Tariffs would dampen the positive effects of tax cuts.

The Tax Foundation’s Erica York has written a piece that examines the effects of Trump’s current tariffs combined with the potential extension of his individual tax cuts. She explains:

As of April 2025, President Trump has imposed tariffs on nearly all US trade partners and additional product-specific tariffs, with few exceptions. The tariffs currently in effect include 20 percent on all imports from China and an additional 125 percent on certain imports from China, 25 percent on non-USMCA goods from Mexico and Canada (10 percent on non-USMCA Canadian energy and potash), 10 percent on most imports from nearly all other trading partners, and 25 percent on steel, aluminum, autos, and auto parts.

Meanwhile, Congress is considering a tax bill that will, in some form, extend the expiring tax cuts from the 2017 Tax Cuts and Jobs Act (TCJA) and potentially include additional tax cuts for individuals based on Trump’s campaign pledges.

The result:

If the tariffs are left in place permanently, and if the expiring individual income tax changes are extended, the policy combination would reduce long-run GDP by more than 0.3 percent and reduce federal tax revenue by nearly $1.6 trillion. In other words, the combination is a tax cut that worsens economic growth, and that’s before considering foreign retaliation to US-imposed tariffs.

Using the Penn Wharton Budget Model would yield even more extreme loss estimates.