President-elect Donald Trump took to Truth Social on Monday to deny a report that he may scale back tax plans across the board when he retakes the White House, adding uncertainty to one of his most anticipated policy moves.
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(Bloomberg) — President-elect Donald Trump took to Truth Social on Monday to deny reports that he may scale back tax cuts across the board when he retakes the White House, casting doubt on one of his most-watched policies. set to do.
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And that might be the point.
Trump and his team have kept markets, businesses and other nations speculating about whether he intends to impose new tariffs, and Monday’s story in the Washington Post adds to the questions. Citing people familiar with the matter, the Post newspaper reported that his aides were looking into plans to pay the sweeping tax. Instead, they will apply more restrictive pricing in all countries but only for essential sales.
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Not so fast, Trump said. The story “falsely states that my tax policy will be rolled back,” he said. “That’s not right.”
However, what was right was not so clear. During his campaign, Trump promised 10% to 20% tariffs across the board on all imported goods and tariffs of up to 60% on Chinese goods. After his election, Trump again shocked the markets by threatening to impose additional tariffs of 10% on goods from China and 25% on all products from Mexico and Canada.
Whether his team has come up with a plan is still an open question.
But what’s almost certain is that Trump — who sees the tariffs as a way to raise money, bring back American manufacturing, and get other countries to look at his policy priorities — is preparing to go ahead with the big package.
Trump is “very committed to this,” said Everett Eissenstat, a trade lawyer who held key positions in Trump’s first administration and as a congressional adviser. “There have been a few comments on social media in the past few weeks that have reiterated that tariffs are an important part of his economic policy. And it doesn’t seem to be just for transactional purposes.”
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“Taxes can serve many purposes and seem to be married to many purposes,” Eissenstat said. “This proves the point that if you want to know what the president is going to do, you have to ask the president.”
Just 24 hours ago, Trump said Congress would use the revenue to help pay for extending his 2017 tax cuts in a “powerful” bill that would eliminate the tax on tips. He also said that the prices will help revive the United States Steel Corp. President Joe Biden last week blocked the deal between the company and Nippon Steel Corp. we would see a Japanese company buying this shadowy but struggling company.
“Why do they want to sell US Steel now when Tariffs will make it a very profitable and valuable company?” Trump thought about Public Truth.
That Trump would take such an attitude is not surprising. It was Trump, after all, who told Bloomberg News Editor-in-Chief John Micklethwait in an interview in October that “the best word in the dictionary is ‘tax.'”
Asked to comment on the president-elect’s latest plans, a spokeswoman for the transition pointed to Trump’s posts on Truth Social.
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The last, best hope for free traders is that Trump will actually be able to carry out his tariff threats. The difficult challenge of putting together a large tax package could be one of the reasons why Trump’s advisers may be considering other options, despite what the president has said on social media.
Trump’s tax plans could come under legal challenges, as happened during his first term, and Congress could refuse to use revenue from the tax cuts to pay for the tax cuts. Some members — including die-hard free trade Republicans — may oppose using them at all, especially if they exceed a certain threshold.
There is also the risk that tariffs could increase inflation and reduce US GDP. A Bloomberg Economics study found that US GDP could fall by 0.8% in 2028 if China retaliates and by 1.3% if other countries raise tariffs on US goods. Higher taxes will increase the prices of imported goods, which could lead to inflation, according to Maeva Cousin and Eleonora Mavroeidi.
But that’s no reason to shy away from using them, according to some defenders of Trump’s economic plans.
“Payments will have some impact on prices, especially in the short term,” Oren Cass, founder and chief economist at American Compass, told PBS in November. “That’s part of the point, to make it more attractive to buy things in America.”
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