Tariffs, tax cuts core to Trump’s economic agenda
U.S. President-elect Donald Trump has pledged to make tariffs and tax cuts the key elements of his economic agenda when he takes office in January.
His November election victory was fueled largely by voter concern about the economy. Several prominent budget forecasters have estimated Trump’s tax-cut plans would add $3.6 trillion to $6.6 trillion to federal deficits over a decade, depending on which proposals are included.
Here are Trump’s tariff and tax proposals:
Tariffs on imports
After the election, one of Trump’s first acts was to threaten Canada and Mexico with blanket tariffs of 25% on imports unless they step up efforts to stop the flow of illegal drugs such as fentanyl and of migrants without documentation across their borders.
Mexico’s government responded by saying the tariff could result in the loss of 400,000 U.S. jobs.
The president-elect has also floated plans for blanket tariffs of 10% to 20% on virtually all imports from every country, as well as tariffs of 60% or more on goods from China, to boost U.S. manufacturing.
Trump has said he would impose a 200% tariff on John Deere’s imports into the U.S. if the company moved production to Mexico as planned, comments that hit the agricultural equipment manufacturer’s share price.
Trump has frequently said he would hit automakers that move production to Mexico with a 200% tariff. The duties would likely violate the U.S.-Mexico-Canada Agreement on trade that he signed into law in 2020.
He also has said he would reward U.S.-based manufacturers with research and development tax credits.
The National Retail Federation, which represents Walmart and other companies that account for almost half of container shipping volume, is among the industry groups opposed to Trump’s proposed tariffs. Economists say tariffs would reignite inflation.
Trump has said he will formally notify Mexico and Canada of his intent to renegotiate a North American free trade deal to address concerns about Chinese vehicles.
Tax cuts for domestic producers
Trump has pledged to reduce the corporate tax rate from 21% to 15% for companies that make their products in the U.S. He slashed the corporate tax rate to 21% from 35% during his 2017-2021 presidency.
Extend tax cuts
Trump wants to extend all individual tax cuts he pushed through Congress in 2017, including for the wealthiest Americans, which tax and budget experts estimate would reduce revenue over a decade by about $3.3 trillion to $4 trillion.
Some Republicans, however, are wary of enacting another round of tax relief without offsetting it with major spending cuts, which could include slashing benefit programs.
Concerns over adding to the federal debt have made the U.S. bond market jittery, which could slow Trump’s tax-cut push.
No tax on overtime pay, tips or social security income
Trump says he will end all taxes on overtime pay as part of a wider tax-cut package.
Trump has also said he would seek legislation to end taxation of tips. Current law requires employees to report tips as taxable income.
He has vowed to exempt Social Security income from taxes.
End ‘double taxation’ on US citizens overseas
Trump has pledged to lower taxes on U.S. citizens living abroad, without providing specifics. Americans living or traveling outside the U.S. are required to file income-tax returns, estate-tax returns, and gift-tax returns and “pay estimated tax in the same way as those residing in the United States,” according to the U.S. Internal Revenue Service.
Unclear proposal on ‘SALT’ deduction
Trump has vowed to “get SALT back” — a reference to the state and local tax deduction available to federal taxpayers. He has also said he would be “restoring the SALT deduction.” Trump’s 2017 tax cuts imposed a $10,000 cap on the amount of state and local tax that taxpayers can deduct. It is unclear whether Trump intends to remove the $10,000 cap, which predominantly affects high-tax, Democratic-leaning states such as New York.
Deduct cost of generators
After Hurricanes Helene and Milton struck the Southeast, Trump said he would allow the cost of home generators purchased in states hit by natural disasters between Sept. 1, 2024, and Aug. 31, 2025, to be tax-deductible.
Other economic proposals
Beyond tax cuts and tariffs, Trump has promised he would support the oil and gas industry by backing new pipelines and restoring fracking on federal land in a bid to boost the economy. He said he would put Alaska’s Arctic National Wildlife Refuge — where the Biden administration canceled oil and gas drilling leases — “back into play.”
Trump has pledged to create a National Energy Council to coordinate policies to boost U.S. energy production that will be led by his pick for interior secretary, North Dakota Governor Doug Burgum.
He has also said he would consider ending a $7,500 tax credit for electric-vehicle purchases. During his first term, Trump sought to repeal the EV tax credit, which was later expanded by President Joe Biden in 2022.
Trump said he would propose making interest on car loans tax-deductible.
He has pledged to put a temporary cap on credit card interest rates of “around 10%.”
Trump has said he will “support a tax credit for family caregivers who take care of a parent or a loved one,” without offering specifics.
In December, Trump said as president he will give “fully expedited” approvals and permits, including environmental approvals, to any person or business that invests at least $1 billion in the U.S., but he didn’t provide further details.
