US News
LAST UPDATE: June 2, 2025
Tax bill contains ‘sledgehammer’ for Trump to retaliate against foreign digital taxes
A new U.S. tax bill includes Section 899, granting President Trump authority to impose escalating taxes on countries that levy digital service taxes on American tech firms.
Insight
Section 899 empowers the Treasury to label foreign digital taxes as “unfair,” allowing for increased U.S. taxes on entities from those countries. While aiming to protect U.S. tech giants, this move could deter foreign investment and strain international trade relations. The provision also challenges the global 15% minimum corporate tax framework, potentially leading to further tax disputes.
Trump Is Canceling $3.7b in Clean Energy Projects
President Trump has announced the cancellation of $3.7 billion in clean energy projects, citing a shift in energy policy priorities.
Insight
The cancellation reflects the administration’s focus on traditional energy sources over renewable initiatives. This decision may impact the U.S.’s progress toward climate goals and could affect investor confidence in the clean energy sector. It also signals a potential realignment of federal energy funding priorities.
Tariff Ruling Threatens a $2 Trillion Fiscal Hole in Trump Plan
A court ruling blocking key components of President Trump’s tariff strategy threatens to create a $2 trillion shortfall in projected federal revenues.
Insight
The ruling undermines the administration’s fiscal plans, which heavily relied on tariff revenues. This development may necessitate revisions to budget projections and could impact funding for other policy initiatives. It also raises questions about the legal limits of executive authority in trade policy.
US consumer spending slows in April; inflation benign
In April, U.S. consumer spending increased by 0.2%, down from March’s 0.7% rise, while inflation remained subdued, with the core PCE price index up 0.1% for the month.
Insight
The slowdown in consumer spending suggests cautious behavior amid economic uncertainties, including tariff impacts. The benign inflation figures may provide the Federal Reserve with flexibility in monetary policy decisions. However, sustained consumer hesitancy could affect overall economic growth.
US goods trade deficit narrows sharply in April as imports plunge
The U.S. goods trade deficit narrowed by 46% to $87.6 billion in April, primarily due to a significant drop in imports ahead of anticipated tariff implementations.
Insight
The sharp reduction in imports reflects businesses’ efforts to mitigate tariff impacts by adjusting supply chains. While this narrows the trade deficit temporarily, it may also indicate potential disruptions in inventory levels and future trade flows. The situation underscores the complexities of trade policy on economic indicators.
US Treasuries Set for First Monthly Loss of 2025 on Deficit Woes
U.S. Treasury bonds experienced their first monthly loss of 2025 in May, driven by concerns over rising fiscal deficits and uncertainty surrounding trade policies.
Insight
The decline in Treasury prices reflects investor apprehension about the U.S. government’s fiscal trajectory, particularly in light of proposed tax cuts and increased spending. Additionally, trade tensions and potential tariff implementations have contributed to market volatility. This environment underscores the importance of fiscal discipline and clear policy communication to maintain investor confidence in U.S. government securities.
