Here's what I think is going on:

He's realized that the biggest lever for power at the federal level is the huge amount of money the national government (which doesn't have budget constraints in the sense that we normally think of them) throws at states and lower-down localities (who do have such constraints) to enable them to continue functioning.

The way the U.S.'s so-called federal system works is that basically nowhere actually balances their budget. Instead, everybody get more or less regular & predictable federal bailouts, in the form of highway funds, pandemic grants, Medicaid reimbursements, education grants, energy infrastructure & environmental improvement grants, etc, etc. The federal government's unique power to print money means it's not just like state government but larger; rather, it's a different beast altogether.

This means that all those court cases about "states' rights" and whatnot are ultimately cosmetic. In the end, if Washington wants you to do something, they'll just threaten your highway funds and then you'll do it.

So he's realized he can just shut off that valve (to make his threat credible) and then only open it up again for mayors and governors who cooperate and signal fealty in whatever ways he demands.

If we let him, that is. Non-zero chance that we do, but also that we don't. I wish there were someone with the vision and spine of a Nancy Pelosi high in the GOP, but I guess their filter has been pretty efficient at meeting those folks out lately.