. The Department of the Interior introduced policies in June to expedite offshore exploration by reducing regulatory delays and extending permits. Additionally, a Section 232 investigation launched in April seeks to impose tariffs on critical mineral imports processed abroad, aiming to protect domestic supply chains.

In August, the U.S. finalized a joint seabed mining agreement with the Cook Islands to responsibly explore polymetallic nodules rich in nickel and cobalt, leveraging Cook Islands’ maritime resources with U.S. oceanic expertise amid concerns over China’s regional dominance. Simultaneously, the Department of Defense awarded $10 million to develop a domestic mine-to-master alloy pipeline, strengthening supply chains for high-tech metals critical to advanced weapons and electronics.

The U.S. Geological Survey is expected to release an updated critical minerals list by year-end, likely adding copper, uranium, gold, and potash, resources prioritized under Trump’s executive orders to accelerate permitting, funding, and stockpiling for strategic sectors.

In early August 2025, a sophisticated breach in the U.S. federal judiciary’s electronic case filing system exposed sensitive sealed documents, including indictments and search warrants, prompting the judiciary to enhance protections and collaborate closely with the Department of Justice (DOJ), Department of Homeland Security, and Congress to mitigate risks and prevent future attacks.

The DOJ has also been active in combating cybercrime, partnering with private sector experts like Amazon Web Services to disrupt malicious operations such as the hacker group Anonymous Sudan, known for deploying large-scale distributed denial-of-service (DDoS) attacks for hire.

Building on this, the US cybersecurity agency CISA and the Federal Emergency Management Agency (FEMA) announced a $100 million fund to bolster cybersecurity capabilities across state, local, and tribal governments, addressing vulnerabilities in critical public infrastructure. Concurrently, a Senate bill mandates the White House to develop a post-quantum cybersecurity roadmap to protect federal systems against emerging quantum threats. The White House has restructured its cyber leadership, appointing a new National Cyber Director to improve agency coordination and incident response. Additionally, a federal panel is charting a roadmap for establishing a dedicated U.S. Cyber Force to enhance defensive and offensive cyber capabilities.

Elon Musk has officially launched the America Party, aiming to challenge the dominance of the Republican and Democratic parties in the U.S. Musk’s announcement came days after a public disagreement with President Donald Trump over the passage of the “One Big Beautiful Bill.”

Musk accuses both major parties of unchecked spending and corruption, arguing that the U.S. operates as a “one-party system” rather than a true democracy. The America Party’s stated goals are to restore individual freedoms and reduce federal deficits. Specific policy details remain scarce, but the strategic intent has been made clear: aim to win a few swing seats in the House and the Senate to gain leverage in Congress. Widespread representation is not on the cards.

With a narrow Republican majority in the Senate (53–47 as of July 2025), flipping just 2–3 seats in states like Arizona, Georgia, or Nevada could give the America Party the decisive vote on major legislation, from debt ceilings to AI regulation. For the House, targeting 8–10 districts in the swing states of Wisconsin, Pennsylvania, or North Carolina, could determine the control of the chamber. In a razor-thin split, even small shifts can tip the legislative balance.

While Musk’s personal fortune can provide an initial boost, the pathway to launch faces significant hurdles. Ballot access laws differ across states and require tens of thousands of signatures, complex legal compliance, and continued vote share to maintain party status. The America Party will need major legal, organizational, and grassroots investment, beyond Musk’s personal wealth, to simply appear on ballots in competitive districts by 2026. As of now, the America Party legal journey is yet to begin as it is not formally registered with the Federal Election Commission yet.

Secretary of the Army Daniel Driscoll’s push to make the force leaner, faster, and digitally integrated is converging with sweeping legislative reforms that grant the Pentagon near “Defense Production Act-style” powers, including the ability to take equity stakes in defence startups. The result could be a generational shift in how America arms itself, accelerating innovation, sidelining legacy contractors, and reshaping the industrial base for near-peer conflict.

Driscoll and Army Chief of Staff General Randy George are reimagining the Army’s posture, doctrine to counter rising Indo-Pacific threats, as outlined in recent interviews with War on the Rocks and Axios. At Fort Stewart, Georgia, the 3rd Infantry Division is being overhauled into a rapid-deployment hub for U.S. European Command—symbolizing the pivot from counterinsurgency to cross-domain operations, integrated fires, and cyber-resilience. “It’s not just about equipment, it’s about how we fight,” Driscoll said. He has also signaled a willingness to disrupt the defense industry, declaring, “I will measure it as success if, in the next two years, one of the primes is no longer in business.”

Congress is matching that ambition. The FY2026 National Defense Authorization Act’s Section 849A would give the Pentagon wide-ranging powers to intervene in the defense supply chain, from castings and microelectronics to critical materials, and to invest directly in small and mid-sized national security startups. Traditionally limited to contracts and grants, the Pentagon could now align private capital with defense priorities, crowding in investment and boosting nontraditional players.

These changes come alongside the FORGED Act, which streamlines acquisition and allows flexible funding, and the SPEED Act, which targets procurement bottlenecks and establishes a “RAPID” directorate to close capability gaps in months. Together, they push back on “commercial procurement as the default,” heightening competition for entrenched primes such as Lockheed Martin, Raytheon, and Boeing.

If enacted, the combination of Army reform and congressional industrial policy would give the Pentagon unprecedented autonomy to shape its industrial base, excluding adversary-linked suppliers and building capacity at speed. But success hinges on political will and execution before global crises outpace reform.

