Washington, DC

1. Hassett shrugs off warnings
2. Defense funding plan
3. China condemns US blockade
4. Tricky Iran war politics
5. USMCA defenders
6. Shrinking chance for rate cut
7. Hyundai battery plant opens

PDB: Plaskett to run for governor

IRS head Bisignano testifies before Senate Finance on Tax Day … Vought goes before House Budget … Melania Trump on Capitol Hill

Hassett downplays Iran economic risks

White House economic adviser Kevin Hassett shrugged off concerns that the war in Iran could send the world into a recession if it lasts the rest of the year, an outcome that Citadel’s Ken Griffin had warned of hours earlier at Semafor World Economy. “We certainly don’t expect this to take anywhere as long as the speculation of” Griffin, Hassett told Semafor’s Liz Hoffman at the event in Washington. Griffin on Tuesday predicted a global downturn, should the Strait of Hormuz remain closed for “the next six to 12 months.” “But the fact is that it’s not the 1970s anymore; there’s a whole academic literature that suggests that the whole global economy is more resilient than it used to be,” Hassett continued, pointing to a 2007 paper comparing oil shocks of the 2000s to those of the 1970s.

Senate GOP’s defense funding headache

Senate Republicans’ plan for a quick-strike immigration enforcement funding bill could complicate plans to restock the Pentagon’s coffers amid the ongoing conflict with Iran, according to multiple GOP senators. One called the chances of a third reconciliation bill low and said Democrats won’t be on board for passing a separate defense funding measure, arguing the party should add the defense spending to the party-line reconciliation and go as big as it can. But GOP leaders are charging forward with ICE and border funding only, with leadership allies explaining they could tie Pentagon money together with disaster aid for wildfires and hope it brings Democrats along. Senate Budget Chair Lindsey Graham told Semafor that adding Iran spending could bog the whole thing down. “We’ll have to pay for it, it may slow things down and make it more complicated. We’re talking about maybe doing some defense.”

China criticizes US blockade

The Iran war risks undermining an uneasy US-China détente, after Beijing decried the US blockade of the Strait of Hormuz as “dangerous and irresponsible.” Following talks with the crown prince of Abu Dhabi, Chinese leader Xi Jinping warned against abandoning international law and reverting to “the law of the jungle,” positioning Beijing as a force for stability compared with the unpredictable US, whose Iranian oil blockade threatens to severely disrupt millions of barrels in exports bound for China. Xi’s comments come one month ahead of a planned visit by President Donald Trump to Beijing — already once delayed — during which Trump hopes to unveil a trade deal and present a reset of the relationship between the world’s two largest economies. Xi also hailed “precious” ties with Russia during a visit by Moscow’s foreign minister.

Sheehy says he’d vote to authorize Iran war

As Republicans grapple with the tricky politics of the US-Israel war with Iran, Sen. Tim Sheehy, R-Mont., said he would “of course” vote for legislation to authorize the war. “But that’s not what’s being offered; what’s being offered is a resolution to end [the war],” Sheehy said at Semafor World Economy, referring to Democratic efforts to rein in Trump’s war powers, which Sheehy said he would vote against. “This is a far more complex problem than the average American has been led to believe and spoon-fed, especially these past 43 days,” he said. “I think the campaign is going very well.” While many Republicans in Congress have voiced support for the Iran war, the conflict is less popular among voters — including some members of Trump’s MAGA base. But even if the war is an issue in the midterms, Sheehy isn’t up for reelection.

Dozens of senators defend USMCA

More than three dozen senators, from both parties, will urge the Trump administration today to extend the US-Mexico-Canada Agreement in spite of the president’s skepticism. “We support efforts to fully enforce the existing terms of the agreement, curb unfair practices, and address outstanding trade barriers that disadvantage American agriculture,” Sens. Steve Daines, R-Mont., Amy Klobuchar, D-Minn., and other lawmakers write in a letter to US Trade Representative Jamieson Greer shared first with Semafor. “We encourage continued engagement with Congress, farmers, and ranchers to ensure … that the joint review process reinforces, rather than undermines, the stability and opportunity that USMCA delivers to America’s farmers, ranchers, and rural communities.” Officials must agree this year to extend the pact, which Trump signed during his first term, past July 1. Greer said this month he’ll reveal the US’ position at the start of June.

— Eleanor Mueller

Prolonged Iran war would affect rate cuts

A prolonged conflict in the Middle East would reduce the chances of a US interest rate cut this year, Chicago Fed President Austan Goolsbee said at Semafor World Economy. Goolsbee said Tuesday he was concerned that the potential inflationary impact of the energy-price shock caused by the war could take hold before policymakers could be sure that the effect of higher tariffs on consumer prices had worn off. “That’s a dangerous, slippery spot to be in,” he said. “The longer this inflation disruption goes, the more likely it is that the appropriate rate-cutting would be put off.” His view won’t be welcome news at the White House, where Trump has been urging the Fed to slash interest rates. But Treasury Secretary Scott Bessent strayed from that view, telling Semafor Monday that the central bank should “wait and see.”

Raided Hyundai-LG battery plant to open

The Georgia Hyundai-LG battery plant that was raided by US immigration agents last year is ready to open later this month, following a resulting staffing crunch and monthslong delays, Semafor’s Shelly Banjo and J.D. Capelouto report. In a spectacle that sparked outrage in South Korea and threatened to derail trade talks with Washington, US federal agents detained 475 people, mostly Korean nationals, at the $7.6 billion manufacturing complex near Savannah, where LG is making battery cells for Hyundai’s Ioniq electric cars. During the sweep, ICE agents handcuffed engineers and other workers and pushed them onto buses. Photos of the raid spread around the world, prompting trade partners to question doing business with the US. White House chief of staff Susie Wiles personally called Hyundai CEO José Muñoz to apologize for the raid, Muñoz told Semafor.

Blindspot: Prosecution and fluoride

Stories that are being largely ignored by either left-leaning or right-leaning outlets, curated with help from our partners at Ground News.

What the Left isn’t reading: The Justice Department accused the Biden administration of selective prosecutions of anti-abortion activists. 

What the Right isn’t reading: A study found that fluoride in drinking water doesn’t impact IQ or brain function. 

Semafor World Economy is well underway with more than 500 CEOs and government leaders — including US Cabinet secretaries, central bank governors, finance ministers, and Fortune 500 executives — joining us for on-the-record conversations about the forces shaping the global economy.

Today’s sessions include discussions on Building Human-Centered Business, Security in the Digital Century, Healthcare in a Transforming World, and much more. You can view the full agenda here.

All sessions throughout the week will be livestreamed on Semafor’s homepage — watch here.

Beltway Newsletters

Punchbowl News: CIA Director John Ratcliffe will attend the GOP Conference meeting today to help sell members on an extension of Section 702 of the Foreign Intelligence Surveillance Act.

Playbook: Leading the Future, a super PAC aligned with the AI industry, has raised more than $140 million in contributions and commitments since its launch in August 2025, and has already started putting money into key races.

Axios: Skycutter, a small British dronemaker, came top in a Pentagon competition to build out a massive fleet of expendable drones for US troops.

White House

• Federal workers say Christianity has “started appearing in office life” and department heads increasingly send religious messages. — Wired

Congress

• The House is expected to vote on a measure extending warrantless surveillance powers this week for 18 months, but GOP leaders are still racing to round up votes amid some resistance from conservatives. With a miniscule House margin, it’s also unclear whether Republicans can pass the “rule” before the legislation itself.