At the moment, it’s a war of words with a side order of sabre-rattling. But as tensions between the US and its overseas rivals rise, the President’s crusade to make what he sees as a long-overdue ‘correction’ to the country’s trade deficit is beginning to have unintended consequences in America’s – and his own – heartland.
Since he took office, President Trump has been committed to the idea of righting the wrongs he believes have been perpetrated by trading partners looking to make gains at the expense of US interests. After dabbling with tariffs on solar panels and washing machines, a new set of curbs on steel and aluminum imports was introduced in spring of this year, swiftly followed by import duties designed to target billions of dollars’ worth of Chinese imports.
But, while China may have borne the brunt of the action, America’s traditional allies certainly haven’t escaped scot-free. Initially exempting Canada, Mexico and the EU from the steel and aluminium tariffs, Washington later confirmed that it would impose the duties across the board – special relationships notwithstanding.
Another bite of the Apple
Could times be a-changing for tech giant Apple? After coming under fire for its tax evasion policies, it seems as if the company could be softening its stance towards corporate tax obligations, as CEO Tim Cook announced in January that Apple would be making a payment of $38 billion to repatriate part of its overseas cash holdings. Cook also committed to spending $30 billion in the US over a five-year period, creating 20,000 jobs and a new campus in the process.
We’ve all heard a lot about tax reform over the last twelve months but with proposed changes still to make it through Congress, should you be planning new tax strategies now or is it best to wait till the dust settles?
This is actually a great time to review your current tax position. Our tips for getting your affairs in apple-pie order might also help to prepare the way for tax savings in the years to come.
Tax reforms finally announced
In line with Trump’s pre-election promises – and with all the pomp and circumstance we’ve come to expect from the new administration – the White House unveiled its plans to reform the US tax system this week.
Heralding ‘the biggest tax cuts in history’, the document itself was something of a damp squib – just a single A4 page summarising the main points of the reform agenda which would at a stroke simplify the US tax system, slash business taxes and consign inheritance taxes to history.
An upturn for the economy?
After a period of sluggish performance, the US economy may be set for an unexpected upturn. The incoming Republican administration seems determined to throw all its resources into boosting the economy which, together with the much-touted trade restrictions shoring up the price of imports, is almost certain to fuel inflation above the average 2.2% of Obama’s second term.
While under Barack Obama, labour regulation and environmental legislation expanded greatly – witness the scope of Obamacare, for instance – its subsequent contraction under Trump may well encourage businesses to start investing again.
Tech giant Apple has been hit with Europe’s biggest-ever tax penalty after Brussels ruled that the company had received what amounted to illegal state aid from Ireland. The company will be required to pay billions of euro in back taxes as the European Commission seeks to redress the aggressive tax avoidance strategies employed by the world’s biggest corporations.
The judgment follows a three-year investigation into claims that Dublin violated EU law by granting Apple an advantage not available to other companies. It’s likely that the decision will be the subject of appeals by both Apple and Ireland – both of which deny any wrongdoing.