July Ag Prices Received Index Down 4.1 Percent; Prices Paid Down 0.6 Percent

July Prices Received Index Down 4.1 Percent  

The July Prices Received Index 2011 Base (Agricultural Production), at 133.0, decreased 4.1 percent from June and 2.6 percent from July 2025. At 107.0, the Crop Production Index was down 5.8 percent from last month but up 3.8 percent from the previous year. The Livestock Production Index, at 157.0, decreased 1.1 percent from June and 8.9 percent from July last year. Producers received lower prices during July for lettuce, cattle, broilers, and milk but higher prices for eggs, wheat, hogs, and onions. In addition to prices, the volume change of commodities marketed also influences the indexes. In July, there was decreased monthly movement for cattle, milk, broilers, and strawberries and increased marketing of grapes, wheat, hay, and peaches.  

July Prices Paid Index Down 0.6 Percent  

The July Prices Paid Index for Commodities and Services, Interest, Taxes, and Farm Wage Rates (PPITW), at 162.1, is down 0.6 percent from June 2026 but up 7.7 percent from July 2025. Lower prices in July for feeder cattle, feeder pigs, other services, and nitrogen more than offset higher prices for milk cows, complete feeds, hay & forages, and supplies. 

This Week's Drought Summary (9/3)

Dry weather continued this week across much of the central U.S., especially from the southern Great Plains to the Mississippi River Valley and Corn Belt. Flash drought conditions were occurring across a large area spanning from Texas northeastward to Oklahoma and southern Kansas, southern Missouri, Arkansas, northern Mississippi and portions of far western Tennessee. Due to the drier- and warmer-than-normal weather in most of these areas, drought and abnormal dryness expanded and intensified in many areas, as widespread adverse impacts to agriculture continued and fire danger continued to grow in some areas. Widespread showers and thunderstorms, some locally heavy, dotted parts of the Northeast and Southeast regions, leading to localized improvements to ongoing drought or abnormal dryness. Some areas that missed out on the rains saw conditions worsen. Hot and dry weather continued near the borders of the Dakotas with Minnesota, leading to worsening drought conditions. Widespread improvements occurred in some areas from Wyoming and the plains of eastern Colorado northeast into the Nebraska Sandhills and southern South Dakota, where either heavy rainfall this week improved conditions or conditions were reassessed following recent heavier rains. Recent hot and dry weather, combined with a lack of winter snowpack, led to the expansion of moderate drought in northern California. Heavy rainfall associated with the remnants of Tropical Storm Dolly in eastern Puerto Rico led to a few improvements there, though widespread severe and extreme drought continued across much of Puerto Rico. Recent rainfall led to the removal of short-term moderate drought from Alaska’s Central Interior.

Northeast

Weather this week was largely drier in the Northeast, except for parts of New Jersey and southeast Pennsylvania (in the Lehigh Valley and Philadelphia area), where heavy rain amounts (locally over 2 inches) boosted streamflows and alleviated long-term precipitation deficits. Recent rainfall also led to a few localized improvements in southern New England, though groundwater shortages and long-term precipitation deficits kept some of the lingering drought and abnormal dryness going. In northern New England, drier weather prevailed, leading to growth and worsening of drought areas amidst very low streamflows. Despite temperatures of 2-4 degrees below normal in central New York, abnormal dryness expanded there as short-term precipitation deficits grew and soil moisture and streamflow declined. Temperatures across the rest of the region were mostly within 2-4 degrees of normal.

Southeast

Scattered heavy rains, locally 2-5 inches, fell from parts of southern North Carolina through the Florida Peninsula. Scattered improvements to ongoing long-term drought occurred in the Florida Peninsula, southeast Georgia, coastal South Carolina and southern North Carolina, where lingering long-term precipitation deficits were balanced against short-term gains and improving soil moisture and streamflow. Localized short-term dryness enveloped parts of northeast North Carolina, leading to locally worsening drought conditions where long-term precipitation deficits are still hefty. Drought and abnormal dryness expanded across much of southern Alabama and a few portions of central Georgia, as soil moisture declined and streamflows lowered with ongoing short-term rainfall deficits. Temperatures in Alabama and northwest Georgia were generally warmer than normal, with some areas finishing the week 2-4 degrees above normal. Elsewhere, with local exceptions, temperatures remained within a couple degrees of normal.

South

Widespread expansion or worsening of ongoing drought or abnormal dryness occurred across the South, especially in parts of Mississippi, Texas, eastern Oklahoma and portions of Arkansas. Heavier rains, locally over 2 inches, fell in southeast Louisiana and southwest Mississippi. Otherwise, weather conditions were mostly drier, with many areas receiving less than a half inch of rainfall and some receiving none at all. Temperatures were warmer than normal across most of the region, especially in Oklahoma and the northern half of Texas, where temperatures were 6-10 degrees hotter than normal. This continued a very hot August across much of Oklahoma. Degradations in drought conditions were especially prevalent in southwestern and northern Texas, deep south Texas, northern Mississippi and eastern Oklahoma, as ongoing hot and dry weather worsened conditions in areas already suffering a myriad of drought impacts. Burn bans were enacted across much of western Oklahoma, while Oxford, Miss., residents were asked to conserve water due to high water demand and recent extreme heat. Streamflow across much of central and western Oklahoma and northern Texas was quite low, along with low soil moisture and intense short-term precipitation deficits.