The Texas state legislature has introduced a redistricting plan aimed at shifting the balance of power in US Congress by converting five currently Democrat-held seats into Republican-controlled districts ahead of the 2026 midterm elections. The proposal focuses on redrawing boundaries in key metropolitan areas, including Austin, Dallas, Houston, and South Texas, to consolidate GOP voter strength. Republicans currently hold 25 of Texas’ 38 House seats, and the new map would increase this to 30, with many districts becoming majority-white or slightly more Republican-leaning in majority-Hispanic areas.

Texas Democratic lawmakers responded by leaving the state to deny quorum and stall the vote. Over 50 of them remain in secured locations primarily in Illinois, with some in New York, California, and Massachusetts. They face $500 daily fines imposed by Texas House rules, but have raised funds to cover these penalties. Governor Greg Abbott has issued arrest warrants enforceable within Texas and filed a lawsuit seeking to remove 13 absent Democrats from office. He intends to call multiple special legislative sessions until a quorum is restored and the redistricting vote passes.

Meanwhile, California has launched a countermeasure against Texas Republicans’ redistricting efforts by proposing a November 2025 ballot measure that would redraw the state’s congressional map to potentially add five Democratic seats ahead of the 2026 midterm elections. Governor Gavin Newsom described the move as an “emergency” response intended to “nullify” Texas’s plan. This plan aims to provide a voter-endorsed alternative in the national battle over control of the U.S. House of Representatives to counteract what Governor Newsom and fellow Democrats view as an unfair advantage sought through Texas’s redistricting. The proposal expects approval from California’s Democratic-majority legislature to hold the special election in early November 2025.

If Texas succeeds, Republican states Indiana, Missouri and Florida along with Democratic state New York, in addition to California, may follow.

The July 2025 Quad Foreign Ministers’ Joint Statement marks a notable evolution in the group’s diplomatic engagement, reflecting a sharpened sense of purpose and a more assertive strategic posture.

By referencing “dangerous and provocative actions” in the South China Sea, including incidents involving water cannons and ramming, the statement takes an unusually direct approach to spotlighting destabilizing behavior. While it avoids naming China outright, the reference is clear.

For the first time, it condemned a specific incident, the April 2025 attack in Pahalgam, Jammu and Kashmir. This framing indicates a shift away from abstract condemnation and toward acknowledging immediate, shared threats. Likewise, the inclusion of disinformation as a threat to regional stability points to an expanded security lens that now incorporates hybrid and information warfare.

A key development is the launch of the Quad Critical Minerals Initiative. It addresses concerns over concentrated supply chains, particularly China’s dominance in processing and refining. The initiative reflects a broader understanding that economic security is inseparable from national security and signals the Quad’s intent to pursue more focused and implementable goals. This recalibration is also visible in the group’s internal structure. The Quad announced its decision to consolidate its wide array of 26 working groups down to six priority areas: maritime security, critical and emerging technologies, infrastructure, counterterrorism, humanitarian assistance and disaster relief, and health.

The announcement of the Quad Indo-Pacific Logistics Network field training exercise and the Ports of the Future Partnership marks a shift toward increased practical collaboration. Traditional areas of engagement, such as humanitarian assistance, are now backed by firmer commitments like the pledge of over $30 million in aid to Myanmar.

For all these adjustments, the Quad’s foundational principles remain steady. The ministers reiterated their commitment to sovereignty, territorial integrity, rule of law, and ASEAN centrality. Continued opposition to coercion and unilateral change, particularly in the East and South China Seas, confirms a shared outlook on the region’s strategic pressures.

Despite the significant progress made in this meeting, recent tariff escalation between US and India have raised some concerns on whether the Quad’s plans will move forward. Doubts even plague the next leaders’ summit which is supposed to be hosted by India this fall.

Opinion season 2025 was action packed. For context, the US Supreme Court’s term traditionally starts in October and ends in late June or early July. Complex cases often involve multiple opinions (majority, concurring, dissenting), which take months to negotiate and finalize. As a result, decisions argued earlier in the term often get released at the end. Multiple rulings this June had far reaching consequences and set precedents:

For his 41st birthday, Vice President JD Vance went kayaking, and the Secret Service made sure the river cooperated. Typically security arrangements mean a wide perimeter, no-fly zones, plain clothed agents and a smattering of sharp-shooters but in this instance the Secret Service went a step beyond. Agents asked the U.S. Army Corps of Engineers to raise the Little Miami River’s water level by releasing extra flow from Caesar Creek Lake, so the VP’s family trip would go smoothly. Vance’s office insists he did not know of these arrangements but critics slammed the move as a taxpayer-funded perk during budget cuts.

1. US licenses Nvidia to export chips to China
2. US lawmaker questions Intel CEO’s ties to China in letter to company board chair 
3. Rubio orders US diplomats to launch lobbying blitz against Europe’s tech law
4. Health Secretary Robert F. Kennedy Jr. to cancel $500 million in vaccine development projects
5. House Oversight Committee subpoenas the Department of Justice for Epstein files – NPR; Chairman Comer Subpoenas Bill and Hillary Clinton, Former U.S. Attorneys General
6. Congress wants the administration to continue ENERGY STAR
7. Taiwan Leader Calls Off US Stopover as Trump Seeks Xi Summit
8. India opens Dallas consular centre to serve growing diaspora
9. US stops third-party passport collection; all Indian applicants must collect in person
10. US warns Indians: Overstaying visa could mean deportation, permanent ban

Thank you for taking the time this month’s issue. Stay tuned for our next edition!