Trump Tariffs Add to Tax Season Pressure | This Week's Economy Ep. 105
What can federal and state governments do to ease the economic strain on your wallet?
Hello Friends!
It’s a big week for tariffs as President Trump has announced a series of tariffs set to take effect on April 2. With federal income taxes already on our minds this month, these tariffs are another tax on American consumers and families.
Speaking of taxes, we’re still awaiting the renewal of the 2017 Tax Cuts and Jobs Act before it expires at the end of the year. Will a Republican-led Congress manage to make these cuts permanent? Meanwhile, many states are considering eliminating income and property taxes. This could provide much-needed relief for Americans grappling with rising prices due to inflation—but it must be balanced with lower government spending.
I discuss these issues and more on this week’s episode of This Week’s Economy. From Texas's record-high budget to AI regulation at the state level, tune in to stay informed about the week’s most pressing topics. Catch the full episode on YouTube, Apple Podcast, or Spotify, and visit my website for more information.
1. ONE BIG, BEAUTIFUL BILL
In the News:
A Republican-led Congress is working to pass a "one big, beautiful bill" that includes key parts of President Trump’s agenda, such as tax cuts, border security, energy policy, and government efficiency plans. Source: NBC News
My Take:
The Good: Making the 2017 Tax Cuts and Jobs Act permanent would provide much-needed relief to American families. Lowering corporate tax rates, improving energy policy, and reducing regulations could spur American business success, increase jobs, and boost the economy.
The Challenging: The bill faces major hurdles, including the debate over Medicaid. Initially, the House proposed reduced Medicaid spending as part of a funding plan. Federal welfare spending should be allocated as block grants to states rather than federal mandates. Block grants would allow states to customize welfare policies to their economic needs, avoiding the pitfalls of one-size-fits-all Washington regulations.
The Ugly: A significant issue with the House’s plan is the proposed $4 trillion increase to the debt ceiling. This expansion of government spending contradicts Trump’s goal of improving the economy and exacerbates issues like inflation.
Related: I discuss how President Trump’s economic strategy will impact your wallet on The Joe Pags Show.
2. WEDNESDAY IS TARIFF DAY
In the News:
April 2 is shaping up to be a significant day for tariffs, with President Trump planning to impose sweeping tariffs on all of America’s trading partners, possibly with some exceptions. He has also indicated upcoming tariffs on automobiles, pharmaceuticals, and other industries. Sources: CNN and CNBC
My Take:
Another April Tax Day: April is already known for tax season, and this tariff announcement should be seen as just another tax on American consumers. Tariffs will drive up prices on goods, reducing families' purchasing power.
Pain is Accepted: Even President Trump acknowledges that Americans will feel the short-term pain of these tariffs. I worry, however, that they will spark long-term trade wars, further raising costs for families and businesses. Farmers, homeowners, and car buyers will specifically feel the pain of these policies. We should focus on negotiating better trade agreements with our allies instead.
Better Ways to Boost Business: Tariffs and industry carve-outs are poor solutions. We need policies that promote U.S. innovation, reduce regulations, and prevent price hikes. The focus should be on fiscal and regulatory reforms to revive manufacturing, not on import taxes. We must champion free trade and pro-growth policies, not government barriers that harm consumers and disrupt supply chains.
Related: What are the trade-offs of tariffs? I discuss the downsides of a trade war on NTD News.
3. TEXAS’ BIG BUDGET
In the News:
The Texas Senate unanimously passed a record-high $336 billion budget, a $71 billion increase (27%) from four years ago. Source: KVUE ABC
My Take:
What’s Big: Everything is bigger in Texas, and unfortunately, that includes the budget. The Senate budget grew by $71 billion, or 42.5%. Where’s the restraint? This exceeds the ~20% increase in population growth and inflation over the last four years, which should guide sustainable state budgeting. The budget looked more like California’s than one Texas would approve.
Surplus Spending Spree: The Senate had a surplus of funds last year, but a surplus doesn’t mean it’s time to spend recklessly! It’s an opportunity to return money to taxpayers. The 2026-27 plan adds $11 billion more in appropriations than the inconsistent LBB calculation of spending-to-appropriations. The budget also spends nearly $100 billion on government schools but provides just $1 billion for school choice—enough for only 1.5% of the 6.3 million students to receive ESAs. It also allocates too much to corporate welfare and fails to implement cuts in various areas. That’s billions in extra spending with just $6 billion for property tax relief. Texans are being overtaxed—this budget spends the surplus instead of shrinking government.
