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

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Craig Erlam

Craig Erlam

Senior Currency Analyst at OANDA
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the Wall Street Journal and The Telegraph, and he also appears regularly as a guest commentator on networks including Sky News, Bloomberg, CNBC and BBC. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam

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