Factbox: Tariffs and Tax Cuts Central to Trump’s Economic Message to Voters By Reuters

By Helen Coster

NEW YORK – Republican presidential candidate Donald Trump has centered his economic strategy around tariffs and tax cuts as he seeks voter support ahead of the 2024 presidential election. Many voters consider the economy to be the most important issue in this election cycle.

Prominent budget analysts estimate that Trump’s proposed tax cuts could increase federal deficits by approximately $3.6 trillion to $6.6 trillion over the next decade, depending on which initiatives are incorporated. In contrast, projections for the spending and tax break plans of his opponents suggest a potential reduction in deficits, ranging from a $400 billion decrease to a $1.4 trillion increase over the same period.

Here’s a summary of Trump’s tariff and tax proposals from his campaign:

TARIFFS ON IMPORTS

Trump has proposed blanket tariffs of 10% to 20% on nearly all imports, with specific tariffs exceeding 60% on goods from China. This strategy aims to bolster U.S. manufacturing.

On September 23, Trump threatened a 200% tariff on imports from John Deere if the company relocates production to Mexico. This statement significantly impacted the company’s stock price. Previously, he had mentioned imposing similar tariffs on automakers moving production to Mexico, but his recent comments marked a notable expansion of this threat to include agricultural equipment manufacturers. Such tariffs would likely breach the trade agreement he signed with Mexico and Canada.

During a speech in Georgia on September 24, Trump reiterated his stance by proposing a 100% tariff on all vehicles crossing the U.S.-Mexico border, along with tax credits for U.S.-based manufacturers focusing on research and development.

The National Retail Federation, which includes major companies like Walmart and represents almost half of shipping volume, opposes Trump’s tariff proposals, warning that they could reignite inflation. However, a recent poll indicated that a slight majority of U.S. voters support his plan to increase tariffs, particularly on Chinese imports.

TAX CUTS FOR DOMESTIC PRODUCERS

In September, Trump committed to lowering the corporate tax rate from 21% to 15% for companies that manufacture within the U.S. Previously, he had expressed wishes to cut the corporate tax rate but had not specifically linked it to domestic production.

During his presidency from 2017 to 2021, Trump reduced the corporate tax rate from 35% to 21%.

END TAXES ON OVERTIME PAY, TIPS, AND SOCIAL SECURITY INCOME

On September 12, Trump announced plans to eliminate taxes on overtime pay as part of a broader tax cut initiative. He also aims to legislate the removal of taxes on tips, a pledge echoed by opponents. Current tax laws mandate that employees report tips as taxable income. Additionally, Trump proposed exempting Social Security income from taxes.

EXTEND CURRENT TAX CUTS

Trump seeks to extend all individual tax cuts enacted during his 2017 tax reforms, including those benefiting higher-income earners. Tax experts project this extension could reduce federal revenue by around $3.3 trillion to $4 trillion over the next decade.

UNCLEAR PROPOSAL REGARDING ‘SALT’ DEDUCTION

On September 17, Trump claimed he would "get SALT back," referring to the state and local tax deduction. At a rally the following day, he mentioned restoring this deduction if re-elected. His 2017 tax cuts placed a $10,000 limit on state and local tax deductions, which primarily affects residents of high-tax states. It remains unclear whether Trump intends to eliminate this cap.

OTHER ECONOMIC PROPOSALS

Aside from tariffs and tax cuts, Trump promises to support the oil and gas sector by advocating for new pipelines and the restoration of fracking on federal lands. He indicated he would aim to reinstate oil and gas drilling in Alaska’s Arctic National Wildlife Refuge, which the current administration discontinued.

Additionally, he has suggested reevaluating the $7,500 tax credit for electric vehicle purchases, a credit that he previously attempted to repeal during his presidency but was later expanded by the current administration in 2022. During a rally in New York on September 18, Trump also pledged to impose a temporary cap on credit card interest rates at approximately 10%.