Midwest

Dry weather occurred across much of the southern half of the Midwest region this week. This led to localized development or expansion of abnormal dryness in Illinois and Kentucky, and widespread degradation of conditions in Missouri, especially in south-central and southwest Missouri. Fire danger and drought impacts to agriculture and other vegetation continued to worsen in southwest Missouri and neighboring Arkansas, leading to degrading conditions across much of this area. Drought conditions also worsened in west-central Minnesota, where short- and long-term precipitation deficits mounted. Temperatures in the eastern half of the region were generally within 2-4 degrees of normal, while much of Minnesota, Iowa and western Missouri were 2-6 degrees warmer than normal. Scattered rains fell across parts of the Upper Midwest, locally exceeding 2 inches but mostly depositing a half inch or less of rain.

High Plains

A swath of 0.5-2 inches of rain fell from parts of western Nebraska and western Kansas into portions of Colorado and Wyoming. Scattered similar rain amounts also fell in portions of east-central and northern South Dakota, as well as in parts of central and western North Dakota. The impacts of recent rainfall in southern South Dakota and the Nebraska Sandhills were re-evaluated this week, and widespread improvements were made as soil moisture and streamflow locally improved, while short-term rainfall deficits were alleviated. Long-term precipitation deficits and their impacts continued across much of this region, and abnormal dryness and long-term moderate drought remained. Scattered improvements to drought also occurred from southern and eastern Wyoming into the western Dakotas and much of eastern Colorado. Short-term precipitation deficits improved in these areas, with some improvement in soil moisture and streamflow, leading to improvements in drought conditions. Streamflow still remains low across portions of the western High Plains region given the poor high elevation snows and warm temperatures during the water year. Temperatures across the region were hotter than normal, especially in Kansas, where temperatures ranged mostly from 6-10 degrees above normal, resulting in high atmospheric demand for moisture in southeast Kansas.

West

Locally heavy rains from the North American Monsoon fell in parts of Arizona, Utah and the Rocky Mountains in Colorado. Parts of Colorado to the west of the Front Range saw conditions improve given recent rainfall, though widespread short- and long-term drought remained across central and western Colorado. In a few areas in south-central and southwest Colorado that missed out on heavier rains, long-term precipitation deficits grew even worse. Temperatures from 4–6 degrees above normal also kept atmospheric thirst high, and extreme and exceptional drought locally expanded. Short-term precipitation deficits and poor streamflow in some areas led to drought degradation in parts of the Idaho Panhandle, the Spokane, Wash., area, and nearby northwest Montana. Short-term dryness and warmth in northern California led to the expansion of moderate drought there. Moderate drought locally expanded in north-central Montana where short-term rainfall deficits grew and soil moisture declined in a few areas. Recent precipitation in southwest Montana led to improvements in mid- to long-term precipitation deficits and overall conditions, and moderate drought coverage decreased. Recent precipitation in western Utah helped to lessen long-term precipitation deficits, and extreme drought coverage lessened slightly. Temperatures were warmer than normal across much of the West, excluding areas from western Nevada and far northern California through Oregon and Washington. In the rest of the region, temperatures were mostly at least 2-4 degrees above normal, with many areas 4-10 degrees warmer than normal.

Caribbean

This week, over 6 inches of rain fell in parts of southeast Puerto Rico as the remnants of former Tropical Storm Dolly passed through the area. At least 2-3 inches of rain fell across much of eastern Puerto Rico. Extreme short-term drought improved to severe short-term drought in parts of northeast and southeast Puerto Rico, while a small area of southeast Puerto Rico saw conditions improve from severe to moderate short-term drought.

This week, increased tropical moisture from the remnants of Dolly created conditions conducive to showers across some areas of the U.S. Virgin Islands (USVI). However, local factors and island-scale variability significantly influenced the resulting precipitation. As a result, while the overall weather pattern brought beneficial rainfall, it was not uniform across the islands—St. Croix received considerably more rain, whereas St. Thomas and parts of St. John remained relatively dry. Despite these recent rainfall amounts, groundwater levels on all three islands are still much lower than they were a year ago, indicating that the recent precipitation has not yet led to significant recovery of groundwater supplies.

St. Croix experienced the highest and most widespread rainfall among the three islands this week. East Hill recorded 1.45 inches, while the CoCoRaHS stations reported various amounts: 1.61 inches at VI-SC-10 (Christiansted 1.6 E), 1.96 inches at VI-SC-20 (Frederiksted 1.7 ESE), 1.61 inches at VI-SC-23 (Christiansted 6.5 W), 1.30 inches at VI-SC-30 (Christiansted 1.7 SW), 1.92 inches at VI-SC-34 (Frederiksted 1.9 NE), and 1.94 inches at VI-SC-35 (Frederiksted 1.3 ENE). Overall, the rainfall across St. Croix was moderate and fairly widespread, with amounts ranging from 1.30 to 1.96 inches among the CoCoRaHS stations. However, despite this recent rainfall, groundwater remains severely depleted. The Adventure 28 Well measured a depth of 24.64 feet below the land surface on September 1, compared to 18.38 feet on the same date in 2025. This indicates that groundwater levels are substantially lower than they were a year ago. As a result, St. Croix continues to experience extreme drought conditions.

This week, St. John received significantly less rainfall compared to St. Croix. Rafe Boulon (VI-SJ-3, Windswept Beach) recorded 0.48 inches, while the CoCoRaHS VI-SJ-5 station (Cruz Bay 1.6 E) recorded only 0.03 inches. These observations indicate limited and uneven rainfall, with no evidence of widespread substantial precipitation across the island. Groundwater conditions remain very dry. At the Susannaberg DPW 3 Well, the water level was measured at 18.50 feet below the land surface on September 1. This level has increased in depth from the previous week and is significantly deeper than the 12.67 feet recorded on September 1, 2025. The combination of minimal rainfall and declining groundwater levels indicates that St. John is currently experiencing extreme drought conditions.

