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The decision in Learning Resources, Inc. v. Trump significantly narrows the scope of emergency economic powers and reaffirms that Congress — not the president — controls tariff policy under the Constitution.

The ruling reduces the likelihood that companies will face sudden tariff shocks triggered by emergency declarations.

What Companies Should Do

1. Monitor other executive trade tools. The ruling does not limit other executive trade authorities, including:

• Section 232 tariffs

• Section 301 trade actions

• Section 122 of the 1974 Trade Act

• Export controls

• Economic sanctions

2. Reassess tariff risk models. Companies should revisit supply-chain risk scenarios that assumed emergency tariff authority.

3. Strengthen policy monitoring. Trade policy risk is shifting toward legislative negotiations and formal trade investigations, which require earlier engagement from companies.

Impact on Trade Policy

1. Trade policy becomes more predictable

Emergency tariffs — potentially imposed overnight — now face legal limits. Companies can expect tariff changes to occur through established legal channels rather than through emergency declarations.

2. Congress becomes more important

The decision pushes tariff policy back toward:

• Congressional legislation

• Formal trade investigations

• Statutory trade authorities

Examples of statutory trade authorities include:

• Section 232 national security tariffs

• Section 301 trade enforcement actions

• Section 122 of the 1974 Trade Act for balance-of-payments issues.

These processes typically involve investigations and notice periods.

Background: Trump Tariff Policy

In 2025, the Trump administration imposed broad tariffs after declaring national emergencies tied to drug trafficking and persistent U.S. trade deficits. Authority for the tariffs relied on IEEPA, a 1977 statute historically used for sanctions and financial restrictions.

The tariffs included:

• 25% tariffs on imports from Canada and Mexico

• 10%–20% tariffs on Chinese imports

• 10% baseline tariff on imports from most countries

Several small businesses challenged the tariffs, arguing that IEEPA authorizes regulation of economic transactions during emergencies but does not authorize taxes such as tariffs. Lower courts agreed, and the Supreme Court affirmed that interpretation.

The Court’s key finding:

Tariffs are taxes, and the Constitution assigns taxing power to Congress under Article I. The president cannot impose tariffs unless Congress clearly grants that authority.

The Court’s Reasoning

1. Tariffs are taxes: The Constitution gives Congress the power to “lay and collect Duties, Imposts and Excises.” The Court held that tariffs fall squarely within that authority.

2. IEEPA does not mention tariffs: IEEPA allows presidents to block or regulate financial transactions during national emergencies but does not refer to tariffs or duties.

3. Major questions doctrine: The Court also applied the major questions doctrine, which requires clear congressional authorization for executive actions with major economic consequences. Allowing a president to impose unlimited tariffs under emergency powers would represent a major expansion of executive authority.

Macro Impact

1. Reinforces separation of powers. The ruling strengthens congressional authority over trade and limits executive economic powers.

2. Reshapes U.S. trade strategy. Future administrations may rely more heavily on sanctions, export controls, investment restrictions, and trade investigations rather than emergency tariffs.

3. Signals stability to trading partners. Foreign governments may view U.S. tariff policy as more predictable because it now depends more on legislation and formal trade processes.

Carney’s views indicate that economic policy is now a primary tool of national se…

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The Framework Agreement is intended as a first step in a process that could expand to cover additional areas and “continue to improve market access and increase their trade and investment relationship.”

The United States and the EU reached the agreement in July 2025, avoiding President Donald Trump’s threatened 30% tariffs. The agreement raised concerns in Europe about economic damage, political fallout, and the durability of the deal. (see U.S. and EU Reach Trade Agreement)

Key Details

• Tariff Reductions:

  • The EU “intends” to eliminate tariffs on all U.S. industrial goods and expand preferential access for US agriculture and seafood.

  • The U.S. will commit to limit tariffs on EU industrial goods at 15%, with MFN-only tariffs applied to key sectors such as aircraft, pharmaceuticals, and natural resources.

  • The U.S. commits to conditional reduction of Section 232 tariffs on EU automobiles and parts upon EU legislative implementation.

• Energy & Technology:

  • The EU commits to purchase $750 billion of U.S. liquified natural gas, oil, and nuclear energy products by 2028.

