Latest news with #WhiteHouseCouncilofEconomicAdvisers
CNBC
30-05-2025
- Business
- CNBC
Trump tariffs would still 'pinch' consumers even if trade court block holds, economist says
The fate of many of President Trump's tariffs is uncertain after a string of court rulings this week. But even if a court block on country-specific tariffs is upheld, others that would remain on the books — for products like steel and automobiles — are still expected to cost consumers almost $1,000 a year, according to a new analysis by the Yale Budget Lab. "It does pinch" consumers' wallets, said Ernie Tedeschi, director of economics at the Yale Budget Lab and former chief economist at the White House Council of Economic Advisers during the Biden administration. Tariffs are a tax paid on imports, paid by U.S. entities importing the good. Businesses are expected to pass on at least some of those costs to consumers. However, the dollar impact of those remaining tariffs is "a far cry" from what it would be if the country-specific tariffs were to remain, he said. The U.S. Court of International Trade on Wednesday blocked country-specific tariffs, including a 10% baseline tariff on most nations and separate levies on Canada, Mexico and China tied to allegations of fentanyl trafficking. A three-judge panel found Trump exceeded his authority by invoking the International Emergency Economic Powers Act to impose those import duties. An appeals court temporarily paused the order on Thursday as it reviews the case. However, 25% tariffs on steel, aluminum, automobiles and auto parts are still in place, with some carve-outs, as well as certain tariffs on China imposed during Trump's first term and expanded during the Biden administration, Jennifer McKeown and Stephen Brown, economists at Capital Economists, wrote in a note Thursday. Those tariffs were imposed using different legal authorities. If the lower court's order holds, those remaining tariffs would cost the average household $950 of purchasing power in 2025, according to the Yale Budget Lab analysis published Thursday. That amounts to a 0.6% increase in consumer prices, it found. More from Personal Finance:Trump administration axes Biden-era barrier for crypto in 401(k) plansTrade schools may be a winner of battle between Trump, HarvardCourt order challenges Trump's plan to move federal student loans Another way consumers can view this legal development: The initial court ruling, if upheld, would save households more than $1,800 this year, said Tedeschi. That's because the average household would lose about $2,800 in 2025 if the country-specific tariffs were to stay on the books, Tedeschi said. In that case, consumer prices would rise about 1.7% this year, he said. McKeown and Brown estimate the court ruling would lower the effective tariff rate to 6.5% from 15%. It was 2.5% at the start of the year, they said. "The most direct impact" of the remaining tariffs will be on car buying, Tedeschi said. Car prices would likely rise about 8% this year and 5% over the longer term, he said. But steel and aluminum are inputs in a swath of consumer products, from homebuilding to household appliances. The Supreme Court may be the final arbiter for Trump's country-specific tariffs, a process that may take "many months," according to McKeown and Brown. Additionally, "it would be unlikely to mark the end of the tariff war given the various other routes through which the Trump administration could impose tariffs," they wrote. The Trump administration has also signaled an intent to put duties on additional products like pharmaceuticals, semiconductors, copper and lumber. Yesterday's court decision was a "landmark ruling," Tedeschi said. "I don't expect it'll be the end of things."
