PwC | US President Trump signals day one changes in global tax and trade policy

What happened? 
On day one of his Administration, President Trump signed two Executive Orders (presidential directives to the executive branch, having the force of law) signaling a clear change in direction from the Biden Administration on global tax and trade policy. The first takes aim at the OECD’s two pillar project, referred to as the ‘global tax deal,’ and essentially nullifies the US’s agreement to the project. The second is a series of directions to implement ‘America First Trade Policy.’ It includes reference to a retaliatory provision of US tax law, never before used, that, if triggered, could double the tax rate imposed on the US income of companies and individuals of foreign countries whose laws are found to discriminate against US citizens or companies.  

Why is it relevant? 
Day one Executive Orders addressing tax issues are highly unusual and illustrate the significance the Trump Administration attaches to controlling the United States’ ability to set the tax policy it deems best, as well as its unwillingness to support what it believes are the imposition of extraterritorial taxes or taxes discriminating against US companies. The trade focus is consistent with President Trump’s first-term emphasis but suggests a broader consideration of other countries’ trade practices as well as options for a US response to practices it deems unfair or harmful to national security. 

Actions to consider 
While awaiting the results of the investigations and reports called for by the Executive Orders, companies (and their US-based foreign executives) should evaluate their operations for the impact of potential actions by the United States and monitor other countries’ responses to President Trump’s Executive Orders. 

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