SENATE & HOUSE APPROPRIATIONS COMMITTEE HEARINGS WITH COMMERCE SECRETARY LUTNICK
On June 4, the Senate Appropriations Committee Subcommittee on Commerce, Justice, Science, and Related Agencies held a hearing entitled “A Review of the President’s Fiscal Year 2026 Budget Request for the Department of Commerce.” On June 5, the House Appropriations Committee Subcommittee on Commerce, Justice, Science, and Related Agencies also held a hearing to examine the Department of Commerce’s budget request for FY2026. Commerce Secretary Howard Lutnick was the witness in both, with his opening statement available here.
Key Takeaways
- The respective Subcommittees reviewed Commerce’s budget request and trade priorities, including increased funding for the Bureau of Industry and Security (BIS) to counter China, address supply chain vulnerabilities, and protect emerging technologies. Discussions cited efforts on reshoring manufacturing, strengthening trade enforcement, and leveraging trade relations through IEEPA, alongside concerns over NOAA staffing and the predictability of trade policy.
- Secretary Lutnick outlined how the administration is working reduce the trade deficit alongside the federal budget deficit while fostering U.S. innovation, onshoring investments, strengthening industry, and prioritizing America First. He discussed how the President’s executive order establishing Commerce’s investment accelerator and surge in U.S. investment, combined with a renewed focus on fair and reciprocal trade, is reigniting domestic manufacturing without additional taxpayer costs. He emphasized the comprehensive effort to revive U.S. manufacturing, eliminate unfair trade practices, and invest in domestic innovation.
- Secretary Lutnick commended the administration’s priorities of and Commerce’s efforts to protect critical U.S. industries, reverse the trend of unfair treatment by foreign trading partners, and close foreign-utilized loopholes. He highlighted Section 232 investigations, tariff imposition and enforcement, and the elimination of the de minimis loophole. He described how new export controls are safeguarding critical technologies.
SENATE COMMERCE, JUSTICE, SCIENCE, & RELATED AGENCIES SUBCOMMITTEE
- Subcommittee Chairman Moran (R-KS) outlined the President’s budget request, with a 16.5 percent reduction in budget authority for Commerce and its agencies, including a $1.5 billion reduction for the National Oceanic and Atmospheric Administration (NOAA), a $325 million reduction for the National Institute of Standards and Technology (NIST), and the eventual elimination of the Economic Development Administration (EDA).
- While he supported the administration’s effort to save dollars, Subcommittee Chairman Moran called for ensuring that subsequent reductions do not harm U.S. efforts to expand manufacturing jobs and promote U.S. exports. He emphasized the additional information needed from Commerce, including the FY26 budget justification and the FY25 spend plan required by law, noting the limited information provided to date as insufficient.
- In response to Senator Collins’ (R-ME) question about trade with Canada, Secretary Lutnick noted the overriding principle governing Canadian tariffs as the U.S.-Mexico-Canada Agreement (USMCA). He cited how products genuinely manufactured in Canada or the U.S. and comply with USMCA rules are traded tariff-free, while products that fall outside the USMCA framework, either by design or due to non-compliance, are subject to tariffs. Senator Collins requested a definitive list of which products fall under the USMCA and are therefore exempt from the tariff, emphasizing the need for clarity. Lutnick responded that the list would primarily come from USTR, and committed to contacting them and providing one.
- Subcommittee Chairman Moran asked whether Commerce will act to protect certain trade surpluses as negotiations for trade agreements progress. Secretary Lutnick said critical exports will be protected, referencing Section 232’s comment period and zero tariff negotiations with the UK. He emphasized that the key is to protect U.S. industries and make sure those trading partners are treating the U.S. fairly.
- Subcommittee Chairman Moran raised concerns about the impact of docking fees for Chinese-owned ships and emphasized the importance of transitioning to American-built vessels for transporting agricultural exports. He acknowledged the need to rebuild domestic ship manufacturing capacity but cautioned against penalizing agricultural producers who currently rely on foreign ships due to the lack of U.S.-built alternatives within the transition to not disrupt exports.
- Senator Kennedy (R-LA) pressed Secretary Lutnick on whether he would accept a hypothetical trade deal in which Vietnam eliminated all tariffs and trade barriers in exchange for the U.S. doing the same. He also questioned whether reciprocity is truly the administrations’ goal within trade deals. Lutnick rejected the theoretical deal, citing Vietnam’s trade imbalance with the U.S. and its role as a conduit for Chinese exports. He said the U.S. absolutely seeking reciprocity with respect to things that can be reciprocal.
