President Donald Trump has unveiled plans for “the largest tax cuts in American history”, alongside a series of 25% tariffs on imported automobiles, semiconductors, and pharmaceutical products. Speaking at the FII Priority Saudi Investment Summit in Miami, he outlined measures aimed at strengthening U.S. manufacturing and reducing reliance on foreign goods.
The former president’s proposals include eliminating taxes on tips, Social Security, and overtime, alongside allowing businesses to expense 100% of new factory construction costs. Trump also reiterated his commitment to tariffs as a tool to encourage domestic production, stating that companies that manufacture goods abroad will face significant import taxes.
Expansive tax cuts designed to benefit businesses and workers
Trump’s tax proposals seek to reduce the financial burden on individuals, workers, and corporations, according to his speech at the summit. Among the key measures, he pledged to remove federal taxes on tips, a move likely to benefit workers in the service industry.
Additionally, he proposed eliminating taxes on Social Security payments and overtime wages, aiming to increase disposable income for millions of Americans.
For businesses, Trump emphasised policies to encourage domestic investment. He announced plans to allow full expensing of factory construction costs, which he argued would make the U.S. a more attractive destination for manufacturing.
Oil and gas producers were also singled out as potential beneficiaries of tax reductions, with Trump stating that lower corporate tax rates would strengthen American energy independence.
Trump framed the tax cuts as an essential step toward economic revitalisation, arguing that they would increase wages, create jobs, and boost investment. However, he did not provide details on how these cuts would be financed or their projected impact on federal revenues.
Tariff strategy targets key industries and foreign competition
In addition to tax cuts, Trump reaffirmed his commitment to protectionist trade policies, including 25% tariffs on automobiles, semiconductors, pharmaceuticals, and lumber. According to Trump, these tariffs are intended to encourage companies to relocate production to the U.S., generating jobs and reducing reliance on foreign imports.
The former president has long criticised what he calls unfair trade practices, particularly in the automotive industry. The European Union, for example, imposes a 10% tariff on U.S. vehicle imports, whereas the U.S. currently levies only 2.5% on European passenger cars. Trump suggested that the new tariffs would level the playing field for American manufacturers.
Trump also addressed China, Mexico, and Canada, confirming that a 10% tariff on all Chinese imports remains in place. Additionally, he announced 25% tariffs on Mexican and Canadian non-energy goods, while oil and gas imports from Canada will be taxed at a lower 10% rate. These tariffs, however, have been postponed until March as border security negotiations continue.