St. Thomas observed the least rainfall of the three islands this week. Cyril E. King Airport recorded just 0.01 inches. CoCoRaHS stations reported varying amounts: 0.34 inches at VI-ST-5 (Charlotte Amalie West 4.2 WNW), 0.06 inches at VI-ST-14 (Nadir 0.3 E/Tropical Marine), and 0.29 inches at VI-ST-15 (Charlotte Amalie West 1.3 N). The VI-ST-13 station (Charlotte Amalie 1.2 NNW) reported missing data instead of an observed rainfall amount. As a result, recorded rainfall ranged from 0.01 to 0.34 inches, indicating generally light rainfall that varied across St. Thomas. In addition, groundwater conditions remain very poor. The Grade School 3 Well reached a depth of 9.88 feet below the land surface on September 1, compared to 7.38 feet on the same date in 2025. Furthermore, groundwater depth has been increasing since April 20, 2026. These conditions suggest that St. Thomas continues to experience extreme drought conditions despite some recent rainfall.

Pacific

Above-normal rain amounts fell in much of central and northern portions of Alaska, along with temperatures that were near-normal or 3-9 degrees below normal in these areas. A small area of short-term moderate drought in the Central Interior was removed, while abnormal dryness locally expanded in the Eastern Interior, where locally dry recent weather continued.

Precipitation amounts in Hawaii this week were mostly below normal, with the highest amounts of 1-2 inches falling in parts of Kauai, Maui, Oahu and the Big Island. Temperatures were mostly within a couple degrees of normal this week. Hawaii remained free of drought, though abnormal dryness remained in parts of Kauai, Oahu, Molokai, central Maui and the western reaches of the Big Island.

The Marshall Islands have been affected by the western Pacific monsoon trough, bringing scattered showers and thunderstorms to Majuro. By September 1, the National Weather Service noted that monsoon activity was weakening, and a drier pattern was expected around Majuro. Rainfall this week was adequate, with all reporting stations free from drought conditions. Weekly totals included 3.31 inches at Ailinglapalap, 0.40 inches at Jaluit, 1.83 inches at Kwajalein, 1.90 inches at Majuro, 2.45 inches at Mili, 0.54 inches at Utirik, and 1.04 inches at Wotje. Jaluit was the driest location but had received 1.9 inches on August 24, providing some moisture to remain drought-free. Overall, the Marshall Islands are currently drought-free.

This week, an active monsoon trough and surge affected eastern and central Federated States of Micronesia (FSM), especially Pohnpei, where a weak tropical disturbance, Invest 95W, was located. The National Weather Service reported that while the surge enhanced convection around Pohnpei, it was expected to weaken as the disturbance moved north-northwest. Western FSM, including Yap and Chuuk, also experienced the effects of a monsoonal convergence zone. Rainfall varied across FSM, with most stations receiving at least 1 inch. Notable weekly totals included 2.84 inches at Chuuk Lagoon, 0.00 inches at Kapingamarangi, 1.12 inches at Kosrae, 1.46 inches at Lukunor, 0.86 inches at Nukuoro, 1.58 inches at Ulithi, 6.28 inches at Pohnpei, 1.59 inches at Woleai, and 1.73 inches at Yap. Pohnpei recorded particularly heavy rainfall, reaching 6.28 inches, including 4.16 inches on August 30. In contrast, Kapingamarangi remained dry with no rainfall and continued to maintain a D0-S (abnormally dry) status. Overall, recent rainfall has kept drought-free conditions across most of FSM, except for Kapingamarangi.

American Samoa continues to experience persistent short-term dryness among the USAPI regions. This week, Pago Pago recorded 0.29 inches of rain, while Siufaga Ridge received 0.76 inches, and Toa Ridge received 0.57 inches. Despite these amounts, all three locations remain in moderate drought conditions (D1-S), as the localized rainfall was insufficient to provide meaningful relief from the dryness. The limited rainfall is due to a synoptic pattern in which the main western Pacific monsoon trough and associated tropical disturbances are positioned well north of American Samoa. This situation has left the territory outside the core area of enhanced Micronesian convection. As a result, rainfall this week has been intermittent and localized, rather than widespread enough to improve the moderate drought conditions significantly.

Palau experienced no rainfall this week, recording 0.00 inches at Koror and only 0.10 inches at WSO Palau/Airai. Both weather stations remain in abnormally dry conditions (D0-S) due to ongoing dryness, raising the risk of deteriorating into moderate drought if these conditions persist. Weather patterns have been less favorable for rainfall than in central and eastern Micronesia. Palau has been situated beneath or near a relatively dry tropical ridge, while the main monsoonal convergence and convective activity have shifted towards Yap and the Marianas. The National Weather Service (NWS) indicated that this ridge would continue to promote mostly dry conditions over Palau. Consequently, the lack of significant rainfall this week, combined with the prevailing dry weather patterns, supports the continuation of abnormally dry conditions (D0-S). Drought conditions may worsen to moderate drought next week if the dry spell continues.

This week, the Mariana Islands experienced locally heavy and highly variable rainfall. The totals of rainfall were as follows: Guam received 4.64 inches, Rota had 2.32 inches, Saipan recorded 0.82 inches (with two days of data missing), and Tinian observed 1.44 inches (with five days of data missing). As a result, all stations remained drought-free. This rainfall pattern was linked to an active monsoon trough and the nearby tropical disturbance, Invest 95W, which increased moisture and convection in the region. Overall, the rainfall was sufficient to maintain drought-free conditions throughout the Mariana Islands.