Yahoo
29-05-2025
- Business
- Yahoo
CEA Chair Miran on EU Talks, Tariffs and Deregulation
White House Council of Economic Advisers Chair Stephen Miran discusses the state of EU-US trade negotiations, the economic impact of recent tariffs and the Trump administration's deregulation initiative. Speaking with Kailey Leinz and Joe Mathieu on "Balance of Power," Miran says the 10% universal baseline tariff rate isn't big enough "to have any adverse consequences in the economy." Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Politico
23-05-2025
- Business
- Politico
What the ‘big, beautiful bill' means for economic growth
President Donald Trump and top Republicans have heralded the 'big, beautiful bill' as a catalyst for a massive economic expansion that will unleash corporate investment and household spending. That won't be an easy bar to clear. The economic stimulus that could come from the larger individual tax breaks and new deductions for businesses is likely to be offset by the bill's hefty cuts to the social safety net and its elimination of previous corporate incentives. While budget analysts and economists say it could moderately contribute to output, they consider the administration's sunny economic forecasts overly optimistic — particularly given the drag that higher tariffs and deficits could have on growth. 'This is definitely not a growth vehicle,' said Kent Smetters, a University of Pennsylvania business professor who serves as the faculty director of the Penn Wharton Budget Model. The main elements of Trump's 2017 tax bill, including lower corporate rates, were already permanent, Smetters said. What's more, many of the largest deductions included in the new bill are only temporary, including highly touted provisions that allow businesses to deduct capital investments and R&D expenses. That will make some of the immediate growth effects 'a bit of a mirage,' he said. The White House Council of Economic Advisers estimated that an earlier draft of the bill — specifically the tax provisions that cleared the House Ways and Means Committee last week — would add 4.2 to 5.2 percent to gross domestic product over the next four years compared to what would occur if Congress allowed existing tax cuts to expire. That report was central to the administration and House Republicans' case that the tax bill would not only preserve the status quo but unlock an economic boom. Kevin Hassett, the head of Trump's National Economic Council, told Fox Business earlier this week that he anticipates annual growth will exceed 3 percent over the coming years — a level of economic success that few modern presidents have consistently enjoyed. If that happens, the 'tax bill basically pays for itself,' Hassett said. Joe LaVorgna, the chief economist at SMBC Nikko Securities and a former Trump economic adviser, said he believes that the president's second-term economy is on a much stronger trajectory than most other economists assume and that the tax bill could push it even higher. 'The baseline I'm working off of is how we did during the first three years of Trump 1.0, when GDP was at 2.8 percent. If it was 2.8 percent [then], why can't it go to 3.0 percent?' LaVorgna said. 'If we grow at 3 percent, then the cost of this bill is going to be extremely limited compared to what everyone out there is saying.' Other estimates of how the bill's policies will impact GDP are far more muted. The nonpartisan Joint Committee on Taxation on Thursday said the measure would increase annual growth by just 0.03 percentage points — from 1.83 percent to 1.86 percent. Penn Wharton's May 19 report on the legislation's economic effects estimated that GDP would climb by 0.5 percent by 2034 — but that assumes Trump drops tariffs back to pre-April 2 levels, Smetters said. In a client note, Goldman Sachs economists said they anticipate negative growth when spending cuts, tariffs and changes to immigration were layered on top of the pro-growth policies included in the House GOP's legislation. While there are certainly components of the legislation that are stimulative — including boosts to the standard deduction, child tax credit and temporary revival of valuable corporate deductions — they're not huge. Goldman's analysis said they could positively affect year-over-year GDP by somewhere between 0.5 and 1 percentage point by mid-2026. Those effects are moderated by other provisions that could dent household finances and investment. The bill includes hefty cuts to Medicaid and the Supplemental Nutrition Assistance Program that will likely trim health care and consumer spending. Opportunities for clean energy projects that were incentivized by President Joe Biden's Inflation Reduction Act would be substantially diminished. White House spokesperson Kush Desai said Republicans had voted to 'prevent a $4 trillion tax hike, the largest in American history, on American families when they passed The One, Big, Beautiful Bill.' 'Locking in President Trump's first-term tax cuts will give American businesses and families the confidence they need to invest in the future,' he said in a statement. 'Additional relief for working-class Americans — by eliminating taxes on tips and overtime — and rewarding American manufacturing with full equipment and factory expensing will turbocharge America's economic resurgence.' Notably, Wall Street has blanched at the bill's price tag. Investor appetite for U.S. debt securities weakened over the last week amid a broader reckoning over the growing likelihood that deficits will continue to climb for the foreseeable future, putting upward pressure on long-term interest rates. That trend has likely been exacerbated by notions that protectionist trade policies may weaken the attractiveness of U.S. markets in the future, Smetters said. 'The government is going to have to try to sell these bigger deficits, this bigger amount of debt, in a world where [investors] have less global demand for that debt because of tariffs and trade,' he said.
