Latest news with #ExternalRevenueService
Irish Independent
29-05-2025
- Business
- Irish Independent
Trump's tariff timeline: 118 days of chaos and climbdowns
In his inauguration speech on January 20th the incoming US President announced the establishment of an 'External Revenue Service; to collect all tariffs, duties, and revenues, promising 'massive amounts of money pouring into our Treasury, coming from foreign sources'. He'd imposed tariffs on a relatively smaller scale during his first presidency, though with a focus on specific sectors like steel and aluminium, and as a means of boosting domestic producers. The inauguration speech suggested something on a much larger and more disruptive scale. Astonishingly, financial markets ignored the clear warnings, hitting record highs at the end of February, just before Trump unveiled his full 'Liberation Day' shopping list of import taxes on almost every nation and territory on the earth. The unilateral imposition of large tariffs was already well underway by then: February 1 - Trump imposes 25pc tariffs on Mexican and most Canadian imports and 10pc on goods from China, demanding they curb the flow of fentanyl and illegal immigrants into the United States. February 3 - Trump suspends his threat of tariffs on Mexico and Canada, agreeing to a 30-day pause in return for concessions on border and crime enforcement. February 7 - Trump delays tariffs on de minimis, or low-cost, packages from China until the Commerce Department can confirm that procedures and systems are in place to process them and collect tariff revenue. February 10 - Trump raises tariffs on steel and aluminum to a flat 25pc March 3 - Trump says 25pc tariffs on goods from Mexico and Canada will take effect from March 4 and doubles fentanyl-related tariffs on all Chinese imports to 20pc March 5 - The president agrees to delay tariffs for one month on some vehicles built in Canada and Mexico March 6 - Trump exempts goods from Canada and Mexico under a North American trade pact for a month from the 25pc tariffs. March 26 - Trump unveils a 25pc tariff on all imported cars and light trucks. April 2 - 'Liberation Day' Trump announces global tariffs of at least 10pc across all imports and significantly higher duties many of the United States' biggest trading partners. The European Union is hit with a 20pc tariff. Pharmaceuticals are excluded. April 8 – The tariffs come into force. April 9 – As turmoil sweeps world financial markets and drives up US borrowing costs Trump pauses most country-specific tariffs for 90 days. The 10pc blanket levy stays in place, including on goods from Ireland and the rest of the EU. But Trump raises tariffs on Chinese imports to 145pc – to all intents an purposes a trade embargo. China responds with its own sweeping tariffs. April 13 - The US says imports of smartphones, computers and some other electronics are tariff free, including from China, the main exporter. April 22 - The Trump administration puts pharmaceuticals and semiconductors back on the agenda, launching investigations into whether dependence on imports is a national security threat. May 4 - Trump says he'll imposes a 100pc tariff on all movies produced outside the US. May 9 - Trump agrees his first trade deal with British Prime Minister Keir Starmer. It leaves in place 10pc tariffs on most British but the UK gets some relief from the higher duty on exports of its cars. May 12 - The US and China agree to temporarily bring down tariffs in both directions for 90-days. The US cuts tariffs on Chinese imports to 30pc from 145pc. China cuts tariffs on US to 10pc from 125pc. May 13 - The US cuts the low value "de minimis" tariff on lower value packages from China to 54pc from 120pc. May 23 - Trump announces a shock 50pc tariff on goods from the European Union to start on June 1. He also says US tech giant Apple will be hit with a 25pc tariff if it continues to manufacture phones outside the US. May 25 - Trump pauses the 50pc tariffs on imports from the EU until July 9 to allow time for trade talks. May 28 - A US trade court blocked most Trump's tariffs, saying the US President lacks the legal authority to impose across-the-board levies on imports. The court ruling covers the tariffs announced at the April 'Liberation Day' event but not levies on imports of steel and aluminium imposed under different powers.
Economist
22-05-2025
- Business
- Economist
Trump will be unpleasantly surprised by America's tariff revenues
In the early 20th century, before America had an income tax, tariffs paid many of the government's bills. President Donald Trump wants to revive that approach. He has repeatedly floated the idea of an ' External Revenue Service ', under which Uncle Sam would scrap income taxes and instead rely on border levies, with foreigners, at least in theory, funding the American government. 'It will be a BONANZA,' Mr Trump posted recently on his social-media site, claiming tariffs could all but eliminate income taxes for people earning less than $200,000 a year.
