Washington, DC

1. Xi’s warning to Trump
2. Vance in Maine
3. Trump priorities in peril
4. Crypto bill to advance
5. Shapiro’s pro-growth pitch
6. Fed workers’ low morale
7. Changing Fortune

PDB: Mamdani’s merger target

SCOTUS faces another decision on mifepristone … House votes on Iran war powers … Rubio tells China to take “more active role” in ending Iran conflict

Xi warns Trump over Taiwan

Chinese leader Xi Jinping used a high-stakes summit with President Donald Trump to warn that the countries risk falling into the “Thucydides trap” — when a rising power threatens to overtake an established one, leading to war — and cautioned that Taiwan could prove a flashpoint. While there were no immediate breakthroughs on key points, the visit otherwise got off to a relatively upbeat start, with Xi saying the two nations should be “partners, not rivals” and Trump hailing the Chinese president as “a great leader.” However, Xi warned that if Taiwan — which he called the most important issue in US-China relations — is mishandled, it could lead to “an extremely dangerous situation.” Beijing is keen to limit US arms sales to the self-ruled island, and wants Washington to outright oppose Taiwanese independence, concessions that Trump is unlikely to make.

Vance in Maine as ’28 chatter turns up

Vice President JD Vance is in Maine today for an event on fraud as he takes a domestic trip that could help former Gov. Paul LePage flip a Democratic House seat — and maybe help himself a little, too, Semafor’s Burgess Everett, Shelby Talcott, and Eleanor Mueller report this morning. Sen. Susan Collins, R-Maine, told Semafor she won’t be there; she has an active vote streak to preserve. But the vice president’s fraud task force is giving him new opportunities to travel the country, bash Democrats, and reintroduce himself to an electorate that might see his name on the ballot in a couple of years. “It’s the opposite of Biden making Kamala the border czar,” said Vance ally Sen. Jim Banks, R-Ind. “It’s a win for him post-midterm elections, as he dives into the presidential race. It shows that he’s action-oriented.”

Key Trump priorities in jeopardy on the Hill

Two top Trump priorities — a gas tax holiday and funding for the new White House ballroom — are in serious jeopardy. Republican lawmakers are publicly skeptical of the need for the gas tax holiday, which requires congressional approval. Republican leaders won’t be able to count on much support from Democrats — or even from some of their GOP colleagues, who see a gas tax holiday as depleting money for highway projects. “I don’t see the momentum” for suspending the gas tax, Sen. James Lankford, R-Okla., said. The ballroom funding has also faced headwinds within Trump’s party, especially among moderates, and it might not even be able to pass the House, where purple-district members are skittish. “As I understand it, it’s private donations,” said Rep. Zach Nunn, R-Iowa. And that’s before the Senate parliamentarian weighs in.

— Nicholas Wu and Burgess Everett

Senate’s crypto drama comes to a head

The Senate Banking Committee will at last mark up its long-awaited overhaul of cryptocurrency regulation this morning following months of debate over divisive issues like stablecoin rewards, illicit finance, and ethics language. Despite aggressive lobbying by unlikely bedfellows including banks, unions, and cops, Republicans had already amassed enough support to advance their latest text without Democrats on Wednesday, when Sen. John Kennedy, R-La., ultimately fell in line. But the digital assets industry is still hoping to draw at least some support on the left, with Coinbase CEO Brian Armstrong telling reporters Wednesday evening he expects “probably a bipartisan vote.” That will hinge on whether senators can strike an 11th-hour deal with the White House on ethics language, which would restrict the administration’s ability to profit off crypto. If they can’t, negotiators hope they can strike a deal before the legislation reaches the Senate floor.

— Eleanor Mueller

Shapiro: ‘I’m a pro-growth Democrat’

Pennsylvania Democratic Gov. Josh Shapiro thinks Democrats’ history of not being “open” to the business community is worthy of criticism, but he insists he doesn’t fit that mold. “I do think it is fair to criticize Democrats in the past for not being as open to business. I’m a pro-growth Democrat,” Shapiro told Semafor’s Andrew Edgecliffe-Johnson in an interview. “I think we need to work with the private sector to create jobs and economic opportunity while at the same time holding the private sector accountable.” Shapiro also criticized Trump’s policies, arguing that his tariffs and “war of choice” in Iran make it “harder to do business in this country.” But Shapiro’s criticism of his own party was notable, as Democrats gear up for a fight over who should next carry the mantle for the party (Shapiro’s own name is in the mix).

