Cornerstones of the new US policy
The most important domestic policy project of the Trump administration's economic policy is to call for drastic tax cuts, which in particular benefit high earners and businesses. These plans follow on from his 2017 tax reform, the Tax Cuts and Jobs Act. At the time, the tax system was designed in such a way that the top income brackets pay significantly less tax than the vast majority of the population. Trump now wants to make these tax cuts, which would otherwise expire this year, permanent. This would cost the US $500 billion a year. Particularly pronounced during Trump's first term in office were a corporate tax cut from 35% to 21% and a tax suspension scheme in respect of repatriated profits of US companies. Now, there are plans for additional new tax cuts, especially with regard to income, tips, pensions and, once again, corporate profits.

Furthermore, comprehensive decentralisation and deregulation of the government administration is being sought, which also adds to weakening the federal state. Prominent representatives of this policy are Russell Vought, one of the key architects of the strategic state restructuring project “Project 2025”  and Elon Musk as the de facto head of the ”Department of Government Efficiency” (DOGE). Migration policy remains a controversial area. While the Trump administration plans mass deportations, the US economy depends on migrant workers, who often work under extremely precarious conditions. At the same time, Donald Trump is massively promoting the expansion of oil and gas drilling, suspending USAID – initially for 90 days – whereby these funds may be used in the future to support fossil fuel projects. He also wants to establish cryptocurrencies more firmly through a Strategic Bitcoin Reserve  and regulatory relaxation.

Tariffs as an incalculable form of pressure
In addition, an expansive trade and customs policy is being pursued with the aim of strengthening national industry and reducing the US trade deficit by making foreign goods more expensive. Trump uses tariffs as a key instrument of his economic policy to generate additional public revenue on the one hand, and to compensate for the lost funds due to tax cuts, while putting pressure on trading partners, as he has done recently on Mexico and Canada, on the other. In practice, the implementation of tariffs is highly volatile and unpredictable, which leads to considerable uncertainty. Since Trump took office, import tariffs of 25% on steel and aluminium and an additional 10% on Chinese goods have been introduced in the US. Now, he has announced a 25% tariff on cars not made in the US, starting on 3 April, and on all car parts starting on 3 May.

EU and USA: Tensions in economic policy
The EU is currently affected by the 25% tariffs on steel and aluminium imports that came into force on 12 March. The US was also the EU's most important trading partner for goods exports in 2024. In total, EU exports worth €26 billion are now said to be affected, which is equivalent to around 5% of all EU goods exports to the US. Trump has also announced reciprocal  tariffs to offset higher tariffs and other (alleged) barriers imposed by trading partners. This approach could lead to further tensions and also affect the EU, thus putting a further strain on relations. The EU is already preparing countermeasures, including the reintroduction of countervailing duties from Trump's first term in office and new duties on certain US products. However, at the same time, tariff reductions on US car imports and an increase in the purchase of US liquefied gas and military equipment are also being discussed. There are also tensions regarding tax policy. The US government is questioning both the OECD agreement on a global minimum tax for corporations and European digital taxation, which primarily affects US tech companies. Current US tax policy is likely to further intensify global tax competition and to put pressure on European tax regulations. 

Discussion at EU level
The debates in the EU Parliament also revolve around US-EU relations. In particular, the EU’s initial plan to impose a 50% EU tariff on American whiskey is causing concern. The US has already threatened back to impose tariffs of 200% on alcoholic beverages from the EU. There are signs that the EU's initial unity on trade tariffs is starting to fall apart. A group of right-wing MEPs as well as Italian Prime Minister Giorgia Meloni, urged Maroš Šefčovič, the EU Trade Commissioner responsible, for the EU's countermeasures to be mitigated. Contrary, MEPs from the S&D, Greens and the Left are calling for stronger measures. These trends were also evident during an exchange with Šefčovič at the INTA Committee meeting on 20 March.

Outlook
The consequences of Donald Trump's policies for Europe have already been clearly felt in the first few months. The EU is facing a multitude of economic and political challenges. It could be crucial whether Europe can develop its own strategy to strengthen regional economic cycles and promote domestic demand. Proactive measures are needed to ensure socio-economic stability and to promote progressive policies that benefit workers and consumers.

Further information:
AK WIEN: Trumponomics: Erster Überblick zum Umbau der USA  (German only)
PROKLA: Die USA am Vorabend einer neuen Ära | PROKLA. Zeitschrift für kritische Sozialwissenschaft (German only)
PROKLA: Was die Wahl Trumps bedeutet: Versuch einer ersten Bilanz in fünf Lektionen | PROKLA. Zeitschrift für kritische Sozialwissenschaft (German only)
Public Citizen: Weaponizing Tariffs To Advance an Anti-Immigrant and Ill-Informed Agenda Does Not Make America Great