Mint
19-05-2025
- Business
- Mint
Trump faces a trillion-dollar tariff disappointment
In the early 20th century, before America introduced an income tax, tariffs paid many of the government's bills. President Donald Trump wants to revive that approach. He has repeatedly floated the idea of an 'External Revenue Service", under which Uncle Sam would scrap income taxes and instead rely on levies at the border, with foreigners, at least in theory, funding the American government. 'It will be a BONANZA," Mr Trump posted recently on his social-media site, claiming that tariffs could all but eliminate income taxes for people earning less than $200,000 a year. There is plenty to dislike about tariffs. Economists bemoan the distortions they impose on commerce. They are often paid not by 'external" firms but by domestic consumers. In 2020 Mary Amiti of the Federal Reserve Bank of New York and colleagues found that nearly all of Mr Trump's first-term levies were ultimately borne by American companies, in the form of lower margins, and buyers, in the form of higher prices. Moreover, agreements with Britain and China have reduced overall tariff levels from recent highs, which will cut the revenue they raise. Levels will continue to fall as America inks more deals. Yet Mr Trump's tariffs will still bring in large sums. Quite how large? Last year just $100bn of the total $4.9trn that the federal government collected came from customs duties. Already, though, that figure is rising. Daily data from the Treasury show a spike. By May 13th gross tariff collections had reached $47bn since the start of the year, about $15bn more than last year. Disentangling how much of this is a result of Mr Trump's latest levies and how much represents firms rushing to bring in goods ahead of further hikes is tricky; much is likely to be the latter. A number of economists have nevertheless attempted to forecast tariff revenues. Peter Navarro, Mr Trump's trade guru, claims that border levies could generate more than $6trn over the next decade, or $600bn a year. His arithmetic is brazenly simple: take last year's $3.3trn in merchandise imports and apply a 20% effective tariff. Such an approach ignores basic economic dynamics. Higher tariffs reduce demand for foreign goods, shrinking the tax base. They also depress income and payroll-tax receipts, offsetting as much as 25% of the gains, according to most estimates. Factor in retaliation and levy-dodging, and anticipated revenue falls further. Mr Navarro's trillion-dollar projections rest on a fantasy of stasis, in which buyers, sellers and trading partners shrug off price signals. Independent estimates of tariff revenues are much lower. The Penn Wharton Budget Model estimates that the full suite of proposed tariffs, including the 'reciprocal" levies currently on pause, would raise around $290bn a year over the next decade. Its calculations account for weaker import demand, as well as the effects on corporate-income- and payroll-tax receipts. Other forecasts are lower still. The Budget Lab at Yale, a non-partisan research centre, forecasts annual revenue of $180bn; the Tax Foundation, a think-tank, puts the number closer to $140bn. There is an oddity to such calculations, however. The cut in the levy on Chinese goods—from 145% to 30%—does not do much to alter their results. At 145% the tariff was on the wrong side of the peak of the 'Laffer curve", the point at which higher rates reduce, rather than lift, revenue. It would have prompted imports from China to plummet, meaning tax revenues would have fallen despite the sky-high levy on goods still coming into the country. According to Penn Wharton, a levy of 145% on Chinese imports would raise only $25bn more a year than the current rate of 30% will. Even with this small mercy, the president's tariffs will not enable the large tax cuts he so desires. Last year America's personal-income tax brought in $2.4trn—an amount forecast to grow to $4.4trn over the next decade. The Tax Foundation estimates that eliminating income taxes for people earning less than $200,000 would cost $737bn in 2025, or two to three times what tariffs could conceivably raise. In theory, a revenue-neutral swap could cover those earning around $80,000 or less, who account for just 10% of income-tax receipts. But eliminating taxes for low earners would, in practice, mean cutting the lowest marginal rate, which applies to all taxpayers on their initial income, and so would mostly benefit high earners. A tax bill proposed by Republicans in the House of Representatives is stuffed with other giveaways, including raising most tax-bracket thresholds, which by itself would dwarf tariff income. Tariffs were able to sustain the federal government in the early 20th century because its spending came to just 2% or so of GDP, being largely confined to debt service, defence and infrastructure. Today that figure is ten times higher. Imports are a narrow and volatile tax base, making them ill-suited to funding a modern state. The irony is that tariffs would make American spending reliant on Chinese production. Most politicians do not try to return to the early 1900s for a reason.
