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.
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’
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 US 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 US 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.”
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 US 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.
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.
At one point in his Sunday TV interview, Trump appeared to be talking on a different timescale altogether. “What I have to do is build a strong country,” he said. “You can’t really watch the stock market. If you look at China, they have a 100-year perspective.”
--With assistance from Katanga Johnson.
©2025 Bloomberg L.P.