Federal workers’ low mood under DOGE

After DOGE ushered in massive layoffs across the federal workforce last year, fewer government employees reported being satisfied with their job and more reported high burnout. The results from Gallup’s analysis of its surveys and Bureau of Labor Statistics data, published this morning, offer a glimpse into the impact of Trump’s across-the-board cuts. Federal workers were less likely than they’d been previously to trust their leaders or believe their workplace “treats people with respect.” In the second quarter of last year, federal workers were 15 percentage points less likely than their counterparts in state and local government to report being very satisfied with their jobs. And the number of federal workers looking for a new job spiked at the start of last year. A previous study estimated that the federal workforce contracted by 10.3% last year, or about 238,000 workers.

Fortune chair joined Trump interview

Fortune’s Hong Kong-based chairman joined an editorial interview with Trump the magazine is set to publish this week — an unusual move that has fueled concerns among the magazine’s journalists, Semafor’s Max Tani reports. Trump’s sitdown interview with Fortune Editor-in-Chief Alyson Shontell had originally excited the newsroom and was a signal of the company’s continued relevance. But the presence of Victor Pang, a lawyer representing CEO and Thai billionaire Chatchaval Jiaravanon and the company’s de facto chief executive, surprised staffers. Some members of the company’s editorial union discussed the booking in private messages this week, and debated whether Pang’s attendance at the White House was just about Fortune’s journalism. A page for Pang’s law firm notes that he has “worked on large-scale listings of various state-owned enterprises and private companies.” A company spokesperson said Pang was there “as a mere observer.”

Tom Wilson runs an insurance company in a low-trust America. That makes trust a core business issue for Allstate. “We sell trust,” he says. On this week’s episode of The CEO Signal, presented by PwC, Penny Pritzker and Andrew Edgecliffe-Johnson ask Wilson how that premise shapes the way he leads one of America’s biggest insurers.

Wilson, who has led Allstate for nearly two decades, is disappointed that more CEOs are not speaking up on societal issues — but he is not calling for corporate commentary on everything. He explains the framework Allstate uses to decide when it has standing to engage, how the company connects corporate purpose to employees’ personal purpose, and why AI should force leaders to ask a harder question than how much cost they can cut: what kinds of good jobs can they create?

What Pratt’s rise can teach both parties

You don’t have to imagine what Los Angeles would look like under Mayor Spencer Pratt. AI already did it for you, Semafor’s David Weigel writes. In one of the reality TV star-turned-candidate’s campaign videos, happy firefighters, cops, and mothers celebrate “Pratt Summer” and how it solved the city’s problems: “I’m allowed to arrest criminals now, with handcuffs and everything!” In another Pratt video, the Republican hopeful suits up as Batman and overthrows the corrupt court of incumbent Democratic Mayor Karen Bass. It’s not a given that Pratt’s Trumpian act will work in LA, but he’s proven one political truth that the sitting president also counts on: Emotion beats data, especially if the data doesn’t jibe with voters’ emotions.

Beltway Newsletters

Punchbowl News: Senior House Republicans are increasingly alarmed over the two-month-long absence of New Jersey GOP Rep. Tom Kean. Kean’s staff said he’s dealing with a medical issue and will return to Washington as soon as possible.

Axios: “[President] Trump has no clear way to square his desire to end the war on his terms with the need to rein in inflation and keep the stock market humming in an election year.”

Congress

• House Speaker Mike Johnson and Minority Leader Hakeem Jeffries launched a joint effort to fight sexual harassment and abuse on Capitol Hill.

• In congressional testimony, Commerce Secretary Howard Lutnick walked back his claims that Jeffrey Epstein blackmailed people and said their interactions were “inconsequential.”

Outside the Beltway