As Donald Trump’s tariffs send markets into a tailspin, pressure is mounting on the president to speed up his main proposal for juicing the economy: a sweeping tax bill.

Trump’s team is starting to warn of short-term pain as they pursue a drastic overhaul of trade and public spending. Tax cuts, which put more cash in consumer pocketbooks, could help soften the blow. Allies would ideally like to pass a bill by July, though there are plenty of hurdles.

In his first term, Trump slashed taxes before beginning a trade war. Now it’s the other way round — and the economic backdrop looks shakier, with high interest rates squeezing the housing market, and inflation proving sticky. Above all, his second-term tariffs are both steeper and less predictable, as the on-again, off-again levies imposed on Canada and Mexico showed.

All of this is driving a slump on stock markets, which Trump has always viewed as a barometer, and triggering talk of recession risks. Tax cuts could revive animal spirits, like they did in 2017, though Democrats say they will chiefly benefit the wealthy. 

Senator Tommy Tuberville, an Alabama Republican, said the onus is on Congress to hurry the tax cuts through the legislative process as quickly as possible, noting that Trump can’t unilaterally enact those measure — unlike the tariff hikes.

“The problem is, President Trump can’t control that. We’re controlling this,” Tuberville told Fox Business on Monday when asked about market reaction to tariffs happening before tax cuts. 

On the tariffs, he said, “President Trump wanted to get his feet on the ground and get going. I mean, he’s only got four years, and that four years is going to blow by.”

The president is also betting that signing a major bill into law in the Rose Garden will help Republicans keep control of the House in the 2026 mid-term elections. But with investors and consumers getting anxious, the administration may need it to happen fast. 

‘On different pages’

Kevin Hassett, director of the White House’s National Economic Council, acknowledges the need for speed. “We’ve got to pass the tax cuts and get the deregulation train rolling,” he told Bloomberg Television on Friday.

Steve Moore, an informal economic adviser to Trump, wants an even faster timetable than the July target, calling for a bill to be signed by Memorial Day in late May. Moore, who isn’t entirely aligned with Trump’s views on the efficacy of tariffs, points to above-target inflation and weak home sales as signals of a potential slowdown.

“The economy needs a pick-me-up,” Moore says. “Tariffs are not a pick-me-up, but tax reform is.”

On the campaign trail, Trump promised to extend his first-term tax cuts for households, as well as slashing charges on tips, overtime earnings and Social Security payments. The extension alone would cost some $4.5 trillion over a decade. Republicans — who’ve also vowed to trim U.S. budget deficits, currently at record levels outside of crisis times — have no clear way to pay for it.

That’s one reason why passing legislation by early summer may prove harder than the president or his party would like. Then there’s the complexity of Washington mechanics.

The House and Senate are still jockeying over which chamber will take the lead in fashioning the bill and whether it will be part of a massive immigration package, or standalone legislation. Republican lawmakers can’t agree on the best strategy.

“The difficulty is exemplified by the fact that we have two competing budget resolutions to even start the process,” says Marc Gerson, a former Republican tax counsel to the House Ways and Means Committee. “The House and Senate are on different pages.”

‘Hate to predict’

On Sunday, Trump admitted that his trade policy could cause some disruption, while insisting it will benefit Americans over the long run by reviving industry. Asked in a Fox News interview if he expected the U.S. to fall into a recession, the president replied: “I hate to predict things like that. There is a period of transition because what we’re doing is very big.”

Optimism among small U.S. firms declined for a second straight month in data published early Tuesday. Other measures showed a spike in uncertainty to near-record highs, and a steep increase in the share of business owners saying they’ve raised prices or will do soon.

Trump owes his election win at least in part to voter angst over inflation. His predecessor Joe Biden spent years trying to downplay this as a passing problem, when in fact it had become a persistent bug within the U.S. economy, and a source of pain for consumers struggling with costly groceries, gasoline and rent. 