What’s Missing: The budget missed key opportunities to eliminate school M&O property taxes, implement new spending cuts or limits, and introduce structural reforms. With a $24 billion surplus and $28 billion in the rainy day fund, the Senate had a real chance to tackle overspending. Unfortunately, they missed the opportunity, leaving us with an unsustainable budget. The latest violations of budget procedure—like subcommittee hearings held outside the bounds of House Rules and unrecorded—raise serious concerns. Perhaps this could stop the flawed Texas House Budget with a point of order. How many past budgets would be rejected if this process were followed?
Related: I recently shared a deep dive on the budget on X and outlined a roadmap for Governor Abbott to steer Texas toward a better, pro-growth future. Check it out here:
4. ARTIFICIAL INTELLIGENCE IN THE STATES
In the News:
Artificial Intelligence has become a significant issue for states this year, with many considering policies to regulate it. Virginia Governor Glenn Youngkin vetoed an AI bill that could stifle innovation and the industry. Meanwhile, Ohio is leveraging AI to drive regulatory reform, identifying unnecessary rules and saving the state 58,000 employee hours and $44 million over the next 10 years. Sources: Wall Street Journal and Legislative Information System
My Take:
AI Offers: Artificial Intelligence and other technologies present tremendous opportunities to solve problems. Governments can and should adopt these tools to increase efficiency and better serve their citizens. Ohio provides a great example of how AI can improve state operations and benefit residents.
Protect Innovation: Regulations on emerging technologies like AI must focus on safeguarding innovation. Virginia Governor Youngkin made the right decision by vetoing legislation that could have stifled growth in the AI sector. I hope Texas Governor Abbott will take the same approach if policies like the new TRAIGA bill (HB 149) advance. While the bill is an improvement to the old bill, it still contains overly broad language on discrimination and excessive regulation on new technologies.
Better Solutions: Texas lawmakers should consider HB 3808, the Texas AI Freedom Act, which creates an AI advisory council and encourages faster innovation in labs. Other states can adopt similar legislation to unlock AI's economic benefits.
Related: Logan Kolas and I recently wrote about a harmful AI bill (the old TRAIGA) being considered in Texas at The Center Square.
5. DATA CENTER BILL IN TEXAS
In the News:
The Texas Senate passed a bill that could hinder data mining centers. The bill introduces regulations granting the state broad authority over data centers' operations and cost measures, which critics argue could lower profit margins for data center producers. Sources: Fox News and Austin American-Statesman
My Take:
Costly Restrictions: This bill increases government control by imposing unnecessary regulations on large energy consumers using over 75 megawatt hours of electricity, restricting competition, and raising costs. It could even force businesses to supply electricity to the state grid and potentially have their power turned off via a killswitch when the state needs more electricity.
Top Concerns: SB 6 creates government barriers that could reduce competition, leading to higher prices for AI, technology, and electricity. This will ultimately harm prosperity and abundance in the future. While other states are considering banning businesses from generating their electricity, this Texas bill doesn’t go that far yet. However, it could still limit economic activities that benefit Texas and its people.
True Energy Abundance: Rather than regulating electricity use and relying on tax breaks and subsidies to prop up energy sources, Texas should remove government barriers to ensure real energy abundance and a thriving economy.
Related: Read my quote in Fox News on the bill alongside other concerns from experts. And check out my commentary on SB 6 in the Dallas Morning News.
6. STATES SEEK TAX CUTS
In the News:
Many states are exploring tax cuts or eliminating certain taxes this legislative session. South Carolina and Georgia are pursuing plans to cut income taxes. Florida lawmakers seek to address rising home costs by considering legislation cutting or eliminating property taxes. Sources: Wall Street Journal, Associated Press, and South Carolina Daily Gazette
My Take:
Tax Cuts Are Worth Celebrating: Seeing several states seriously considering tax cuts for families is encouraging. With many Americans struggling under rising inflation, cutting taxes will put more money in their pockets, a positive step toward helping people prosper.
Income Tax Cuts: Lower income taxes make states more competitive and attractive places to live. We're seeing trends of people moving to states with lower tax rates. To make this work, governments must spend less. Spend less, eliminate taxes, and everyone prospers more!
Property Tax Cuts: Property taxes are not just a financial burden—they are fundamentally unfair, forcing homeowners to perpetually "rent" from the government. They act as unrealized capital gains and wealth taxes paid annually, making it harder for families to build or pass on a legacy. As Florida is considering cutting property taxes, it can ease the burden on families struggling with rising homeownership costs.
Related: In a recent episode of Let People Prosper, Grover Norquist and I discussed states looking at zero income taxes.
Thanks for joining me in this episode of "This Week's Economy." For more insights, visit vanceginn.com and get even greater value with a paid subscription to my Substack newsletter at vanceginn.substack.com.
God bless you, and let people prosper!
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