Latest news with #TheBudgetLab
Business Insider
2 days ago
- Business
- Business Insider
Canada would suffer the most economic damage under Trump's tariffs, new Yale report shows
Trump's tariffs could shrink Canada's economy by 2.1% in real terms, says The Budget Lab of Yale. Canada faces a 35% tariff threat by August 1, on top of tariffs on potash, steel, and automobiles. The US ranks second in terms of economic damage due to tariffs, the Budget Lab report shows. A new report by The Budget Lab at Yale University shows that the Trump administration's tariffs would shrink Canada 's long-run economy by 2.1% after taking inflation into account, more than the impacts on other countries in the world. This figure is up from the previous estimate of a 1.9% long-term damage to Canada, and doesn't take into account Trump's threats to impose a 35% tariff on Canada from August 1. On Truth Social, Trump published a letter to Canada on Thursday, accusing the northern neighbour of having "financially retaliated against the United States." Though Canada is not subjected to the 10% base tariffs, the northern neighbour already faces a 10% tariff on potash and energy, a 50% tariff on steel and aluminum, and a 25% tariff on automobiles. Canada also exports around three-quarters of its goods to the US. The US-Canada relationship has also suffered due to the tariffs and Trump's repeated comments that Canada should become the 51st state of America. Many Canadian retailers and consumers are turning to locally sources goods over US imports. In response to Trump, Canadian Prime Minister Mark Carney wrote on X that he remains willing to collaborate with Washington, DC, and said he is "building Canada strong." "The federal government, provinces, and territories are making significant progress in building one Canadian economy," wrote Carney. "We are poised to build a series of major new projects in the national interest. We are strengthening our trading partnerships throughout the world." After Canada, the Bugest Lab report shows that the US ranks second in terms of estimated GDP loss due to Trump's tariffs. While China's economy is expected to contract by 0.2%, the US economy is expected to be 0.4% smaller in the long run and 0.8% smaller in 2025 alone.
Business Insider
2 days ago
- Business
- Business Insider
Canada would suffer the most economic damage under Trump's tariffs, new Yale report shows
The US's second-largest trading partner may be bearing the brunt of President Donald Trump's tariffs. A new report by The Budget Lab at Yale University shows that the Trump administration's tariffs would shrink Canada 's long-run economy by 2.1% after taking inflation into account, more than the impacts on other countries in the world. This figure is up from the previous estimate of a 1.9% long-term damage to Canada, and doesn't take into account Trump's threats to impose a 35% tariff on Canada from August 1. On Truth Social, Trump published a letter to Canada on Thursday, accusing the northern neighbour of having "financially retaliated against the United States." Though Canada is not subjected to the 10% base tariffs, the northern neighbour already faces a 10% tariff on potash and energy, a 50% tariff on steel and aluminum, and a 25% tariff on automobiles. Canada also exports around three-quarters of its goods to the US. The US-Canada relationship has also suffered due to the tariffs and Trump's repeated comments that Canada should become the 51st state of America. Many Canadian retailers and consumers are turning to locally sources goods over US imports. In response to Trump, Canadian Prime Minister Mark Carney wrote on X that he remains willing to collaborate with Washington, DC, and said he is "building Canada strong." "The federal government, provinces, and territories are making significant progress in building one Canadian economy," wrote Carney. "We are poised to build a series of major new projects in the national interest. We are strengthening our trading partnerships throughout the world." After Canada, the Bugest Lab report shows that the US ranks second in terms of estimated GDP loss due to Trump's tariffs. While China's economy is expected to contract by 0.2%, the US economy is expected to be 0.4% smaller in the long run and 0.8% smaller in 2025 alone. US households, the report says, will also see an income loss of $2,500 due to tariffs. Clothes and footwear would become disproportionately more expensive by as much as 39% in the short run, and prices are expected to stay up in the future.
