Policy Week in Review - Oil Moves, New Tariff Investigations, and the DHS Lapse Impact

Key Takeaways

• President Trump reversed course from last week and announced that he and other countries around the world will tap strategic oil reserves to address gas prices.

• The President may be looking at other policies including Jones Act limitations. 

• Iran selected Mojtaba Khamenei– son of the late Ayatollah Ali Khamenei – to lead the country in a sign that their hairline posture will continue.

• The Strait of Hormuz is effectively under a blockade for the time being.

• The Administration announced new tariff investigations into 16 countries and the EU.

• These investigations focus on unfair trade practices and will be used to replace IEEPA. 

• The Homeland Security shutdown is in a complete stalemate.

• TSA will stop receiving checks this week which could result in absences and long lines at airports. 

• The Senate overwhelmingly passed legislation meant to address housing costs that included a ban on “institutional investors” owning more than 350 homes.

• In the House, the bill may face delays and changes. 

Oil Stockpiles Released from the U.S. Petroleum Reserve

Wednesday evening, the President reversed his earlier position and approved the release of 172 million barrels of oil from the Strategic Petroleum Reserve (SPR). Intended to reduce the impact of oil supply disruptions, SPR oil can be sold when authorized by the President. This has only happened four times prior to this: 1) in January 1991, as a result of Operation Desert Storm; 2) in September 2005, after Hurricane Katrina; 3) in June 2011, after disruptions in Libya and other countries related to the Arab Spring; and 4) in March 2022, due to Russia’s invasion of Ukraine. 

The release is part of the International Energy Agency (IEA) effort to release 400 million barrels of oil, the largest release from member countries in the agency’s history. Tapping the SPR is intended to address supply disruptions and mitigate oil price increases due to Iran’s attempted blockade of the Strait of Hormuz, which carries over 20 million barrels of oil per day and is one of the busiest oil routes in the world. Given those numbers, this 400 million oil barrel release will supplant roughly 20 days of oil normally transiting the strait, with the U.S. share accounting for about nine of those days.

In the past, Iran has frequently threatened to disrupt or close the strait in response to sanctions or geopolitical pressure,and continue – among other things – its nuclear weapons ambitions. The President’s plan to free up commercial traffic through the Strait of Hormuz includes attacking Iranian mine-laying ships, exploring options to insure ships sailing through the Persian Gulf, and potentially escorting oil tankers through the strait. It is yet unknown if the plan to free up traffic in the strait will succeed but President Trump reiterated committed to breaking Iran’s stranglehold over 

The White House is also said to be considering a suspension of the Jones Act which requires all shipments between U.S. ports to be carried out by ships built and flagged in America. Repealing the Jones Act is a longheld conservative goal regarded as good policy by most Republicans but may not have a large immediate impact on oil prices. According to a National Bureau of Economic Research (NBER) study, eliminating the Jones Act would have saved American consumers $769 million per year in lower fuel costs. According to the Department of Energy, Americans spend just over $1 trillion on petroleum annually. 

Iran Picks New Leader as Hormuz Becomes Chokepoint

This week, Iran’s “Assembly of Experts” selected Mojtaba Khamenei – son of the late Ayatollah Ali Khamenei – to lead Iran following his father’s killing in a joint U.S.-Israeli airstrike. President Trump had earlier deemed the potential appointment of Mojtaba Khamenei to be unacceptable and expressed disappointment following his selection, saying it would “​lead to just ​more of the same problem ‌for ⁠the country.” 

The appointment of Mojtaba likely signals a continuation of his father’s hardline policies, especially considering his role in the crackdown on protesters in 2009 and his close ties to the paramilitary Islamic Revolutionary Guard Corps (IRGC). Mojtaba Khamenei is already proving to be deferential to the IRGC. In his first public comments, Khamenei vowed to attack U.S. military bases in the Middle East and to continue blockading the Strait of Hormuz, a key shipping route for oil and gas that typically sees one-fifth of the world’s oil pass through. 

At least two fuel tankers have been hit near the Iraqi port of Basra and four additional vessels in Gulf waters, leading to uncertainty in global markets. To keep the strait passable, the United States Central Command announced on Tuesday that it had attacked multiple Iranian naval vessels, including 16 mine-laying vessels near the strait. As U.S. precision strikes in Iran intensify – aimed at crippling theIranian regime’s nuclear advancement,– the pace of Iran’s retaliatory strikes also appears to be slowing, a sign of degraded weapons capabilities and depleting stockpiles.

Tariff Investigations Announced for 16 Countries and EU 

On Wednesday, Trump Administration officials from the United States Trade Representative (USTR) announced Section 301 investigations into unfair trade practices by 16 countries and the European Union. The investigations will likely be used to replace reciprocal tariffs recently struck down by the Supreme Court. 

Immediately following the Supreme Court decision on reciprocal tariffs, the White House used Section 122 of the Trade Act of 1974 to impose a new, baseline global tariff of 10%. Tariff authority under Section 122 is broad but limited in duration and tariff amount. Tariffs are limited to a top level of 15% and will expire on July 24, 2026, if not extended by Congress. 