Looking Ahead

Through the evening of Monday, Sept. 7, the National Weather Service Weather Prediction Center is forecasting dry weather to continue across much of the central and south-central U.S., especially from southeast Nebraska through Oklahoma, Arkansas and western north Texas into southwest Texas and eastern New Mexico and Colorado. Heavier precipitation amounts through Monday evening will likely be confined to parts of the southeastern and northern Lower 48. Heavy rain is forecasted, or occurring on Wednesday afternoon, in east-central and southeast Texas, while the remnants of Tropical Storm Edouard pass through. Heavier rain is also forecast across the central and eastern Gulf Coast and Florida Peninsula. Rain amounts from southern Louisiana to near Panama City may approach 1-2 inches, while heavier rain amounts, locally 2-3 inches or more, are forecast in the Florida Peninsula. Heavier precipitation amounts, mostly in the 0.75-2 inch range, are also forecast in parts of the Pacific Northwest, northern Idaho, northern parts of Montana and North Dakota, and from Minnesota southeastward across Wisconsin and the lower Great Lakes into Pennsylvania and New York.

The National Weather Service Climate Prediction Center’s 6-10 day outlooks, covering Sept. 8-12, favors warmer-than-normal temperatures across much of the central and eastern U.S. The highest confidence for above-normal temperatures is centered around Kansas City and the mid-lower Missouri River Valley southward to the central and western Gulf Coast. Near-normal temperatures are favored in the western half of the West, with below-normal temperatures slightly favored in western Nevada and adjacent parts of California and Oregon. Near- or below-normal temperatures are also favored in central and northern New England. Above-normal precipitation is favored across much of the Great Plains and western U.S., especially from the Continental Divide into the Great Basin and in northern Minnesota and environs. Above-normal precipitation is also slightly favored in east-central Florida. The forecast favors drier-than-normal weather in the Tennessee and Ohio River Valleys and from Lake Erie to southern parts of the Northeast.

In Hawaii, both precipitation and temperatures are expected to be above normal for Sept. 8–12. Above-normal precipitation is also favored across large parts of Alaska, except for the northwest portion of the state and the central Aleutian Islands. Above-normal temperatures are favored in southeast and central Alaska and in the central Aleutian Islands, while near-normal temperatures are favored in northeast and southwest Alaska and the eastern Aleutian Islands.

Farmer Sentiment Rises Again in August as Future Expectations Improve

Farmer sentiment improved for the second month in a row, with the Purdue University-CME Group Ag Economy Barometer (AEB) Index increasing from 126 points in July to 135 points in August. Both subindices also increased; however, the Index of Current Conditions rose by only 1 point, while the Index of Future Expectations increased by 11 points. For the first time since June 2025, a higher proportion of respondents expect their operation to be better off financially (28%) than worse off (24%) a year from now. Optimism regarding export prospects over the next five years also improved this month, reaching an index value of 140, the highest since last December. Higher input costs, chosen by 45% of respondents, remained the biggest concern. The August barometer survey was conducted among 402 farmers across the country from August 10 to 14, 2026.

The Farm Financial Performance Index increased from 90 at the start of the year to 103 in August, reflecting greater optimism among respondents about their financial prospects over the next 12 months. Despite this increase, the Farm Capital Investment Index dropped 5 points to 45.

This month’s survey included three questions about operator skills. The first question had respondents indicate the skill that generated the most return on investment on their farm. Production skills were selected by 29%, followed by financial management and analysis at 23%, strategic planning at 22%, selling products at 14%, and buying inputs at 11%.

The second question asked respondents which skill their farm needed the most improvement in. Strategic planning was selected by 28% of respondents, followed by selling products at 20%, buying inputs at 19%, financial management and analysis at 17%, and production at 16%. The third question asked respondents to indicate which skills they believed had the most potential for improvement using artificial intelligence. The top three choices, in order, were strategic planning (32%), financial management and analysis (28%), and production (18%).

The Short-Term Farmland Value Expectations Index increased by 8 points to 127 in August. Alternative investments, interest rates, and inflation were cited as the three factors with the greatest influence on farmland values. Periodically, the survey includes a question asking respondents to rate farmland as an investment. In August, 65% of respondents indicated that farmland was a good investment, 17% indicated that farmland was a medium investment, and 18% indicated that farmland was a poor investment.

Since July 2025, producers have been asked whether they think the U.S. is headed in the “right direction” or on the “wrong track.” After averaging 71% during the last six months of 2025 and 62% in the first quarter of 2026, the percentage of producers who said the U.S. was headed in the “right direction” has ranged from 51% to 57% since April, with 51% of respondents saying that the U.S. was heading in the right direction in August.

Wrapping Up

Farmer sentiment increased again in August, with the largest improvement coming from the future expectations. The Index of Current Conditions increased by 1 point, while the Index of Future Expectations increased by 11 points. Respondents were more optimistic about their financial prospects and land values in the upcoming year and exports in the next five years, but were less confident about making new investments in machinery and buildings.

Despite the improvement in producer sentiment, important concerns remain. High input costs continue to be the biggest concern, followed by low crop and livestock prices and rising interest rates. Respondents were asked questions related to their farm’s key skills. Strategic planning was most frequently identified as the skill needing improvement. Interestingly, respondents also indicated strategic planning as the most likely skill that could be improved through the use of artificial intelligence (AI).