  • The EU “intends” to purchase $40 billion in U.S. artificial intelligence (AI) chips for computing infrastructure.

• Investment:

  • EU firms are expected to invest $600 billion in strategic U.S. sectors through 2028.

• Defense:

  • The EU plans to substantially increase procurement of U.S. defense equipment, reinforcing NATO interoperability.

• Regulatory Cooperation:

  • The is mutual recognition of automotive standards and expanded conformity assessments across sectors.

  • The EU notes U.S. concerns related to the Carbon Border Adjustment Mechanism (CBAM), Corporate Sustainability Due Diligence Directive (CSDDD), and Corporate Sustainability Reporting Directive (CSRD).

  • The EU will ease compliance burdens for U.S. exporters, especially for small and medium-sized businesses.

• Digital Trade:

  • The EU confirms it will not impose network usage fees.

  • Both sides reaffirm the WTO moratorium on customs duties for electronic transmissions.

Key Changes

• Eliminates the “5% safe harbor” for the Section 45Y clean electricity production tax credit (PTC) and the Section 48E investment tax credit (ITC) for all wind projects and for solar projects of more than 1.5 megawatts (MW).

• Leaves in place the tougher “physical work” test, which considers the amount of work done on a project.

• Implements strict continuity rules.

Guidance Determines 2027 Deadline

OBBB repealed the PTC and ITC for wind and solar projects unless they are placed in service by the end of 2027. In July, President Trump issued an executive order titled “Ending Market Distorting Subsidies for Unreliable, Foreign-Controlled Energy Sources,” which directed the Treasury to issue guidance to determine whether a project began or is subject to the December 31, 2027 deadline.

• Began construction after July 4, 2026: Wind and solar projects that have not started construction by July 4, 2026 must be in service by the end of 2027 to qualify for the tax credits.

• Began construction by July 4, 2026: Wind and solar projects that began construction before July 4, 2026 can be placed in service after 2027.

“Physical Work” Replaces 5% Safe Harbor

• Under the 5% safe harbor, a project begins construction when the taxpayer pays or incurs 5% or more of the total cost of the facility.

• Now, a developer must have performed “physical work of a significant nature,” which is determined under a “facts-and-circumstances” approach.

Types of “Physical Work”

Both off-site and onsite work can be used to demonstrate that physical work of a significant nature has begun. Qualifying work includes:

• Off-site work may include the manufacture of components, mounting equipment, support structures such as racks and rails, inverters, and transformers and other power conditioning equipment;

• On-site work for wind projects may include such activities as the excavation for the foundation, the setting of anchor bolts into the ground, or the pouring of the concrete pads of the foundation. On-site work for solar projects may include the installation of racks or other structures to affix photovoltaic (PV) panels, collectors, or solar cells to a site.

• Physical work of a significant nature does not include preliminary activities, including planning, designing, permitting, site clearing, financing, and warehousing.

September 2, 2025 Deadline

• Given that the rules apply to projects that begin construction on or after September 2, 2025, wind and solar projects can start construction before September 2, 2025 by beginning physical work of a significant nature or by incurring 5% of project costs.

Continuity Requirements

• If an applicable wind or solar facility is not placed in service within four years, the project developer will have to show continuous construction to be allowed more time to finish the project.

• Disruptions such as weather delays, permitting, supply chain shortages, and labor stoppages are allowed.

• Whether a taxpayer maintains a continuous program of construction to satisfy the Continuity Requirement will be determined by the relevant facts and circumstances.

Rooftop Solar Exclusion

The changes apply to utility-scale solar and provide a significant exclusion for smaller solar facilities, such as rooftop solar for homes and businesses. Solar projects with a maximum net output of 1.5 MWs or less can continue to claim the 5% safe harbor if they begin construction after September 2, 2025, and before July 4, 2026.

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New tariffs rates

Some countries negotiated tariff rates that are lower rates than initially threatened:

• The EU (15%), Japan (15%), South Korea (20%), Vietnam (20%), and the U.K. (10%).