Indian Express
3 days ago
- Business
- Indian Express
US households face bigger income loss than Trump's $300 billion tariff revenue
The American government hopes to collect $300 billion in revenue this year from Donald Trump's tariff war. However, the higher prices resulting from the increase in tariffs from imported goods could set back US households' incomes by an even greater amount. Tuesday, Treasury Secretary Scott Bessent said the US, so far in 2025, had garnered around $100 billion in tariff income, which could triple to $300 billion by the end of the year. And while Trump claims the tariffs 'will start being paid' from August 1 by the countries they are imposed on, the loss of income for American households from higher prices will exceed the government's revenues on account of the higher duties on foreign goods. According to non-partisan policy research centre The Budget Lab at Yale, all tariffs levied up to July 9 in 2025 — assuming they stay in force in perpetuity — will lead to a 1.8 per cent increase in prices in the short-run, which is equivalent to an annual income loss of $2,367 for each household, on average. With the Census Bureau estimating the number of US households at just over 127 million, this results in a total income loss of $302 billion for American households this year. The Budget Lab's calculations assume the US Federal Reserve does not react to the tariffs, which are estimated to bring down GDP growth in 2025 by 70 basis points (bps) and 40 bps in the long run — equivalent to an annual GDP loss of $110 billion in 2024 prices. Meanwhile, the unemployment rate is seen rising 40 bps by the end of 2025. To be sure, the gains for the US government from the tariffs could end up being higher than just $300 billion considering the reciprocal tariffs were suspended for 90 days as various countries negotiated trade deals with the Trump administration. According to the Budget Lab, the tariffs levied so far in 2025 could raise the government's revenue by a net $2.2 trillion over 2026-35. This is lower than the US Congressional Budget Office's own estimate of tariff income of about $2.8 trillion over 10 years, which Bessant said this week was 'probably low.' Starting July 7, Trump has sent 'letters' to 22 countries informing them of the tariff that would apply to goods imported into the US from their shores starting August 1. This interim pause until next month, according to ANZ Asia Economist Krystal Tan, 'appears to be a calculated negotiation tactic – designed to increase the pressure on trading partners to accelerate talks and offer deeper concessions'. However, the list is littered with names that the US stands little to gain from. Of the 22 countries on whom the US has levied tariffs as of July 9, eight – Laos, Myanmar, Serbia, Bosnia & Herzegovina, Libya, Tunisia, Brunei, and Moldova – enjoyed a goods trade surplus of less than $1 billion in 2024. In fact, these eight countries' goods trade surplus with the US in 2024 was a mere $3.79 billion, up from $3.11 billion in 2023. And yet, these countries have been slapped with tariffs ranging from 40 per cent – Laos and Myanmar, who had a goods trade surplus of $763 million and $577 million, respectively, with the US in 2024 – to 25 per cent. Moldova, which faces a tariff of 25 per cent, had a goods trade surplus of just $85 million with the US last year. All these rates are in addition to any sector-specific tariffs. Then there is Brazil, which has attracted the highest tariff rate of 50 per cent for non-trade reasons, with Trump complaining in his letter to President Luiz Inácio Lula da Silva that the treatment of his predecessor Jair Bolsonaro – who is on trial for his alleged coup attempt following a loss to Lula in the 2022 elections – was a 'disgrace' and a 'witch hunt'. The US, ironically, enjoyed a goods trade surplus of almost $7 billion with Brazil in 2024. On the whole, the 22 countries to have received Trump's letters so far had a combined goods trade surplus of $264 billion in 2024, up 8 per cent from 2023. However, this year-on-year increase hides a few key points. One, the US' surplus or deficit with nine of these countries – Brazil, Myanmar, Bosnia & Herzegovina, Iraq, Libya, Algeria, Japan, Malaysia, and Brunei – had improved in 2024 from 2023. In fact, the increase in the deficit last year was due to just two countries – South Korea and Thailand – both of whom face a 25 per cent tariff. Both are also key trade partners for the US. 'It is undoubtedly interesting that Trump is targeting South Korea and Japan, the two most important allies in Asia. Whether this will help to build a united front with these countries against their major global rival, China, remains to be seen,' Commerzbank economists Bernd Weidensteiner and Christoph Balz said in a note on July 8. Siddharth Upasani is a Deputy Associate Editor with The Indian Express. He reports primarily on data and the economy, looking for trends and changes in the former which paint a picture of the latter. Before The Indian Express, he worked at Moneycontrol and financial newswire Informist (previously called Cogencis). Outside of work, sports, fantasy football, and graphic novels keep him busy. ... Read More
Indian Express
09-06-2025
- Business
- Indian Express
Consumers' loss, farmer optimism: In US, trade war sees key groups at odds
