Tax News & Views Tariff Burritos Roundup

Tariffs

Trump’s Tariffs Send Shockwaves Across Global Economy – Jennifer A. Dlouhy, Catherine Lucey, Josh Wingrove, and Skylar Woodhouse, Bloomberg:

President Donald Trump imposed the steepest American tariffs in a century as he steps up his campaign to reshape the global economy, sparking threats of retaliation and a selloff in markets around the world.

Trump announced Wednesday he will apply at least a 10% tariff on all exporters to the US, with even higher duties on some 60 nations, to counter large trade imbalances with the US. That includes some of the country’s biggest trading partners, such as China — which now faces a tariff of well above 50% on many goods — as well as the European Union, Japan and Vietnam.

Trump announces 10 percent tariffs on all imports, additional taxes for some 60 countries – David J. Lynch & Jeff Stein, Washington Post:

President Donald Trump said Wednesday that he will impose a new 10 percent tariff on all imported goods along with higher import taxes tailored for each of about 60 countries that his advisers say maintain the largest barriers against U.S. products, in a sharp turn toward the kind of protectionism that the United States abandoned nearly a century ago.

To impose the new tariffs, the president declared a national emergency, citing the annual merchandise trade deficit that the United States has run each year since 1975.

Trump Unveils New Tariffs on Dozens of Countries – Dylan Moroses, Law360 ($):

President Donald Trump announced sweeping tariffs on major trading partners Wednesday, including a 10% rate on all goods entering the U.S. to take effect later this week, in a "declaration of economic independence" he says will jump-start domestic industry and production.

Trump said the tariffs, which he called reciprocal, are meant to equal the economic sum of other countries' tariff and nontariff trade barriers, but will be discounted by half for most nations facing high rates. He said in remarks outside the White House that the tariffs are necessary to address the economic and national security emergency the U.S. is facing as a result of large trading deficits.

Trump Outlines Country-by-Country Reciprocal Tariff Plan – Michael Smith & Amanda Athanasiou, Tax Notes ($):

President Trump outlined a plan to charge countries across the world a reciprocal tariff equal to half of the combined rate of tariffs and nonmonetary barriers that they apply to U.S. imports.

In an April 2 speech, Trump announced reciprocal tariffs aimed at equalizing the trade deficit the United States has with the rest of the world. Before the announcement, Trump referenced the Office of the U.S. Trade Representative's annual report, which said trade discrepancies and nonmonetary barriers, such as digital services taxes and additional levies placed on U.S. tech, are directly harming U.S. trade.

Americans’ Reactions to Trump’s Tariffs Range from Worried to Enthusiastic – Alan Rappeport & Colby Smith, New York times:

President Trump’s announcement of sweeping universal and so-called reciprocal tariffs on countries around the world drew a swift rebuke on Wednesday from business groups, trade experts, Democratic lawmakers and many economists who warned that they would raise prices for American consumers and slow economic growth.

“This is catastrophic for American families,” said Matt Priest, president and chief executive of the Footwear Distributors and Retailers of America. “We had hoped the president would take a more targeted approach, but these broad tariffs will only drive up costs, reduce product quality and weaken consumer confidence.”

Why one industry is cautiously excited about Trump’s tariffs – Brendan Bordelon & Gabby Miller, Politico:

With American industries broadly stressing out about President Donald Trump’s looming tariff plans, there’s one that sees a possible upside: Big Tech.

For years, Silicon Valley giants have been complaining about foreign regulations on their platforms — taxes, fines and restrictions that the U.S. doesn’t impose, but other large governments do.

Now, tech lobbyists are cautiously hoping President Donald Trump will use his tariff policy as a blunt-force instrument to push it back.

Trump’s Tariffs Could Blow Up Big Pharma’s Tax Shelter – David Wainer, Wall Street Journal. “On Wednesday, Trump announced sweeping reciprocal tariffs, citing the barriers other nations impose on U.S. goods. The measures include a 20% tariff on the European Union and are expected to affect nearly every industry. Major pharmaceutical companies are lobbying for exemptions, arguing that the tariffs would harm patients and discourage investment in research and development.”

Bessent Urges Against Retaliation, Says ‘Wait and See’ on Talks – Daniel Flately & Annmarie Hordern, Bloomberg ($):

Treasury Secretary Scott Bessent urged US trading partners against taking retaliatory steps against President Donald Trump’s new set of retaliatory tariffs.

“I wouldn’t try to retaliate,” Bessent said in an interview Wednesday with Bloomberg Television. “As long as you don’t retaliate this is the high end of the number.”

Bessent spoke shortly after Trump unveiled a 10% universal baseline tariff for many trading partners, with much higher surtaxes on others — including a 34% rate for China and 20% levy on the European Union.

The Hidden Loser in Trump’s Auto Tariffs: Domestic EV Manufacturing – David Ferris, Politico:

The 25-percent tariffs President Donald Trump has ordered on imported vehicles and parts has sent shock waves through the automobile industry. Manufacturers and dealers are deeply worried about the real chance that sticker prices could climb by as much as $10,000 on vehicles that already cost an average of about $48,000.

Trump has said he isn’t concerned about higher prices. It’s worth it, he says, to promote American manufacturing. But one of the less-discussed consequences of the tariffs is the hit it will put on one of the domestic auto industry’s growing sectors: electric vehicles.