Countries that have not negotiated a deal with the United States were hit with higher rates:

• Brazil (50%), Canada (35%), Switzerland (39%), Laos (40%) and Algeria (30%) saw increases.

• India and several others remain outside deals and face high default tariffs.

· The countries and rates are listed in the annex to the executive order.

Economic impact

• Commerce Secretary Howard Lutnick said the tariffs could raise $50 billion a month in revenue.

• Economists warned of the risk of rising inflation on U.S. consumers.

Geoeconomic impact

• Trump’s tariffs are reshaping global trade and using them as leverage on issues beyond trade, particularly against Brazil, which Trump has criticized for its prosecution of former Brazilian President Jair Bolsonaro.

Legal challenges remain

• The tariffs are under legal challenges for exceeding executive authority under the International Emergency Economic Powers Act of 1977. A New York trade court sided against Trump, but allowed tariffs to stay in place pending appeal.

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Key Terms

• Tariffs:

  • 15% tariff on ~70% of EU exports — covering €780 billion in trade.

  • Includes pharmaceuticals, semiconductors, and cars (down from 27.5%).

  • U.S. imports into the EU will not face new tariffs.

• Steel & aluminum: U.S. keeps 50% tariff; Europe gets a quota deal tied to past import levels.

• Zero-tariff sectors: €70B in trade spared — aircraft, some chemicals, generics, agricultural products, critical raw materials.

• Energy & weapons: EU pledges $750 billion in U.S. energy purchases and $600 billion in U.S. investments, plus undefined defense buys.

Geoeconomic impact

• Tariff leverage: Trump’s tariff threat forced the EU to make sweeping concessions.

• U.S. “win”: White House officials hailed the deal as the “biggest ever,” citing benefits for U.S. industry and security.

• A one-sided deal: The EU gains little beyond avoiding 30% tariffs.

• Not legally binding: EU officials stressed that investment and energy pledges are political commitments, not enforceable law.

• Security link: Analysts say EU leaders feared that rejecting Trump’s terms risked U.S. disengagement from NATO and Ukraine.

• WTO clash: Experts warn zero-tariff carveouts may violate global trade rules.

European Reactions

• Europe’s dilemma: Leaders say they avoided worse damage, but critics call the agreement “capitulation.”

• Germany: Economy minister Katharina Reiche admitted it was “challenging” but highlighted car and pharma relief. Chancellor Friedrich Merz warned the pact could cause “considerable damage.”

• France: PM François Bayrou called it a “dark day,” blasting agricultural concessions. Far-right leader Marine Le Pen dubbed it a “political, economic and moral fiasco.”

• Ireland: PM Micheál Martin said it brings “predictability,” but at a cost.

• Italy: Called the 15% tariff “sustainable,” emphasizing stability over conflict.

• Netherlands: “No tariffs would have been better,” said PM Dick Schoof, but he praised the Commission for damage control.

Legal challenges remain

• Legal test: U.S. courts are reviewing whether Trump exceeded his authority under the 1977 IEEPA law. A ruling against him could upend the tariff regime.

Longer Reads

• Donald Trump’s tariff blitz brings US levies to highest levels since 1930s, Financial Times, July 28, 2025

• What opponents of the EU-US trade deal get wrong, The Economist, July 30, 2025

• The trade deal with America shows the limits of the EU’s power, The Economist, July 31, 2025

• Donald Trump’s EU oil and gas deal is ‘pie in the sky’, energy experts warn, Financial Times, July 28, 2025

• Josh Lipsky, How Donald Trump remade global trade, The New Atlanticist, August 1, 2025

• Tariff roulette: inside Trump’s chaotic trade negotiations, Financial Times, August 1, 2025

• Lessons from the 1920s and 30s on tariffs and markets, Financial Times, August 3, 2025

• Trump’s tariffs leave us in the second worst of all worlds, Financial Times, August 4, 2025

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Key Facts

• Tariffs: U.S. auto tariffs lowered from 25% to 15% (still well above the original 2.5% rate). Steel and aluminum tariffs remain at 50%.

• Investment: Japan committed up to $550 billion in investment in the United States, including U.S. manufacturing, infrastructure, and supply chain projects.