- Senator Kennedy asked why the White House was not advised to proceed under the Trade Expansion Act. Secretary Lutnick responded that the President chose the International Emergency Economic Powers Act (IEEPA) because he could do it swiftly and sweepingly to address the underlying problems that created the $1.2 trillion trade deficit.
- Senator Britt (R-AL) and Secretary Lutnick discussed how the tariff strategy works to rebalance the U.S. economy through the onshoring of manufacturing activities and the fortifying of domestic supply chains. They raised how steel and aluminum production is heavily dependent on power, noting that foreign governments subsidize electricity costs and thereby enable producers, particularly in China, to dump cheap steel in the U.S. market.
- Subcommittee Ranking Member Van Hollen (D-MD) criticized the administration’s and Commerce’s failure to comply with law or reasonable requests, citing how the administration is withholding $200 million provided to Commerce in the fiscal year 2025 appropriations law that the president signed in March. He emphasized that Commerce failed to provide a real spending plan and outline the intended execution of the fiscal year 2025 appropriations law, criticizing the two-page document in lieu of a reorganization plan.
- Democrats, led by Subcommittee Ranking Member Van Hollen, criticized staff reductions with Commerce departments, such as NOAA, warning about the implications of reduced staffing and coverage. Lutnick stated that such reductions were less than five percent of total staff, saying how the National Hurricane Center has zero openings and is fully staffed in preparation for hurricane season.
HOUSE COMMERCE, JUSTICE, SCIENCE, & RELATED AGENCIES SUBCOMMITTEE
- Subcommittee Chairman Rogers (R-KY) discussed how Commerce’s budget request includes funding for targeted investments in tools to address unfair trade practices, alongside initiatives prioritizing U.S. manufacturing and trade enforcement. He emphasized Commerce’s role in protecting U.S. industries from one-sided trade practices, strengthening domestic supply chains to ensure economic security, alongside global leadership and competitiveness.
- Subcommittee Chairman Rogers praised the inclusion of a fifty percent increase for the Bureau of Industry and Security to strengthen export controls, counter threats from China, and protect the U.S.’s technological competitiveness. The discussion raised China’s unfair trade practices, citing their targeting of critical supply chains, U.S. innovation, and intellectual property. Secretary Lutnick emphasized the Bureau of Industry and Security’s (BIS) importance in protecting emerging technologies, referencing how BIS’s budget request is specifically for staff to protect and defend export controls.
- Representative Gonzales (R-TX) commended the administration’s efforts to align foreign partners in strengthening economic and national security alliances, asking how the U.S.-Mexico relationship could be leveraged to strengthen the North American footprint against foreign adversaries like China. Lutnick called for reimagining the U.S.-Mexico relationship to harness Mexico’s assets, like energy and labor, for industries such as mining and refining, without undermining U.S. jobs through outsourcing cheaper labor as allowed under NAFTA.
- Representative Clyde (R-GA) and Secretary Lutnick discussed how long-standing trade imbalances have led to the offshoring of manufacturing and have undermined critical supply chains, with increased dependence on foreign adversaries. Lutnick stated Commerce’s role is to open markets for American ranchers, farmers, and manufacturers by removing long-standing barriers and non-tariff obstacles. He emphasized that shifting the $1.2 trillion the U.S. spends on imports to domestic production would raise GDP growth to six percent, eliminating the deficit and positioning the U.S. as a global winner.
- Representative Morelle (D-NY) questioned Secretary Lutnick about the implications of businesses not having certainty in policy or markets to make necessary decisions, highlighting the lack of predictability in the administration’s trade agenda and recent actions. Secretary Lutnick responded that the President is the greatest dealmaker in the world, highlighting that deals will expand access to previously closed markets while protecting and fostering industries under attack from foreign entities.
- Subcommittee Chairman Rogers voiced concerns about the implication of reduced staffing and operational capacity, alongside necessary resources and technology, of local NOAA offices. Secretary Lutnick reiterated the five percent reduction of NOAA staff has not led to a reduction in forecasting capacity or deploying technology, with the Agency at full-force.
- Representative Dean (D-PA) asked about progress with trade deals while referencing how trade deficits can serve as a sign of economic health and criticizing the President’s fixation on the trade deficit. Secretary Lutnick responded that the administration is in the midst of negotiations with dozens of countries and could sign deals, but that deals are only going to get better. He said there is no uncertainty around tariffs if products are produced in the U.S.
- Democrats, led by Subcommittee Ranking Member Meng, criticized the administration’s imposition of funding and staff reductions, citing DOGE efforts and employee deferred resignations, creating diminished operational capacities and budgets for critical programs and mechanisms, such as NOAA.