September Policy Preview

Lawmakers return to Washington this week facing a full agenda and a tight schedule. Several bills, policy fights and negotiations require attention, including a third reconciliation package, a suite of kids’ online safety bills, a farm bill and key cybersecurity programs. Congress will also be navigating economic pressures from rising food and diesel prices as the approaching midterm elections put pressure on Republicans to move quickly on their legislative priorities. POLITICO policy teams detail what else is on lawmakers’ fall agenda. — Congress is deadlocked on several defense bills, including the National Defense Authorization Act and supplemental funding for the war in Iran.   — President Donald Trump and Chinese leader Xi Jinping are set to meet this month for a discussion that's expected to touch on artificial intelligence.   — The trade war with Canada is at a stalemate, risking the economy and the GOP's election outlook. Agriculture — Farm bill Status: Lawmakers will reconvene after Labor Day to address the future of the stalled farm bill. The Senate Agriculture Committee failed to advance the legislation amid disagreements over proposals to delay a requirement for states to share the cost of providing food aid under the Supplemental Nutrition Assistance Program.   Democrats have demanded a two-year delay of the cost-sharing requirement enacted as part of the One Big Beautiful Bill Act, but Republicans and the White House won’t budge beyond one year, fueling fears that the once-bipartisan legislation that farmers rely on will not pass during this Congress.   With the midterm elections on the horizon, farm-focused lawmakers are also preparing for dramatic changes. Agriculture Committee ranking members Sen. Amy Klobuchar (D-Minn.) and Rep. Angie Craig (D-Minn.) are set to leave Congress. Rep. Shontel Brown (D-Ohio) is already vying for the top Democratic seat on the House side. House Agriculture Chair G.T. Thompson (R-Pa.) would have to step down unless granted a waiver to continue. Rep. Austin Scott (R-Ga.) would be next in line to lead Republicans if Rep. Frank Lucas (R-Okla.) doesn’t want the job.   Issues such as tariffs, rising farm production costs and even the spread of data centers are expected to be important issues in competitive districts where Agriculture Committee lawmakers, like Rep. Derrick Van Orden (R-Wis.), are defending their seats.   — Tariffs vex cattle industry: Meanwhile, cattle ranchers are fuming after President Trump signed a proclamation temporarily removing tariffs on some beef imports. Farm-state Republicans and ranchers say the plan to lower consumer prices ahead of the midterms will damage their businesses.   At USDA, officials are gearing up to release a highly anticipated regulation aligning federal school meals with the Dietary Guidelines for Americans, which were released in January. Agriculture Secretary Brooke Rollins has said the proposed regulation could be published this week. While details remain unclear, it’s expected to lower added-sugar and salt limits, as well as reduce highly processed foods. School nutrition professionals have raised concerns that the rule will impose new costs without raising the federal reimbursement rate for meals at a time when food costs are already high.   — Food safety: The Trump administration is also facing heightened scrutiny for its handling of recent foodborne illnesses, including salmonella and a record-setting cyclopsora outbreak. Former Trump administration officials have called for a review of the government’s handling of the outbreak, but it’s not clear if Congress will take up the matter this fall. — Marcia Brown Trade — Trade war with Canada: President Trump’s 50 percent tariff on $20 billion worth of Canadian goods went into effect on Aug. 22, launching a new and more fraught phase in the North American trade war.   In response, Prime Minister Mark Carney announced counter-tariffs targeting more than 700 products, with the hardest squeeze on American steel and aluminum. The duties are set to go into effect on Sept. 8.   Carney has also expressed an interest in trying to negotiate a detente, after pulling his negotiators from the talks on Aug. 21. But neither government looks prepared to return to the table immediately, despite pressure from business groups.   Trump has threatened to impose yet another round of 50 percent on Canadian vehicles, steel and other items beginning Jan. 1, suggesting the stand-off could drag throughout the fall.   — Tariff's create midterm headaches: That’s bad news for industries that rely on North American markets and supply chains, particularly in Canada. It’s also alarming Republicans in U.S. states that border Canada in the buildup to the midterm elections.   Four border states — Maine, Michigan, New Hampshire and Alaska — as well as manufacturing-heavy Ohio are on the front lines of both the midterms and Trump’s trade war.   Fifty-six percent of U.S. adults said cost-of-living concerns are among the top issues facing the country in a recent POLITICO Poll. And a notable share of Trump’s own voters hold negative views about the current state of the economy — and how he is trying to improve it.   Among Trump voters who said things are less affordable now than a year ago, most blamed the Iran war (52 percent), but a sizable share (42 percent) blamed Trump’s tariffs on imported goods.   Former Republican Sen. John Sununu, who is running to recapture his New Hampshire Senate seat this fall, said in a statement to POLITICO Tuesday that “it makes no sense to start a trade war with our closest neighbor."   “Canada is an important and valued trading partner for New Hampshire,” Sununu added. “As Senator, I’d encourage both sides to continue to negotiate and keep trade flowing between our countries.” — Zi-Ann Lum, Daniel Desrochers, Jordain Carney, Mia McCarthy Financial Services — Interest rate intrigue: The Federal Reserve will meet this month, and some members of the rate-setting committee are expected to make the case for hiking interest rates in the face of elevated inflation. In his Aug. 28 speech at the Fed’s annual conference in Jackson Hole, Wyoming, Warsh laid the groundwork for an interest rate hike by acknowledging that inflation was concerning but argued that the economy is strong and the labor market is at full employment.   — Clarity action coming: The Senate is expected to vote on a major cryptocurrency bill known as the Clarity Act on Sept. 15. The bill needs bipartisan support to advance, but Democrats say they are withholding their support without further concessions in three key areas. Most importantly, they are pushing for ethics language that would crack down on President Trump’s ability to profit from his family’s crypto businesses. Democrats are also seeking to force changes to a portion of the bill known as the Blockchain Regulatory Certainty Act, that has been a concern for law enforcement groups, and to overhaul the commodities portion of the legislation that is overseen by the Senate Agriculture Committee.   — House Financial Services back to business: Treasury Secretary Scott Bessent is scheduled to testify before the House Financial Services Committee on Sept. 15 about the international financial system. The panel will also hold a hearing on strengthening the American economy and conduct a markup. Additionally, lawmakers will have to take action on a slew of fiscal 2026 programs and government funding that will expire at the end of the month. In particular, $289 million in funding for the Community Development Financial Institutions Fund is set to expire Sept. 30, raising concerns among lawmakers and industry groups.   — Here come the SEC rules: Securities and Exchange Commission Chair Paul Atkins is moving to check off some major items on his to-do list. Following the Wall Street regulator’s recently proposed cryptocurrency rules, the SEC is preparing to roll out new plans on how companies report executives’ compensation, its pay-to-play rule and the regulations for safeguarding client assets, including crypto tokens. All three efforts are currently under White House review, which is usually the final step before they’re voted on and formally proposed.   — HUD rulemaking: HUD plans to propose a rule in September to overhaul the Continuum of Care program, which provides federal funding to local organizations that assist people experiencing homelessness. The proposal will “increase flexibilities for Continuums of Care to address substance use disorder and behavioral health barriers to stable housing” as well as increase state and local government involvement, according to the department’s regulatory agenda. Previous efforts by HUD to restructure the program through funding notices were struck down by a federal judge, who ruled the overhaul will have to go through a standard regulatory process. — Victoria Guida ,Jasper Goodman, Katherine Hapgood, Declan Harty, Cassandra Dumay Tax — Crypto tax plan faces hurdles: Many in tax world are also waiting to see if House Ways and Means Chairman Jason Smith (R-Mo.) decides to mark up his cryptocurrency tax plan. He’s been eager to move it, and the pressure to act will increase if the Senate can finally pass a separate crypto regulatory bill known as the Clarity Act.   But that’s a big “if.” Smith is anxious to win bipartisan support and it’s unclear whether Democrats will back the plan. President Trump's highly profitable crypto ventures could make it harder for many Democrats to support Smith’s measure.   Lawmakers aren’t expected to stick around Washington for long, with both sides eager to campaign ahead of the midterms.   — Year-end tax bill takes shape: In Congress’s absence, expect a lot of strategizing and speculation about a potential end-of-the-year tax bill, though that will depend largely on the elections. If Democrats win big, they may decide to postpone the issue until next year when they’d have more negotiating power. At the same time, they might decide they’d rather clear the decks now, and dispose of the issue so they can focus on bigger things next year.   Any bill would likely focus on the slew of bipartisan tax administration bills approved this year by both the House and Senate tax committees. It’s possible a deal could go beyond that to include so-called extenders, like the Work Opportunity Tax Credit. In August, Finance Chairman Mike Crapo (R-Idaho) and ranking Democrat Ron Wyden (D-Ore.) issued a joint statement in support of extending the Advanced Manufacturing Investment Credit, which phases out for construction projects that begin after the end of this year. It’s important to the semiconductor industry, which has big presences in both Idaho and Oregon.   In the meantime, there’s ongoing speculation about who will be joining the tax committees next year, especially if Democrats take control of the House. Many lawmakers are already jockeying for a seat.   — Tax law details: At the Treasury Department, officials remain focused on churning out regulations related to Republicans’ 2025 tax cuts, and are expected to produce more details about how the law’s changes to the tax code affecting multinational corporations will work. — Brian Faler Education — Funding federal education programs: Before senators left town for August recess, the chamber passed a continuing resolution to fund the government through Dec. 11 and avoid a government shutdown at the end of September. The House is expected to vote on the Senate bill under suspension of the rules when lawmakers return.   The stopgap funding bill includes language that would temporarily delay the Trump administration from finalizing a controversial rule to put political appointees across federal agencies in charge of approving and terminating federal discretionary grants. It's a proposal that K-12 schools, colleges and research universities worry could cause more financial uncertainty.   The Office of Management and Budget initially intended to finalize the rule by the beginning of the new fiscal year in October. But if the House clears the bill, the Trump administration would be blocked from finalizing the rule until December. Education leaders and advocates want Congress to permanently block the rule or the Trump administration to rescind the proposal.   — Grant rules unsettled: But that might not resolve the funding uncertainty for K-12 schools and colleges. The Education Department has proposed a rule clarifying that the agency has the ability to terminate discretionary grants “for convenience in a manner consistent with law.” The agency’s goal with those proposed changes includes “ensuring that Federal funds are not wasted, projects remain aligned with Department priorities, and recipients remain accountable for delivering projects consistent with public purposes authorized by law.” Public comment for the proposal is open until Sept. 23.   The department also plans to make K-12 formula funds for Title I-A, which supports high-poverty schools, and Title II-A, which supports teacher professional development, available to states at the end of the month using its own grant management system. The continued use of the education agency system comes despite a deal with the Labor Department to manage federal K-12 programs, as part of the Trump administration’s effort to offload federal education programs and shutter the education agency. The Labor Department is distributing career and technical education formula funds using its system under a separate deal with the education agency. — Mackenzie Wilkes Defense — Return to inaction: The war against Iran grinds on, with the Trump administration now focusing on economic sanctions on countries that do business with Tehran. And the Senate and House return from recess no closer to consensus on the military conflict, defense spending and a variety of other national security issues.   