Unlock the White House Watch newsletter for free

Your guide to what the 2024 US election means for Washington and the world

Republican senator Ted Cruz warned of a potential “bloodbath” for his party in the 2026 midterm elections if Donald Trump’s tariffs send the US economy into recession.

The senator from Texas also predicted a “terrible” fate for the world’s largest economy should a full-blown trade war erupt and Trump’s tariffs, as well as any retaliatory measures on US goods, stay in place long-term.

Typically a Trump ally, Cruz’s comments on his Verdict podcast on Friday were the starkest warning from a member of the president’s party since his “liberation day” levies kicked off the global market rout.

Republican lawmakers have begun to worry about the effects of Trump’s tariffs on the economy and their party’s prospects for keeping control of both chambers of Congress in the 2026 midterm elections. Their concerns grew as Americans watched about $5.4tn of stock market capitalisation evaporate over a two-day Wall Street rout.

On Thursday, Republican Chuck Grassley introduced a bill in the Senate, alongside a Democrat, to reassert Congressional control of tariff policy. Under the proposed law, new levies would expire in 60 days unless approved by Congress, and there would be a mechanism for lawmakers to cancel tariffs at any point.

Support for the bill grew on Friday as Republican senators Lisa Murkowski, Mitch McConnell, Jerry Moran and Thom Tillis signed on as co-sponsors. The bill is likely more symbolic than anything, but points to increasing discord within the Republican party as lawmakers worry about the effects of the trade policy on constituencies reliant on exports — and on re-election hopes.

There were already signs of voter discontent this week, when an Elon Musk-backed conservative lost a state supreme court seat in Wisconsin to the liberal candidate. Republicans also underperformed their 2024 results in two special House elections in Florida.

If Trump’s and any retaliatory tariffs remain in place long-term and push the US into “a recession, particularly a bad recession, 2026 in all likelihood politically would be a bloodbath. You would face a Democrat House, and you might even face a Democrat Senate,” Cruz said.

Despite the 53-47 Republican majority in the Senate, “if we’re in the middle of a recession and people are hurting badly, they punish the party in power”, Cruz said.

The Canada-born Texan did not share the president’s assessment that the tariffs would usher in “a booming economy”. Instead, Cruz said there could be “an enormous economic boom” only if the US and any retaliating countries slash their duty rates.

But if “every other country on earth” hits the US with retaliatory tariffs and Trump’s so-called reciprocal levies remain in place, “that is a terrible outcome”, the senator warned.

If the confrontation between the US and its trading partners escalates into a full-blown trade war, “it would destroy jobs here at home, and do real damage to the US economy”, Cruz said. It would also “have a powerful upward impact on inflation”.

The U.S. Supreme Court on Friday sided with the Trump administration, at least for now, in a dispute over the Department of Education’s freeze of DEI-related grants. The administration has taken several grievances to the high court recently, but this was the first of its legal theories to stick.

By a 5-4 vote, the justices allowed the administration to keep frozen $65 million for teacher training and professional development, halting a lower court order that had temporarily reinstated the grants.

The court’s unsigned opinion comes about a month after a similar dispute in which the justices left in place a lower court order to pay USAID contractors for services already performed.

This time, however, with education grants on the line, the court majority ruled that even though Congress had already appropriated money for the programs, the Education Department could stop funding them while the case is litigated in the lower courts.

The Education Department had frozen the grants in anticipation of trying to claw back unspent funds that had been appropriated by Congress.

A federal district judge had issued two consecutive 14-day temporary restraining orders to consider the question of the frozen funds. While such 14-day orders are rarely appealable, the Supreme Court majority viewed this case differently, and granted the administration’s request to block the lower court order from going into effect. In an unsigned 2-1/2-page opinion, the majority wrote that the lower court may actually not have had the authority to issue its order in the first place.