• Purchases: Japan agreed to buy ~$8 billion in U.S. agricultural products, expand LNG offtake, and procure additional Boeing aircraft.

• Legal status: The deal is an executive agreement rather than a free trade agreement. Timelines for implementation are unclear.

• Trade balance: In 2024, Japan had a $70 billion surplus in trade with the United States.

Geoeconomic Impact

• The agreement demonstrates U.S. transactional trade diplomacy under which tariff relief is tied to pledges for investment and purchase.

• Japanese government officials framed the deal as avoiding harsher tariffs.

• Critics noted the lack of clarity on U.S. commitments and the lack of enforceability.

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Below are the key changes to the major energy tax provisions.

• Clean vehicle tax credits: The law accelerates the expiration of the “clean vehicle” tax credits for electric vehicles (EVs) to 2025 and 2026 from 2032.

• Residential energy efficiency credits: The law also accelerates the expiration of residential energy tax credits to 2025 and 2026.

• Technology-neutral tax credits: The OBBBA phases out the §45Y and §48E clean electricity production and investment credits beginning in 2034. The production and investment credits for wind and solar is repealed unless the project is placed in service before 2028. If the wind or solar project is placed in service after 2027, construction must begin before July 4, 2026.

• Foreign Entity of Concern (FEOC): The law expands the FEOC rules to restrict credit availability to taxpayers that are FEOC or receive material assistance from FEOCs.

• Carbon capture: The law implements the foreign entity rules for the §45Q carbon oxide sequestration credit. It also repeals transferability for facilities that begin construction two years from the bill’s enactment.

• Clean fuels: The law extends the Section 45Z clean fuel production credit through December 31, 2029, from the current expiration at the end of 2027.

• Credits transfers: The law retains the ability of entities to transfer credits but prohibits transfers to prohibited FEOCs or entities that receive material assistance from prohibited FEOCs.

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The final version of the OBBA extends the expiring individual and corporate tax cuts from the 2017 Tax Cuts and Jobs Act (TCJA), provides new temporary tax provisions that Trump promised during the campaign, makes changes to business and international taxes, and reduces energy tax credits.

Key provisions in the OBBA include:

Individual Tax Provisions

• Makes TCJA rates permanent: The OBBA makes the TCJA rate and bracket changes permanent. The rate reductions were scheduled to expire at the end of 2025.

• Maintains limits on itemized deductions: The law maintains the limits on itemized deductions for high earners.

• Increases standard deduction: The law permanently increases the standard deduction by $750 to $15,750 for individuals, by $1,125 to $23,625 for heads of household, and by $1,500 to $31,500 for joint filers, all beginning in 2025. Amounts are then indexed for inflation.

• Eliminates personal exemption: The law makes permanent the personal exemption elimination enacted by the TCJA.

• Increases SALT deduction limit for five years: The law increases the limit on state and local tax deductions (SALT) from $10,000 to $40,000 for taxpayers earning up to $500,000. After five years, the limit returns to $10,000.

• Pass-Through Entity Tax (PTET) deduction: The OBBA did not include any changes to the PTET deduction.

• Increases and makes permanent the child tax credit: The law permanently increases the child tax credit by $200 to $2,200 per child, with the refundable portion remaining at $1,700.

• Temporarily makes overtime pay deductible: The law allows a deduction of up to $12,500 for overtime pay for taxpayers with incomes of less than $150,000 for tax years 2025 through 2028. Base pay would remain taxable.

• Temporarily makes tips deductible: The OBBA allows a deduction for tipped wages of up to $25,000 per taxpayer for tax years 2025 through 2028. An income phase out begins at $150,000. This applies to taxpayers in customarily tipped industries.

• Increases standard deduction for seniors: The law increases the standard deduction for seniors by $6,000 subject to an income limitation for tax years 2025 through 2028. An income phase out begins at $75,000.

• Temporarily makes auto loan interest deductible: The law makes the interest from auto loans fully deductible for tax years 2025 through 2028 for autos with final assembly in the United States. The deduction would be limited to $10,000 with an income phase out beginning at $75,000.