Republican efforts to advance roughly $60 billion for the war effort cleared the House before lawmakers left town. But a pressure campaign by the Trump administration in the Senate has yet to yield results. Senate Majority Leader John Thune has warned that the House-passed framework to unlock supplemental funding doesn't have the votes needed to clear the upper chamber and has been unwilling to subject vulnerable Republicans to politically charged votes.   While the Senate could push forward when it returns mid-month, clearing the budget resolution would be just a first step. And little time remains before the midterms to pass a funding bill through a party-line reconciliation process.   — Policy problems: Annual defense policy legislation remains stalled as well. While House Republicans barely passed a hard-right version of the NDAA in July, a competing Senate bill has stalled. Democrats in the Senate blocked the bill in protest of the Iran war and Trump's $1.5 trillion Pentagon budget request.   The failure of the defense policy bill in the Senate, with no immediate resolution in sight, means congressional leaders may have to wait until after the midterm elections to iron out a compromise. — Connor O’Brien Health Care — Health nominees in flux: Nominees for top jobs at the Health and Human Services Department are in limbo, and November’s election could keep them there permanently.   Normally, a Senate controlled by the president’s party would be rushing to confirm pending executive branch nominees in advance of an uncertain election.   But President Trump’s decision to oppose Sen. Bill Cassidy’s reelection has thrown out all the norms. Cassidy lost his May primary in Louisiana and won’t be returning to his chairmanship of the Health, Education, Labor and Pensions Committee. His political incentive to help Trump is now gone.   Through his chairmanship or his seat on the Finance Committee, Cassidy has the deciding vote on the four pending HHS nominees: Heidi Overton for FDA commissioner; Chris Klomp to serve as HHS deputy secretary; Sean Kaufman to lead the Administration for Strategic Preparedness and Response; and Nicole Saphier for surgeon general.   Cassidy has already expressed reservations about Kaufman, citing his past statements questioning vaccine safety, and about Overton, because she stood with Trump in August as he announced a new review of the childhood vaccine schedule.   — No Surprises fix? Members of the House Ways and Means Committee are trying to assemble a compromise measure to fix problems created by the 2020 No Surprises Act.   That law aimed to protect patients from unexpected medical bills after they unknowingly received treatment from out-of-network doctors. That was a problem, especially in emergency care.   But the arbitration system Congress set to mediate between doctors and insurers resulted in outsized payments in some cases for doctors. At the same time, doctors complain that insurers often refuse to pay after arbitrators issued their ruling.   Any change in the law will have to pass muster with both doctors and insurers — each of which are powerful forces on Capitol Hill. — Health Care Pro Team Transportation — Highway bill blues: Congress is on the precipice of approving a short-term extension of the current surface transportation bill, which is riding on government stopgap funding legislation. That patch would extend the bill’s authorities until Dec. 11, but a new five-year bill remains very much a work in progress.   In the House, the Ways and Means Committee has not yet taken up the bill. That’s a problem, since the panel is in charge of the tax title of the package, which would touch on the federal gas tax and a contentious, proposed electric vehicle fee. Committee Chair Jason Smith (R-Mo.), has been tight-lipped about his intentions, but told POLITICO that it’s “being discussed daily.” He did not say when a markup of the bill would happen, and nothing is on the calendar yet.   In the Senate, things are moving even more slowly. Environment and Public Works Chair Shelley Moore Capito (R-W.Va.) told POLITICO she hopes to have text from her committee this month. Hopes are now pinned on the lame duck session, but election results could go a long way in determining what, if anything, gets done.   — ATC overhaul turbulence: DOT Secretary Sean Duffy has been routinely touting achievements in the much-ballyhooed modernization of the nation’s aging air traffic control system. But beneath the surface, the FAA has been displeased with the progress of the effort’s main contractor, Peraton.   One person familiar with the project told POLITICO that Peraton, which had little prior experience with the FAA, had “basically not done any work” since winning a $1.5 billion bid late last year. The FAA has also struggled to coordinate with Peraton, with another source telling POLITICO that the agency has micromanaged Peraton’s efforts. FAA Administrator Bryan Bedford recently acknowledged some bumps, saying that Peraton “did not meet” at least one goal.   The upshot is that FAA officials have been considering scaling back Peraton’s involvement in the massive project. Last year, congressional Republicans gave the FAA $12.5 billion for the project. Duffy has asked Capitol Hill for up to $20 billion more, though the Peraton news could give lawmakers pause.   — Leadership shakeup: The FAA is also grappling with a major personnel shakeup. POLITICO reported in early June that Donald Bornhorst, a former airline executive who joined the FAA last year as chief administrative officer, was leaving the agency because of a family issue. Bedford’s now-former chief of staff, Pete Hearding, is now filling that position on an interim basis, while Jeannie Shiffer is Bedford’s new chief of staff.   Earlier this summer, the longtime No. 2 at the agency, Chris Rocheleau, left for a private sector job. Liam McKenna, the agency’s chief counsel, is now acting in that role.   All of this comes as the FAA has undergone a significant reorganization and is in the midst of a bid to consolidate its office space in the Washington area. — Samuel Larreal Technology — FCC nominee on deck: The Senate will likely consider President Trump’s nominee for an open Republican seat on the Federal Communications Commission. The Senate Commerce Committee hearing, which has yet to be scheduled, would give senators a chance to question Danielle Thumann Severs, a longtime adviser to Chair Brendan Carr.   