Who Really Stands to Benefit From Trump’s Tax Plans?

The relationship between tax cuts and the U.S. economy’s external sector is simple: A reduction of income tax liabilities raises households’ disposable income, which drives personal consumption, residential investments and, indirectly, business capital outlays — the main segments of the economy that represent 85 percent of America’s GDP. All that new purchasing power then leads to rising demand for imports, while the expanding domestic markets lower the pressure on businesses to sell their goods and services abroad.The result is a deteriorating trade balance: a decline of a trade surplus, or, most frequently, an increase in trade deficits.That is the likely scenario one can expect from tax cuts the U.S. Senate passed last Friday.

Source: GOP tax plan is a gift to China, Japan and Germany – commentary – CNBC

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.