• Repeals individual energy credits: The law repeals energy tax credits for individuals, including the electric vehicle tax credit and the residential energy efficiency credits in the Inflation Reduction Act (IRA).

• Increases passthrough deduction: The law permanently extends the Section 199A passthrough deduction at 20%. It also increases the phase-in range for the limit to $75,000 for individuals and $150,000 for joint filers. There is a new $400 deduction for taxpayers with qualifying income of at least $1,000.

• Permanently extends alternative minimum tax thresholds: The law extends the TCJA exemption and phaseout threshold for the alternative minimum tax (AMT). The phaseout is set at $1 million in 2026 and adjusted for inflation thereafter with a phase out rate of 50%.

Estate Tax Provisions

• Increases estate tax exemption: The OBBA increases the estate tax exemption to $15 million beginning in 2026 and make it adjusted for inflation for subsequent years.

Business Tax Provisions

• Permanently allows immediate R&E expensing: The law permanently allows business taxpayers to fully expense Section 174 domestic research and experimental (R&E) expenditures in 2025 or later. This reverses the requirement to capitalize and amortize them over five years.

• Increases small business expensing: The law increases the Section 179 Small Business Expensing Cap from $1.25 million to $2.5 million per year. It also increases the phase-out threshold from $3.1 million to $4 million.

• Allows bonus depreciation permanently: The law permanently allows 100% bonus depreciation for short-lived investments in 2025 or later. Bonus depreciation has been subject to a phase-down since 2022.

• Reinstates EBITDA interest deduction limit: The bill would restore EBITDA-based limitation on business interest deductions under Section 163(j) for 2025 and later.

• Reduces corporate charitable deduction: The law allows deductions for corporate charitable contributions only to the extent that contributions exceed 1% of a corporation’s taxable income. This begins in 2026.

• Increases 1099-MISC reporting threshold for payments: The law increases the reporting threshold for Form 1099-MISC from $600 to $2,000 for payments in 2025 and after. The law also increases the threshold for Form 1099-K at $20,000 and 200 transactions.

• New Bonus Depreciation for Qualified Production Property: The law implements a new Section 168(n), which allows an elective 100% depreciation deduction for qualified production property (QPP) acquired between January 20, 2025 and the end of 2028 and placed in service by the end of 2030.

• Expands Qualified Small Business Stock (QSBS): The law expands Section 1202 QSBS stock acquired after July 4, 2025 through a tiered system of requirements to hold the stock.

Energy Tax Credits

• Phases out major clean energy tax credits: The law phases out clean energy tax credits.

International Tax Provisions

• Permanently increases GILTI deduction: The law increases the global intangible low taxed income (GILTI) deduction to 40%, replacing the scheduled post-2025 reduction to 37.5%. The law also modifies the GILTI calculation.

• Increases FDII deduction: The law increases the foreign-derived intangible income (FDII) deduction to 33.34%, replacing the scheduled post-2025 reduction to 21.875%. The bill would also rename the FDII “foreign-derived deduction eligible income” (FDDEI). The law also modifies the FDII calculation.

• Increases BEAT rate: The law also increases the base erosion and anti-abuse tax (BEAT) rate from the current 10% to 10.5%, avoiding the scheduled increase to 12.5% after 2025. It also makes permanent the treatment of research and other credits in calculating BEAT.

• New 1% tax on remittances: The law imposes a new 1% excise tax on certain remittance transfers, effective January 1, 2026.

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Like the House bill, the Senate version extends the expiring tax cuts from the 2017 Tax Cuts and Jobs Act (TCJA), makes changes to corporate and international taxes, and reduces energy tax credits. The Senate bill requires $4 billion in spending cuts with the goal of $2 trillion in cuts. The House bill, by contrast, requires spending cuts of more than $1 trillion with the goal of $2 trillion in cuts. The Senate bill raises the debt ceiling by $5 trillion, compared to $4 trillion under the House bill.

Notably, the Senate bill uses a “current policy baseline” approach for calculating the cost of the bill. The approach reduces the projected fiscal impact of the tax cuts by assuming no cost to continuing the current tax policy. The House uses a “current law baseline,” which assumes that the TCJA tax cuts will expire as scheduled in the law and that extension of the tax cuts has a fiscal impact. The Senate’s approach allows for the permanent extension of certain tax provisions, a key difference between the House and Senate bills.