In the meantime, the White House, USTR, and Department of Commerce will conduct expedited studies and deliver reports to issue tariffs under other existing laws including: 

• Section 232 national security tariffs that are generally product based. 

• Section 301 tariffs imposed if another country is engaged in unfair trade practices, and which may remain in place for as long as appropriate.

The White House and USTR will use the coming months to conduct investigations and issue recommendations for additional tariffs. Tariffs placed broadly on specific countries will likely use Section 301 while tariffs imposed on particular products or industries will use Section 232 national security justifications. Both approaches are likely to face legal challenges, but the administration appears confident they can be defended in court.

Department of Homeland Security Shutdown Lingers

The Department of Homeland Security (DHS) remains shut down and Republicans and Democrats remain far apart on a solution. Competing unanimous consent requests from Democrats (to reopen all agencies except Immigration and Customs Enforcement) and from Republicans (to reopen the entire department) both failed to reach the required votes again this week. The department will be shut down again at least until Congress returns next week. 

As the shutdown continues, national disruptions will increase. Both sides appear to be playing a game of political chicken to see which side will relent first. Meanwhile, the pressure points mount for travelers and DHS employees.

TSA Paychecks Coming to an End: Transportation Security Agency (TSA) agents received a partial paycheck last week, but will not be paid again until the shutdown ends.

Increased TSA Employee Absences: The number of unscheduled TSA employee absences has doubled during the shutdown. 

Longer Airport Lines: Travelers across the country are starting to face long delays in security lines as more TSA agents stop showing up for work. 

FEMA Stops Non-Essential Activities: The Federal Emergency Management Agency (FEMA) has ceased all non-essential activities and will focus exclusively on immediate disaster response where there is an active threat to life, public health, or safety. As spring storm season begins, the lack of response is sure to be felt more across the country.

Coast Guard Pay Disrupted: The U.S. Coast Guard and federal law enforcement agencies are also impacted by the lack of funding and working without pay until Congress funds DHS.  

Mullin Hearing for DHS Secretary Set for Next Week

Next Wednesday, March 18, the Senate Homeland Security and Governmental Affairs Committee will hold formal confirmation hearings with Senator Markwayne Mullin (R-OK), nominee to succeed Kristi Noem as Secretary of the Department of Homeland Security (DHS). In the past, Committee Chair Rand Paul (R-KY) and his former colleague have sparred over policy and voting records in the Senate. While there may be some personal contentiousness between the two, the fact that the hearing was promptly scheduled shows that the nomination will move swiftly. It is likely the Senate will easily vote to confirm Mullin as Secretary by March 27, 2026. 

Senate Passes Bill to Address Housing Costs

On Thursday, the Senate voted 89-10 to pass the Renewing Opportunity in the American Dream to Housing (ROAD to Housing) Act. Although it received strong bipartisan support in the Senate, the bill faces a tough path ahead in the House. House Financial Services Committee Chair French Hill (R-AR) has said the House will not support the Senate-passed bill as written, and House Republican leadership has indicated it will support Hill’s position. The influential House Freedom Caucus reportedly also will not support the bill without changes. The House passed its own housing reform bill last year, and House members seem ready to fight for their version. 

Provisions banning large institutional investors from purchasing homes drew some concern among interest groups and even Democrats like Senator Brian Schatz (D-HI), who said Wednesday that the text of the provision is a “drafting error.” Their concern stems primarily from language that would require investors to sell build-to-rent homes within seven years. 

At this point it is likely that the bill will be subject to changes in the House that will require another Senate vote. Supporters of the bill in the Senate will argue that the widespread, bipartisan support means the House should vote on the bill as it stands. If President Trump weighs in and pushes the House to take up the Senate bill quickly it will change the current dynamics. 

Warsh Heads to Capitol Hill, But Hearing Timing Remains Uncertain

Kevin Warsh, President Trump’s nominee to replace Jerome Powell as Chair of the Federal Reserve when his term ends in May, was on Capitol Hill this week meeting with key Senators regarding his nomination. Warsh has strong support among Republican Senators, and his confirmation would otherwise have an easy road ahead except for retiring Senator Thom Tillis’ refusal to move his nomination forward until a Department of Justice investigation into Powell concludes. 

President Trump Leans on Congress to Pass the SAVE Act

Earlier this week, Senator John Cornyn (R-TX) joined President Trump in calling for the Senate to modify the filibuster system that requires 60 votes to consider a bill in the Senate in an effort to send the House-passed SAVE Act to the President’s desk. However, Senate Majority Leader John Thune (R-SD) stated this week that changes to the filibuster rule are not forthcoming. President Trump has said the voting reform bill, which among other things requires voter ID, is his number one legislative priority. Republicans in the Senate are wary of changing the Senate threshold from 60 to 50 votes to consider a bill because they worry of the precedent it could set if and when Democrats take the majority again.