With Donald Trump’s rates to overthrow markets, pressure on the president grows to accelerate his main proposal for economic stimulus: a wide packet of tax cuts.
Trump’s team has already begun to warn that their strategy for reformulating trade and public spending will bring “short -term pain”. Tax cuts, which increase consumer available income, could help to soften this impact. The expectation of allies is to approve a project by July, but there are several obstacles on the way.
In the first term, Trump cut taxes before starting a trade war. Now the order has been reversed – and the economic scenario is more fragile, with harming the real estate sector and inflation proving persistent. In addition, Trump’s new fares are more aggressive and unpredictable, as the passions and goings of sanctions against Canada and Mexico have shown.
– A thermometer that Trump always followed closely – and feeding recession fears. Tax cuts could rekindle investors’ appetite, as occurred in 2017, but Democrats argue that the benefits would mainly go to the richest.
The president also bets that sanctioning a large tax package before the 2026 legislative elections will help Republicans maintain control of the House. But with increasingly restless markets and consumers, management may need to act quickly.
Divisions among republicans may delay approval
Steve Moore, Trump’s informal economic advisor, defends an even faster schedule, suggesting that the package will be approved until the Memorial Day holiday at the end of May. Moore, who diverges from Trump on the effects of tariffs, points to inflation above the goal and weakness of the real estate market as signs of imminent deceleration.
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“The economy needs an impulse,” says Moore. “Tariffs are not an impulse, but tax reform is.”
In the campaign, Trump promised to extend the tax cuts of his first term to families, as well as eliminate tips, overtime and social security payments. Only the extent of exemptions would cost about $ 4.5 trillion over a decade. Republicans, who also promised to reduce the US record deficit, did not have a clear solution to finance this measure.
The internal dispute between House and Senate about which Legislative House will take the leadership of the bill and whether it will be incorporated into a separate immigration or treated package adds more uncertainty. “The difficulty is exemplified by the fact that we have two competing budget resolutions to start the process,” explains Marc Gerson, former Republican tax counselor in the House’s means and resources committee. “House and Senate are in opposite directions.”
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Trump admits impacts of the trade war, but maintains optimistic speech
On Sunday, Trump admitted that his trade policy can generate turbulence, but insisted that in the long run the strategy will strengthen the economy by reindustrializing the US. When asked in an interview with Fox News if he predicts a recession, he replied: “What we are doing is very great. There is a transitional period. ”
Inflation was one of the decisive factors for Trump’s electoral victory, as his predecessor, Joe Biden, underestimated the persistence of the problem. Now the current president is in danger of being held responsible for economic challenges.
Economists warn that tariffs can press prices and slow growth, although most do not predict immediate recession.
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Behind the scenes of the White House, the climate is not yet panic, according to sources close to the government.
Trump’s advisers are strengthened by victory in the seven decisive states of the election and believe they are quickly advancing in the implementation of their agenda through executive orders and restructuring the public machine.
Outside Washington, Republican leaders also show little concern. “Usually the motto would be ‘it’s the stupid economy,” said Christopher Ager, president of the republican party in New Hampshire. “But now the theme seems neutral.”
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Market charges quick answers and CEOs gather with Trump
The impact of trade war, however, worries the corporate sector. On Tuesday, Trump will meet with dozens of CEOs at the Business Roundtable event, where he should face questions about his next steps.
Kevin Hassett, director of the White House National Economic Council, recognizes the need to accelerate measures: “We need to approve tax cuts and accelerate deregulation,” Bloomberg TV told.
However, in responding to market volatility in his interview on Sunday, Trump seemed more focused on the long run: “What I need to do is build a strong country. You cannot be obsessed with the stock market. China works with a 100 -year perspective. ”
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