Trump’s tax cuts: Where we stand

The ‘Tax Cuts and Jobs Act’ of 2017, a cornerstone of President Donald Trump’s first term that will expire by year-end, is on the road to revival. 

“What I am hoping for is that we will have a signed, sealed, and delivered tax bill by July 4 that will give great assurity to American companies, the American consumer, and provide a real impetus for the U.S. Economy, just as the tax bill did in 2018, 2019, and even during COVID” said U.S. Treasury Secretary Scott Bessent during an interview on FOX Business’ ‘Kudlow” on Tuesday. 

Members of the Senate and House are working in “lockstep” to hammer out details. House Speaker Mike Johnson was originally hoping for a Memorial Day deadline, but is comfortable with the progress. 

“I think it’ll send a very important signal to the bond markets, the stock market, to investors and job creators here and around the world, and it’ll send a message to our allies and our enemies that America is serious. We have stabilized tax policy. Everyone will know what their tax rates are. That will be helpful for making decisions for companies,” Johnson said during an interview with Axios Wednesday. 

10-YEAR TREASURY & STOCKS 

The 10-year Treasury yield, which has seen extreme upward volatility, has trended lower to 4.158%. a sign that interest rates could be easing. The Federal Reserve will hold its next meeting on May 7th, and no rate change is expected, according to the CME’s FedWatch Tool. 

While the S&P 500, the broadest measure of the stock market, is down 6% year-to-date. However, it did exit its correction, down 10% from a recent high last week. 

The updated bill may include a few bonus provisions. 

Auto Loan Interest Deductible

“One of his [Trump’s] programs is to make interest on auto loans for cars made in America, both new and used, tax-deductible,” Bessent added. 

The average new-vehicle annual percentage rate came in at 7.1% in the first quarter, according to Edmunds. With the average loan term for new vehicles of 69.5 months, car buyers are likely on the hook for a monthly payment of $741. 

Expanded Manufacturing Expensing 

The other item is expanding expensing for manufacturers, which currently includes only equipment. “What we are going to add to that is 100% expensing for factories. So you will be able to expense both the equipment and the structure”, Bessent noted.   

U.S. manufacturers, who compete fiercely with China and other foreign countries, have been a proponent of supporting extending and/or making permanent the existing 2017 tax cuts. 

“The 2017 tax reforms that President Trump actually announced at our board meeting in 2017 and when he said it would be rocket fuel for the economy, if they were enacted, they indeed were. Those tax reforms led to record investment and job creation and wage growth for three years running after they were in enacted” Jay Timmons, CEO of the National Association of Manufacturers, recently told FOX Business. 

Nearly 6 million jobs will be lost if the cuts expire, according to a NAM-backed study, recently reported by FOX Business. 

AMERICAN JOBS, $1.1T IN GDP IF CONGRESS LETS TRUMP TAX CUTS EXPIRE: STUDY

The U.S. economy will face $540 billion in lost wages and a $1.089 trillion GDP shortfall if the remaining Tax Cuts and Jobs Act provisions expire. Additionally, if Congress does not preserve the reforms, 1.137 million manufacturing jobs, $126 billion in manufacturing worker compensation and $284 billion in manufacturing GDP are on the line, the study says.

The U.S. economy is showing signs of stalling. The first read on 1Q GDP fell by 0.3%, the first contraction since 2022. Two back-to-back contractions would signal an official recession. 

FOX News’ Danielle Wallace contributed to this report.