Hindustan Times
19-05-2025
- Business
- Hindustan Times
Trump faces a trillion-dollar tariff disappointment
In the early 20th century, before America introduced an income tax, tariffs paid many of the government's bills. President Donald Trump wants to revive that approach. He has repeatedly floated the idea of an 'External Revenue Service', under which Uncle Sam would scrap income taxes and instead rely on levies at the border, with foreigners, at least in theory, funding the American government. 'It will be a BONANZA,' Mr Trump posted recently on his social-media site, claiming that tariffs could all but eliminate income taxes for people earning less than $200,000 a year. There is plenty to dislike about tariffs. Economists bemoan the distortions they impose on commerce. They are often paid not by 'external' firms but by domestic consumers. In 2020 Mary Amiti of the Federal Reserve Bank of New York and colleagues found that nearly all of Mr Trump's first-term levies were ultimately borne by American companies, in the form of lower margins, and buyers, in the form of higher prices. Moreover, agreements with Britain and China have reduced overall tariff levels from recent highs, which will cut the revenue they raise. Levels will continue to fall as America inks more deals. Disentangling how much of this is a result of Mr Trump's latest levies and how much represents firms rushing to bring in goods ahead of further hikes is tricky; much is likely to be the latter. A number of economists have nevertheless attempted to forecast tariff revenues. Peter Navarro, Mr Trump's trade guru, claims that border levies could generate more than $6trn over the next decade, or $600bn a year. His arithmetic is brazenly simple: take last year's $3.3trn in merchandise imports and apply a 20% effective tariff. Such an approach ignores basic economic dynamics. Higher tariffs reduce demand for foreign goods, shrinking the tax base. They also depress income and payroll-tax receipts, offsetting as much as 25% of the gains, according to most estimates. Factor in retaliation and levy-dodging, and anticipated revenue falls further. Mr Navarro's trillion-dollar projections rest on a fantasy of stasis, in which buyers, sellers and trading partners shrug off price signals. Independent estimates of tariff revenues are much lower. The Penn Wharton Budget Model estimates that the full suite of proposed tariffs, including the 'reciprocal' levies currently on pause, would raise around $290bn a year over the next decade. Its calculations account for weaker import demand, as well as the effects on corporate-income- and payroll-tax receipts. Other forecasts are lower still. The Budget Lab at Yale, a non-partisan research centre, forecasts annual revenue of $180bn; the Tax Foundation, a think-tank, puts the number closer to $140bn. There is an oddity to such calculations, however. The cut in the levy on Chinese goods—from 145% to 30%—does not do much to alter their results. At 145% the tariff was on the wrong side of the peak of the 'Laffer curve', the point at which higher rates reduce, rather than lift, revenue. It would have prompted imports from China to plummet, meaning tax revenues would have fallen despite the sky-high levy on goods still coming into the country. According to Penn Wharton, a levy of 145% on Chinese imports would raise only $25bn more a year than the current rate of 30% will. Even with this small mercy, the president's tariffs will not enable the large tax cuts he so desires. Last year America's personal-income tax brought in $2.4trn—an amount forecast to grow to $4.4trn over the next decade. The Tax Foundation estimates that eliminating income taxes for people earning less than $200,000 would cost $737bn in 2025, or two to three times what tariffs could conceivably raise. In theory, a revenue-neutral swap could cover those earning around $80,000 or less, who account for just 10% of income-tax receipts. But eliminating taxes for low earners would, in practice, mean cutting the lowest marginal rate, which applies to all taxpayers on their initial income, and so would mostly benefit high earners. A tax bill proposed by Republicans in the House of Representatives is stuffed with other giveaways, including raising most tax-bracket thresholds, which by itself would dwarf tariff income. Tariffs were able to sustain the federal government in the early 20th century because its spending came to just 2% or so of GDP, being largely confined to debt service, defence and infrastructure. Today that figure is ten times higher. Imports are a narrow and volatile tax base, making them ill-suited to funding a modern state. The irony is that tariffs would make American spending reliant on Chinese production. Most politicians do not try to return to the early 1900s for a reason. Get 360° coverage—from daily headlines to 100 year archives.
Economist
18-05-2025
- Business
- Economist
Trump faces a trillion-dollar tariff disappointment
In the early 20th century, before America introduced an income tax, tariffs paid many of the government's bills. President Donald Trump wants to revive that approach. He has repeatedly floated the idea of an ' External Revenue Service ', under which Uncle Sam would scrap income taxes and instead rely on levies at the border, with foreigners, at least in theory, funding the American government. 'It will be a BONANZA,' Mr Trump posted recently on his social-media site, claiming that tariffs could all but eliminate income taxes for people earning less than $200,000 a year.