Her confirmation would give Carr a 3-1 Republican majority and eliminate any risk of losing his three-member quorum. Democrats want Republicans to advance Thumann Severs with one of their own picks, including by renominating Democratic Commissioner Anna Gomez.   The Senate will face a tight timeline for Thumann Severs’s confirmation given the few legislative days left and other competing priorities like government funding. The vetting could give Senate Commerce Chair Ted Cruz (R-Texas), who has objected to some of Carr’s media actions and process decisions, a chance to press Thumann Severs on those issues.   — Surveillance pricing deadline: The deadline to comment on the Federal Trade Commission’s new enforcement policy on personalized pricing is Sept. 18. The agency issued a statement in August warning that failing to disclose when people's information is used to set personalized prices may violate the FTC Act.   FTC Chair Andrew Ferguson said listed prices should be the same for everyone, not adjusted based on customers’ personal data.   Ferguson noted the FTC can’t ban the practice, but that four states have laws limiting it.   — Potential AI markup: Cruz plans to hold a markup on a slate of AI bills in September, though no official date has been set.   Cruz previously planned to hold a markup covering legislation for kids’ online safety and AI, but it was narrowed after senators were unable to strike a deal on the legislation. It is unclear which bills would be included in the markup, but dozens of proposals have been floated.   One of the most closely watched is an AI bill led by Sen. Amy Klobuchar (D-Minn.) and Majority Leader John Thune. Klobuchar said in July that negotiations would continue over August recess and that she hoped a markup would be scheduled “immediately.”   — Next steps on kids' online safety: A package of kids’ online safety bills was approved by the Senate Commerce Committee last month, and could be voted on by the full chamber as soon as September.   But the Senate is under a time crunch, with the approaching midterms and other bills and nominations in the queue.   After the House passed its own kids’ online safety legislation that differs significantly from the Senate version, Cruz suggested the Senate would pass its package before negotiating a compromise with House leaders.   The main hangup is a provision that would impose a legal requirement on tech platforms to mitigate harms they know their products cause children. The Senate version includes the language, while House lawmakers opted to omit it, citing concerns that it could violate the First Amendment.   — Trump-XI summit: President Trump and Chinese leader Xi Jinping will meet on Sept. 24 for a discussion that's expected to touch on artificial intelligence.   Xi’s U.S. visit comes as the Trump administration and lawmakers in Congress grapple with how to effectively regulate the technology. Newly unveiled models from leading AI developers with advanced hacking capabilities, along with reports of AI-powered cyberattacks, have sparked a renewed sense of urgency among policymakers to implement safety guardrails.   The White House, which has consistently favored a pro-innovation AI agenda as a means of beating China in the global AI race, is facing calls from lawmakers and AI safety advocates to regulate the industry more aggressively.   The summit also comes as the administration considers whether to ban Chinese AI models, a proposal that has been met with significant pushback from industry leaders. Major tech companies and Silicon Valley startups argue the move would cut off access to Chinese open-weight models. Smaller businesses rely on open-weight models because they are comparable to American-made models but come at a much lower cost. China is the leader of such models. — John Hendel, Alfred Ng, Owen Dahlkamp and Katherine Long Cybersecurity — Cyber program deadlines: Congress is back in session this month as two key cybersecurity programs face expiration. There is also dwindling time before the midterms to address recent hacks of U.S. water utilities and the threat of artificial intelligence models carrying out autonomous cyberattacks.   The 2015 Cybersecurity Information Sharing Act, which incentivizes private companies to share cyber threat information with the federal government, is set to lapse at the end of the month. The law expired in September 2025 and has been kept alive through temporary reauthorizations since then. Last month, the Senate passed a continuing resolution that included a provision extending the law until December. House lawmakers will return this month to debate whether to pass the stopgap funding deal.   Also nearing its renewal deadline is the State and Local Cybersecurity Grant Program, which previously provided $1 billion in federal funding to states and localities to boost their cyber defenses. It lapsed last September and has also been subject to temporary fixes to keep the program alive.   — Water attacks: The push to reauthorize the state and local cyber program could be bolstered by recent coordinated cyberattacks on water facilities across at least a dozen U.S. states in late July and early August. Lawmakers in the House and Senate introduced multiple bills to strengthen the cybersecurity of water utilities after the attacks — which many federal and state officials have tied to Iran — but no committee has scheduled any public hearings or briefings on the incidents.   — AI battles: Several AI developers, including OpenAI, recently announced that their AI models with hacking capabilities had escaped testing environments and carried out autonomous cyberattacks. Congress is now under pressure to respond, and a number of lawmakers has sent letters to AI leaders asking them to appear at hearings and otherwise provide more information about their testing protocols. We also expect Congress to use September and October to advance legislation that puts guardrails around these models.   September also marks the reported internal deadline for Pentagon contractors to stop using Anthropic’s AI software. However, the Pentagon’s decision earlier this year to blacklist Anthropic and label it a supply chain risk is being challenged in two federal courts, and the order's ultimate fate remains unclear.   — CISA rule expected soon: CISA is also expected to release a long-awaited final rule this month requiring critical infrastructure owners and operators to report major hacks to the agency. Congress passed the underlying law, known as CIRCIA, in 2022 following a string of major cyberattacks on private U.S. companies. But the law, which would give significant new powers to an agency that generally relies on voluntary cooperation from the private sector, has been repeatedly delayed from its expected October 2025 implementation. — John Sakellariadis, Dana Nickel and Maggie Miller