April was one of the most important months in the world's economic history, with the Trump administration's reciprocal tariffs coming into force on April 2 before being put on pause for 90 days a week later. The threat of the reciprocal tariffs, however, has seemingly had the opposite effect as American companies stocked up ahead of the tariffs' rollout. Data released last week showed that while the US' goods and services trade deficit in April 2025 fell a record 55 per cent from March 2025 to a 19-month low of $61.6 billion, the deficit for the first four months of 2025 was up 66 per cent compared to a year ago. The basis of Trump's reciprocal tariffs was that it would help bring down the US' trade deficit with various countries. Take India, for instance, which enjoyed a total trade surplus of $46.09 billion with the US in 2024. However, India's merchandise trade surplus with the US for the first four months of 2025 increased by 45 per cent to $23.29 billion, with imports from India up 29 per cent according to latest data from the US commerce department. In January-April 2025, the US imported $9.49 billion of advanced technology products from India, up 86 per cent from a year ago. Consumers & farmers American consumers have, for long, been considered the biggest losers in the Trump administration's pursuit of balanced trade. According to non-partisan policy research center The Budget Lab at Yale, American households, on average, are facing a consumption loss of $2,500 in 2025 when prices are measured in 2024 levels. 'The post-substitution price increase settles at 1.3%, a $2,100 loss per household,' The Budget Lab at Yale said. The Budget Lab estimates that Americans are facing an overall average effective tariff rate of 15.6 per cent at present — the highest since 1937 — with segments such as clothing and textiles being affected the most. In the short run, shoe and apparel prices for US consumers are up 31 per cent and 28 per cent, respectively. Despite the pain from tariffs, some in the US are still upbeat; in fact, more so than in several years. The Purdue University-CME Group Ag Economy Barometer index climbed to a four-year high last month, suggesting improved sentiment among farmers due to a 'much more optimistic view of US agricultural export prospects, combined with a less negative view of tariffs' impact on 2025 farm income than respondents provided in either March or April'. Exports are indeed on American farmers' minds, with Agriculture Secretary Brooke Rollins having recently visited Italy as part of her 'aggressive travel agenda to promote American agriculture worldwide'. The trip to Italy follows one to the UK in May 2025, with India, Vietnam, Japan, Peru, and Brazil on Rollins' schedule over the coming months. Shifting views on free trade Rather ironically, even as US and Chinese officials meet in London on Monday to add to the preliminary agreement that was agreed last month, American farmers have over the years grown somewhat skeptical of how beneficial free trade is. As per the Purdue University-CME Group Ag Economy Barometer, 18 per cent of producers in May 2025 either disagreed or strongly disagreed when presented with the statement that 'free trade benefits agriculture and most other American industries'. Back in December 2020, the corresponding number was just 7 per cent.
Axios
22-05-2025
- Business
- Axios
What to know about the No Tax on Tips Act and who it affects
The no-tax-on-tips provision is getting closer to becoming a reality for the nation's tipped workers. Why it matters: The Senate passed the bill to eliminate federal income tax on tips Tuesday — a campaign promise by President Trump. A version of No Tax on Tips is included in Trump's " Big, Beautiful Bill" that's making its way through the House. The massive bill proposes extending Trump's 2017 tax cuts and cuts to social safety programs. What is the No Tax on Tips Act? The big picture: The No Tax on Tips Act or Bill S. 129 proposes amending the Internal Revenue Code to exempt "cash tips" from federal income tax. Eligible employees will be allowed to claim a 100% deduction of up to $25,000 per tax year. Sen. Ted Cruz (R-Texas) introduced the bill, which was sponsored by a bipartisan group of senators, in January. Which workers would be eligible for tax exemption Zoom in: Waiters, bartenders and delivery drivers are examples of employees who could become eligible for the tax exemption, Senate Minority Leader Chuck Schumer (D-New York) said in a statement. Tipped workers tend to be lower income — the median weekly wage for tipped occupations was $538 in 2023 compared to $1,000 for non-tipped workers, according to estimates from The Budget Lab at Yale University. Roughly 4 million U.S. workers were in tipped occupations in 2023 or 2.5% of all employment, per Yale Budget Lab. To qualify for the tax deduction, there would be a $160,000 earnings limit for 2025, which would be indexed for inflation yearly. When does no tax on tips start? What we're watching: The bill has to be approved by the House of Representatives and signed by Trump to become law. If approved, the bill is expected to apply to taxable years beginning after Dec. 31, 2024. The House version sets a Dec. 31, 2028, end date for the tax deduction. Current IRS tax rule on tips How it works: The Internal Revenue Service says current workers who receive cash tips of $20 or more monthly must report those earnings to employers.