Business Groups Warn About New Tariffs Unveiled by Trump – Kate Ackley, Bloomberg ($). “Corporate lobbying groups, many of them jittery about bashing new administration policies, ramped up their opposition Wednesday to a slew of tariffs planned by President Donald Trump.”

Budget

Senate GOP Plan Would Extend TCJA, Allow $1.5T In Tax Cuts – Asha Glover, Law360 ($):

Senate Budget Committee Republicans released a budget proposal Wednesday that would permanently extend the Tax Cuts and Jobs Act and allow for up to $1.5 trillion in other tax cuts.

The Senate's proposed amendment to the House-passed budget resolution uses current policy to calculate the budget baseline for spending and revenue, which assumes that the 2017 tax law is permanent even if certain provisions are set to expire on a certain date. The bill also would authorize the Senate Finance Committee to enact $1.5 trillion in additional tax cuts and would increase the debt limit by $5 trillion.

Senate Pencils In $5 Trillion for Tax Relief, Leaves Blank Spaces for Spending Cuts – Richard Rubin, Wall Street Journal:

Senate Republicans rallied behind a fiscal framework that allows more than $5 trillion in tax cuts over a decade, taking a crucial step toward turning President Trump’s agenda—tax cuts, border security and national defense—into law.

But the GOP budget resolution released Wednesday won’t be the final word along the complicated path to a major tax and spending bill. The plan employs a controversial accounting maneuver, postpones decisions about spending cuts and conflicts with a competing House plan.

Republicans Plan to Skirt Senate Rules to Push Through More Tax Cuts – Catie Edmondson, New York Times:

For decades, senators looking to push major budget and tax legislation through Congress on a simple majority vote have had to win the blessing of a single unelected figure on Capitol Hill.

The Senate parliamentarian, a civil servant who acts as the arbiter and enforcer of the chamber’s byzantine rules, has traditionally been in a position to make or break entire presidential agendas. That includes determining whether budget and tax legislation can be fast-tracked through Congress and shielded from a filibuster, allowing it to pass along party lines through a process known as reconciliation.

Now, in their zeal to deliver President Trump’s domestic policy agenda in “one big beautiful bill” of spending and tax cuts, Senate Republicans are trying to steer around the parliamentarian, busting a substantial congressional norm in the process.

Senate Unveils Plan to Fast-Track Tax Cuts, Debt Limit Hike – Erik Wasson, Bloomberg ($):

Senate Republicans unveiled a budget blueprint designed to fast-track a renewal of President Donald Trump’s tax cuts and an increase to the nation’s borrowing limit, ahead of a planned vote on the resolution later this week.

The Senate plan will allow for a $4 trillion extension of Trump’s tax cuts and an additional $1.5 trillion in more tax reductions. The House plan called for $4.5 trillion in total cuts.

Tax-Heavy Budget Resolution Faces Tests in Senate, House – Cady Stanton & Doug Sword, Tax Notes ($):

A budget resolution with sparse details on spending cuts and a novel method of scoring tax extensions faces a week or so of debate and votes to get through Congress and begin the detailed process of writing a tax-heavy reconciliation package.

Senate Republicans released the text of their tax-focused budget resolution April 2, which includes $1.5 trillion for tax cuts in addition to a current-policy scoring direction to make permanent the extension of expiring Tax Cuts and Jobs Act provisions.

The 70-page resolution is expected to come to the Senate floor within two days for a potentially lengthy “vote-a-rama” and then, should it be adopted, go to the House the week of April 7. The White House is expected to provide cover for deficit hawks by potentially releasing numbers on revenue and savings through tariffs, cuts by the Department of Government Efficiency, and other spending cuts.

FOIA Backlog

IRS FOIA Backlog Expected to Grow – Lauren Loricchio & Amanda Athanasiou, Tax Notes ($):

The backlog of Freedom of Information Act requests at the IRS and Treasury is expected to increase during President Trump’s second term, amid mounting concerns about the administration’s transparency.

“There was a pretty healthy increase in the volume of FOIA requests” during Trump’s first term, said Matt Topic of Loevy & Loevy.

Fired Probationary Employees

Work Set to Resume in Mid-April for Fired Probationary Employees – Kristen A. Parillo & Benjamin Valdez, Tax Notes ($):

The IRS told fired probationary employees to resume full-time work in mid-April after a federal judge narrowed the scope of relief in the mass firings case to workers in the states that sued.

In an April 2 email seen by Tax Notes, the IRS said employees will soon receive instructions on returning to full-time duty by April 14, one day before the filing season deadline.

DOJ Tax Division

Tax Community Pushes to Keep DOJ Tax Division Intact – Mary Katherine Browne, Tax Notes ($). “More than 60 attorneys urged the Justice Department against dismantling its Tax Division, stating that doing so would increase fraud and inconsistency and would end up costing Treasury more than it saves.”

Attys Call Ending DOJ Tax Division 'Epic Failure' In Efficiency – Kat Lucero, Law 360 ($):

The U.S. Department of Justice's plan to dissolve its Tax Division would jeopardize effective tax enforcement nationwide, a slew of tax controversy lawyers told the DOJ Wednesday, saying such a move would defeat President Donald Trump's stated overarching goal to improve government efficiency.

The division, which enforces and defends U.S. tax laws for the DOJ, has been critical in recovering more than $10 billion in lawsuits before trial and appellate courts nationwide, according to a letter to DOJ Deputy Attorney General Todd Blanche signed by more than 60 veteran tax controversy lawyers.

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