Axios
21-05-2025
- Business
- Axios
Trump's $4 trillion deficit bomb
President Trump yesterday declared himself the biggest "fiscal hawk" in Washington. He then spent the next hour urging Republicans to unite behind the most budget-busting legislation in modern U.S. history. Why it matters: Trump's " big, beautiful bill" is projected to add trillions to the deficit over the next decade — rattling conservatives who have long warned that the U.S. is barreling toward fiscal catastrophe. Some Republicans now find themselves trapped between two of the party's most animating principles: Deficit reduction vs. absolute loyalty to Trump. That tension is threatening to derail Trump's vision for a new "Golden Age," which the White House hopes will begin in earnest with a vote on the House floor this week. State of play: Trump and his aides have brushed off warnings that his ambitious tax-and-spending bill — combined with his pledge not to touch Social Security and Medicare — could balloon the national debt, which now tops $36 trillion. White House officials emphasize they inherited sky-high deficits from the Biden administration, and say their policy mix of spending cuts, deregulation, tariffs, and pro-growth policies will bring them down. The White House Council of Economic Advisers projected that the bill would boost GDP by 4.2% to 5.2% in the short run — a staggering level of growth that goes far beyond the mainstream consensus. White House press secretary Karoline Leavitt went as far as to claim that the bill "does not add to the deficit," and that it would actually save $1.6 trillion through spending cuts and Medicaid work requirements. Reality check: Independent budget experts see that as laughable. The Joint Committee on Taxation projects the House reconciliation bill would increase deficits by $3.8 trillion through 2034. The Penn Wharton Budget Model projects deficits of almost $3.3 trillion, even when accounting for "positive economic dynamics." Moody's, which downgraded the U.S. credit rating on Friday, estimates that extending Trump's 2017 tax cuts alone — a central component of the bill — would add $4 trillion to the deficit over the next decade. What they're saying: "This tax bill's enormity is being underplayed ... [It] will cost more than the 2017 tax cuts, the pandemic CARES Act, Biden's stimulus, and the Inflation Reduction Act combined," Jessica Riedl, a budget specialist at the conservative Manhattan Institute, told Yahoo Finance. Jim Millstein, a former chief restructuring officer at the Treasury Department, warned that most deficit projections "assume consistent economic growth." "Just imagine the Trump tariffs ... cause a recession," Millstein told Bloomberg. "They are risking a fiscal disaster." The other side: Some Republicans argue that not passing the bill poses a more immediate threat. If Trump's 2017 tax cuts are allowed to expire, taxes would rise for 62% of filers, according to the Tax Foundation. Some conservatives also reject the notion that cutting taxes should be equated with the type of deficit spending that Congress approved during the Biden administration. "If you think a tax cut is a cost, you're standing in the shoes of the government, not the American people," anti-tax activist Grover Norquist told the Washington Post. "Tax cuts are income to Americans and a loss to the bureaucracy."
Axios
20-05-2025
- Business
- Axios
White House forecasts "big, beautiful bill" would drive stunning economic growth
White House economists project that the budget legislation pending before the House will, if enacted, contribute to a stunning rise in the economy's growth path. Their numbers are eye-popping — and far higher than those that analysts outside the Trump administration are projecting. Driving the news: In its new analysis of the "big, beautiful bill" that has cleared a key committee and will now go to the floor of the House, the White House Council of Economic Advisers finds that it would add 4.2% to 5.2% to GDP in the short run. They put that number at 2.9% to 3.5% in the long run. They see the legislation boosting investment by 10% to 15% in the next four years, and boosting wages by $6,000 to $11,000 per worker. What they're saying: "All of this is a result of low tax rates incentivizing additional labor supply, incentivizing additional investments by firms, and incentivizing additional manufacturing capacity at home," CEA chair Stephen Miran told reporters Monday. Reality check: Numbers of those magnitudes are a distinctly non-mainstream conclusion, even among analyses that do find some growth boost from the legislation. The Tax Foundation, a center-right think tank, finds that the version of the legislation that passed the House Ways and Means Committee last week would add 0.6% to long-run GDP. The Penn-Wharton Budget Model puts the gain at 0.5% over the next 10 years and 1.7% in 30 years. Between the lines: A big difference between the White House economists' findings and those of other analysts is that the CEA analysis sees big supply-side gains from some of President Trump's campaign-trail tax promises not built into more mainstream models. "I want to emphasize that the segments of the labor force being targeted by some of those tax provisions, particularly no tax on overtime and no tax on tips, these are workers that are highly elastic and therefore highly responsive to changes in incentives," Miran said, which means the policies could help boost the economy's supply side.
