Trump proposes income tax cuts to ease tariff impact
What's the story
United States President Donald Trump has suggested that income taxes for those making less than $200,000 per year could be reduced, potentially as a result of his sweeping tariffs. In a post on Truth Social on Sunday, he wrote, "When Tariffs cut in, many people's Income Taxes will be substantially reduced." At the same time, he defended the strategy behind his steep tariffs, arguing that "massive...jobs are already being created, with new plants and factories currently being built or planned."
Tariff impact
Trump's tariffs spark global economic concerns
Trump's tariffs have shaken the world economy, triggering fears of higher prices for Americans. The policies have also set off alarm bells over a possible recession. In a recent CBS News poll, 69% of Americans said the Trump administration wasn't focusing enough on reducing prices. Further, Trump's approval rating for his handling of the economy has fallen from 51% in early March to 42%.
Tax strategy
Trump plans to extend and expand tax cuts
Trump's proposed income tax cuts are part of his broader strategy to extend tax reductions approved during his first presidency in 2017. Many of the cuts are set to expire by the end of 2025. In addition, he has suggested extending tax breaks by exempting workers' tips and social security earnings. Trump also plans to reduce corporate taxes from 21% to 15%.
Economic response
Treasury Secretary comments on consumer spending
Treasury Secretary Scott Bessent, in response to the recent poll results, said that US consumers are continuing to spend. He added that the administration is working on bilateral trade agreements after Trump's reciprocal tariffs in early April. However, all levies were suspended for 90 days for all affected countries except China.