Trump Administration

Trends in the US National Economy Following the Trump Administration’s Taxation Strategy

The article demonstrates recent trends in the US national economy following the Trump administration’s attempt to implement a new taxation strategy. The strategy sought to increase domestic demand for manufactured goods (Sparshott, 2017). The author explicitly bases his point on a new survey from the American National Association of Manufacturers. According to the report, the market has increased from 60.75 in the second quarter to about 60.95 in the third quarter (Sparshott, 2017).

The Primary Strategy: Lowering Tax Rates on Local Manufacturers

According to the speaker, the primary strategy, in this case, is lowering tax rates on businesses and individuals engaged in local manufacturing. The Trump administration, backed by Congress, seeks to overhaul the national tax code, which will see the rates drop from 35% to 20% (Sparshott, 2017). The primary beneficiaries will be the local manufacturers because they will enjoy a relatively low tax rate while the income will remain high. In economics, the policy will seek to influence a shift in the demand for the locally manufactured goods. This is because the reduction in tax rates will influence the manufacturers to reduce prices, which will, in turn, entice the consumers to go for the locally manufactured goods (Sparshott, 2017). In the long run, the demand for the local goods will increase.

Expected Impact of Tax Rate Reduction Policy on the Local Economy

Evidently, the article demonstrates how the tax rate reduction policy is expected to have an impact on the local economy once implemented in October 2017 (Sparshott, 2017). Even before the policy is enacted, the industry has started showing signs of the impact on the demand curve, which is shifting towards the right. This is because the market for locally manufactured goods will increase due to the reduction in the prices expected to follow the reduction in taxes (Sparshott, 2017).

Reference

Sparshott, J. (2017). U.S. Manufacturers Upbeat amid Rising Demand, Promise of Tax Overhaul. The Wall Street Journal. Retrieved from https://blogs.wsj.com/economics/2017/09/29/u-s-manufacturers-upbeat-amid-rising-demand-promise-of-tax-overhaul/