The US Congress returned from the August recess after Labor Day with a major focus to extend government funding that expires after 30 September and possible enactment of additional tax and health legislation. That legislation could take the form of another reconciliation bill that House Speaker Mike Johnson (R-LA) sees being completed "late in the fall" and/or a potential package of bipartisan priorities that could be attached to a year-end appropriations bill.

Lawmakers have several options moving forward. In the past, it has been common for government funding to be patched beyond 30 September fiscal year-end through a short-term continuing resolution and then later extended through a long-term spending bill at the end of the year. This approach would provide a legislative vehicle for tax, health and other items. In terms of legislation, there are tax and health items that expire at the end of 2025 as well as many provisions that were not addressed in the "One Big Beautiful Bill Act" (OBBBA) signed into law on 4 July. All of these issues could be drivers for additional legislation this year.

Besides a second budget reconciliation bill, there are several areas that could see bipartisan legislation. Those include Taiwan tax-relief legislation held over from the last Congress and bipartisan interest in addressing tax questions around digital assets.

Republicans in the Senate considered adding some crypto provisions to the OBBBA, but more time was needed to settle policy and technical questions. Republicans and Democrats on the House Ways & Means Committee both want to take the lead on cryptocurrency tax issues; there is already a bill in the Senate (S. 2207) and issues addressed include a de minimis rule, staking and wash sales. Also, following a 16 July Ways & Means Oversight hearing, Rep. Max Miller (R-OH) circulated a draft framework for a crypto tax bill that addresses those issues without specifying details.

Worth noting, shortly before the August recess, Senate Banking Committee Chairman Tim Scott (R-SC) and other Republican cosponsors released a draft of the committee's "market structure" bill for cryptocurrency regulation, the Responsible Financial Innovation Act, and said the committee would mark up the bill in September. Market structure legislation is regarded as key for establishing a complete system for regulating digital assets in the United States.

On 29 August, the US Court of Appeals for the Federal Circuit issued an en banc opinion affirming (7-4) a decision by the US Court of International Trade (CIT) that held President Trump had exceeded his authority in imposing certain tariffs under the International Emergency Economic Powers Act (IEEPA). After the CIT released its opinion, the Federal Circuit temporarily stayed the CIT's decision, allowing the IEEPA-based tariffs to remain in place pending appeal.

The Federal Circuit ultimately agreed with the lower court that "IEEPA's grant of presidential authority to 'regulate' imports does not authorize the tariffs imposed by [five Presidential] Executive Orders," which included the 2 April "Liberation Day" announcements and Executive Orders imposing tariffs on Mexico, Canada and China in response to migration and drug smuggling allegations. The Trump Administration filed an appeal with the US Supreme Court this week, with the Court expected to take the case. The High Court's affirming the Federal Circuit's decision against the Administration's actions would be a major blow to President Trump's tariff policy and could result in billions of dollars in tariff refunds. A Global Trade Alert is pending.

President Trump on 4 September signed an Executive Order (EO) titled "Implementing the United States-Japan Agreement." The agreement provides for a 15% baseline tariff on nearly all Japanese imports into the US, with separate sector-specific treatment for automobiles and auto parts, aerospace products, generic pharmaceuticals and natural resources "not naturally available or produced in the United States." Japan also pledged a $550b US investment fund under the deal. The EO is based on a 22 July trade agreement reached between the two countries.