Now — since presidents at some point have to own the economy they oversee — Trump runs the risk of getting the blame himself. He likely can’t convince Americans indefinitely that the problem is a hangover from Biden’s policies. Economists say tariffs will push consumer prices up and drag growth down, though most don’t expect a recession.

So far, there’s not too much widespread panic within the West Wing over the economic data, according to people familiar with the White House discussion.

Trump aides are emboldened by their election victory in all key seven battleground states. Within the president’s orbit, there’s a perception that they’re moving swiftly and ticking items off their to-do list. Trump has signed rafts of executive orders, while Elon Musk seeks to radically reshape the federal government.

Outside of Washington, GOP politicians don’t seem too fretful. In New Hampshire, Christopher Ager — who serves state as Republican Party chair — says he’s not picking up much anxiety.

“Normally, you say, ‘It’s the economy, stupid’,” he says, citing the political received wisdom that that elections hinge on the issue. “But now it just seems neutral.”

‘100-year perspective’

There’s been some chatter about fluctuating gas prices, but local conservatives are mostly talking about other stuff, Ager says — like transgender kids in sports and migrants living in sanctuary cities, the subject of two bills now working their way through the statehouse.

GOP voters don’t seem too worried either. Some 42% of Americans approve of Trump’s handling of the economy, compared with an overall approval rating of 45% that hasn’t budged much since his inauguration, according to the latest Gallup data.

Still, the trade war has rattled corporate America, from the smallest firms to the largest. Trump is slated to meet on Tuesday with dozens of chief executives at a Business Roundtable event. It’ll be a crowd broadly enthusiastic about his agenda of slashing taxes and red tape, and the president will likely face questions about what he’ll do next — and when.

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The average American will pay $497,804 in total taxes over a lifetime, but the exact amount can be much higher in certain parts of the country. QuickBooks consultants Dancing Numbers recently compared all 50 states and the District of Columbia to determine which states pay the most in taxes, as well as the least.

The total lifetime tax amount of a New Jersey resident ($755,493) is more than double the amount that a resident of Mississippi ($343,885) will pay over a lifetime.

Of the 10 states with the largest lifetime tax totals, seven are in the Northeast, while eight of the 10 states with the smallest lifetime tax total are in the southern part of the United States.

Read more about how much the average American will pay in taxes over a lifetime.

Source: Dancing Numbers

States paying the least total lifetime tax

States paying the most total lifetime tax

The American Institute of CPAs has issued a set of recommendations from a special task force on changing some of the independence rules related to alternative practice structures at accounting firms, given the large number of deals involving private equity investments.

The recommendations come from an Alternative Practice Structures Task Force that was set up two years ago by the AICPA’s Professional Ethics Executive Committee. They’re in a discussion memo and the AICPA is asking for comments on the preliminary conclusions and two possible interpretation options. Feedback should be emailed to [email protected] by June 15. The AICPA said last month it planned to revise the rules.

One of the revision options includes a specific private equity-related example, while the other is more general. Under both options, the draft interpretations would provide a three-step process:

1. Determine which entities associated with the alternative practice structure are network firms (a term which is defined in the ethics code). Network firms are subject to independence requirements for financial statement audit and review clients.
2. Determine which individuals associated with the alternative practice structure are covered members subject to independence requirements.
3. Determine which additional relationships and circumstances associated with the alternative practice structure create threats to independence, and then identify relationships and circumstances where independence would be impaired, and apply the “Conceptual Framework for Independence” (ET sec.1.210.010) to any other relationships and circumstances that the member knows or has reason to believe may exist.

When evaluating the first step, the non-attest entity would be considered a network firm of the attest firm. Alternatively, a private equity investor, its funds and other portfolio companies would generally not be considered network firms, so portfolio companies could conceivably provide non-attest services to any attest clients. However, there may be circumstances where a portfolio company could be defined as a network firm for other reasons that will be spelled out in the task force’s discussion memorandum.

After the comment period closes, the committee intends to use the feedback to supplement its research and develop a formal exposure draft.