24 July, 2025

Summer Twists: Tax Cuts, Tariffs, and Treasuries

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Summary

The OBBBA fiscal plan impacts US debt, social programs, and economic growth. This article provides a detailed analysis of its short and medium-term economic and social effects.

Key points

The One Big, Beautiful Bill Act (OBBBA), signed by President Trump on 4 July, marks a significant shift in US fiscal policy. Narrowly passed by Congress, the bill embodies the core of Trump's second-term agenda, combining substantial tax cuts with unprecedented cuts to social programmes and increased security spending.
The OBBBA is a patchwork of regressive measures that exacerbate inequality, impede the energy transition, and significantly increase US public debt.
However, these measures stimulate the US economy in the short term, by around 0.2pp, because spending cuts come next year. But much of this could be offset by increased interest payments on debt and higher tariffs. However, any short-term economic performance should not obscure the exorbitant cost of the OBBBA and its adverse social effects in the medium term. Ultimately, we believe that it poses a further threat to the future of US economic power.
The tax cuts are estimated to cost $4.5 trillion over ten years, with only $1.5 trillion in spending savings, which would increase the debt by more than $3 trillion.

Read the full article on the Amundi Research Center

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Summer Twists: Tax Cuts, Tariffs, and Treasuries

Summary

Key points

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Read the full article on the Amundi Research Center

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