Donald Trump announced on Thursday that companies should establish operations in the US or pay tariffs to import products into the country. Speaking remotely at the World Economic Forum in Davos, Switzerland, he promised companies "the lowest taxes of any nation on Earth."
Trump highlighted that the administration is significantly reducing taxes, even beyond the original Trump tax cuts of 2017, which lowered the corporate tax rate from 35% to 21%. He stated that companies choosing not to manufacture in America would have to pay tariffs, which would generate substantial revenue for the US treasury to strengthen the economy and reduce debt.
Extending the 2017 tax cuts is estimated to cost $4.2 trillion between 2026 and 2035. However, tariffs alone would not cover this cost, as the nonprofit Tax Foundation estimates that a 10% universal tariff would raise $2 trillion and a 20% universal tariff would raise $3.3 trillion from 2025 through 2034. The Congressional Budget Office had previously estimated that the 2017 tax cuts would cost $1.9 trillion over ten years, though the COVID-19 pandemic has affected these projections.
Earlier in the week, Trump mentioned that OpenAI, Oracle, and SoftBank have formed a joint venture called Stargate, investing $500 billion in AI infrastructure in the US. Additionally, Saudi Arabia is considering a $600 billion investment in the country, though the specific projects remain unclear.
