To dodge a recession, congressional Republicans should speed Trump’s tax cuts
COMMENTARY
By Peter Morici - Tuesday, May 13, 2025
OPINION:
Congress should support President Trump by passing a “big, beautiful” tax bill now.
After posting strong 2.8% growth in 2024, gross domestic product fell 0.3% in the first quarter. This doesn’t have to herald a recession, but tax relief is needed to avert risks.
The disappointing winter performance was caused by retailers, manufacturers and private individuals stocking up on imported consumer goods and business supplies ahead of the April 2 “Liberation Day” tariffs.
Exports also grew, but increased foreign purchases were a potential subtraction from GDP. Many were stashed in business inventories, which count positively as investment in computing GDP, but the net impact of the import surge still subtracted 2.6% from GDP.
Put another way, if businesses and consumers had not rushed to buy capital goods, new cars and appliances before tariffs boosted sticker prices, GDP would have grown about 2.3%, roughly in line with growth over the past two years.
Business investments in equipment and software were particularly robust.
Increased duties on autos, steel, aluminum, Mexico and Canada, a potential 145% tariff on most Chinese imports and a 10% tariff on most other foreign goods would raise the average tax on imports by 20 percentage points.
That’s a $700 billion excise tax, more than 2% of GDP, and a mammoth fiscal brake.
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READ MORE: https://www.washingtontimes.com/news/2025/may/13/dodge-recession-congressional-republicans-speed-trumps-tax-cuts/
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