Justice Elena Kagan dissented, saying that the Court had made a serious “mistake” when it intervened too swiftly, effectively changing the court’s rules with only a “barebones briefing, no argument and scarce time for reflection.” Justice Ketanji Brown Jackson, joined by Justice Sonia Sotomayor, noted that it was exceptional for the Court to intervene when the temporary restraining order would expire in only three days, and that that the administration had not presented a convincing enough argument as to why such an extraordinary intervention was necessary.

While Chief Justice John Roberts noted his disagreement with the majority, he did not join either dissenting opinion.

Universities accused of violating civil rights law

The Education Department funding went to two grant programs targeting teacher shortages. Recipients included “high need” institutions, nonprofits, Historically Black Colleges and Universities, and Tribally Controlled Colleges and Universities.

The Department of Education cut nearly all of the existing grants in February, notwithstanding the fact that Congress had already appropriated the funds to be spent for these specific purposes. The administration said it eliminated 104 of 109 grants because they “fund discriminatory practices–including in the form of DEI.”

The Department also sent letters to the recipients stating that their programs violated federal civil rights laws by discriminating based on race, sex, or other protected characteristics.

Eight states whose universities and nonprofits had their grants terminated–California, Massachusetts, New Jersey, Colorado, Illinois, Maryland, New York, and Wisconsin–sued in federal district court. The challengers argued that the Department of Education’s decision to cancel the grants violated federal law. In response, the government argued that it was well within its broad regulatory authority to cancel the grants because the so-called “DEI initiatives” were no longer aligned with government policy.

A federal judge in Boston issued a temporary restraining order, which reinstated the funding for up to 28 days while he considered the states’ claims. After a failed attempt to overturn the order in the federal court of appeals, the Department of Education asked the Supreme Court to stop the lower courts from reinstating the grant money, at least for now.

The Department insisted that it should not be forced to continue funding millions of dollars in “taxpayer money that may never be clawed back” while the lawsuit plays out in the courts. It pointed out that, even if it eventually wins this case, it would have a hard time getting the millions in federal dollars back once the “federal funding spigots” had been turned back on.

The eight states that are part of the lawsuit against the administration countered that it would make little sense for the Supreme Court to intervene at this stage, given that the grant reinstatement would expire soon anyway. And, they pointed out, the order’s limited shelf life gave grant recipients little time to continue receiving government funds.

In that sense, the schools would be getting a drop in the bucket compared to the government’s image of a “funding spigot.” And that would still be less than they were promised in their five-year grant.

The Supreme Court didn’t see things that way, and instead sided with the Trump administration, delivering a major win to an executive branch trying to amass greater power as it continually clashes with the lower federal courts.

More cases in the pipeline

Friday’s case is only the latest of what is expected to be a tsunami of cases that the Trump administration is bringing to the Supreme Court. Among those already in the pipeline at early stages of litigation is a lower court order that reinstated roughly 16,000 previously terminated federal employees.

Another court stopped the administration from denying birthright citizenship for some children born in the United States, a case in which the government complained at length about the use of universal injunctions, a wide-reaching order that applies to everyone impacted across the country. And most recently, the administration asked the court to allow it to continue deporting U.S. residents, without a hearing, who it alleges are Venezuelan members of the Tren de Aragua gang.

Bubbling under the surface in these cases is the government’s ongoing critique of sweeping court orders that bind the administration’s actions beyond the confines of the courtroom. Judges’ grants of nationwide relief have been a thorn in the administration’s side since Trump took office in January.

They were also a thorn in the side of the Biden administration. But as frustrated as that administration sometimes was, it rarely complained of unfair treatment. In contrast, the Trump administration, and President Trump himself, have cried foul repeatedly and loudly over these lower court decisions.

Attorney General Pam Bondi in a statement said Friday’s ruling “vindicates what the Department of Justice has been arguing for months: local district judges do not have the jurisdiction to seize control of taxpayer dollars, force the government to pay out billions, or unilaterally halt President Trump’s policy agenda.”

—NPR’s Ryan Lucas contributed to this report.