Key provisions in the Senate bill include:

Individual Tax Provisions

• Make TCJA rates permanent: The bill would make the TCJA rate and bracket changes permanent, the same as with the House bill.

• Maintain limits on itemized deductions: The Senate bill follows the House bill in maintaining the limits on itemized deductions for high earners.

• Increase standard deduction: The bill would permanently increase the standard deduction by $1,000 to $16,000 for individuals, by $1,500 to $24,000 for head of household filers, and by $2,000 to $32,000 for joint filers. It would also index the deductions to inflation. The House bill increases the standard deductions through the end of 2028 only.

• Eliminate personal exemption: The Senate bill would follow the House bill and make permanent the personal exemption elimination enacted by the TCJA.

• Increase SALT deduction limit: The Senate bill would extend the limit on state and local tax deductions (SALT) at the current $10,000. This limit is viewed as a placeholder for negotiations. The House bill, by contrast, would increase the limit to $40,000 for incomes up to $500,000.

• Limit Pass-Through Entity Tax (PTET) deduction: The Senate bill would limit the PTET deduction for individual owners to the greater of $40,000 or 50% of their allocation of the PTET. The House bill proposed to eliminate the PTET deduction for Specified Service Trades or Businesses (SSTBs), which include such professions as law, accounting, and medicine. Under the House bill, qualified trades or businesses would still be allowed to use the PTET as a workaround of the federal SALT $10,000 cap.

• Increase and make permanent the child tax credit: The Senate would permanently increase the child tax credit by $200 to $2,200 per child. The House bill would increase the credit to $2,500, but only through 2028.

• Temporarily make overtime pay deductible: The bill would allow a deduction of up to $12,500 for overtime pay for taxpayers with incomes of less than $150,000 for tax years 2025 through 2028. Base pay would remain taxable. The House bill proposed a full deduction for overtime pay for taxpayers with incomes of less than $160,000 for tax years 2025 through 2028.

• Temporarily make tips deductible: The bill would allow a deduction for tipped wages of up to $25,000 per taxpayer with an income phase out at $150,000. This would apply to taxpayers in customarily tipped industries. Like the House bill, the Senate would make the deduction available through 2028 only.

• Increase standard deduction for seniors: The bill would increase the standard deduction for seniors by $6,000 subject to an income limitation. The House bill proposed a temporary $4,000 increase.

• Temporarily make auto loan interest deductible: The Senate bill follows the House in making the interest from auto loans fully deductible for tax years 2025 through 2028 for autos with final assembly in the United States. The deduction would be limited to $10,000 and would phase out according to income.

• Repeal individual energy credits: Like the House bill, the Senate bill would repeal energy tax credits for individuals, including the electric vehicle tax credit and the residential energy efficiency credits in the Inflation Reduction Act (IRA).

• Increase passthrough deduction: The Senate bill would permanently extend the Section 199A passthrough deduction at 20%. The bill would also increase the phase-in range for the limit. The House bill proposed to increase the deduction to 23%.

• Alternative minimum tax: The Senate bill follows the House bill in extending the TCJA exemptions for the alternative minimum tax (AMT), but it would revert the phase-out thresholds to 2018 levels, indexed to inflation.

Estate Tax Provisions

• Increase estate tax exemption: The Senate bill proposes to increase the estate tax exemption to $15 million beginning in 2026 and make it adjusted for inflation for subsequent years. This is the same as in the House bill.

Business Tax Provisions

• Permanently allow immediate R&D expensing: The Senate bill would permanently allow business taxpayers to fully expense Section 174 domestic research and development (R&D) costs in the year they occur. The change would be retroactive for certain small businesses. The House bill limited this through 2029.

• Increases small business expensing: The Senate bill follows the House bill in proposes to increase the Section 179 Small Business Expensing Cap from $1.25 million to $2.5 million per year. Also, following the House, the Senate bill would increase the phase-out threshold from $2.5 million to $4 million.

• Extend bonus depreciation permanently: The Senate bill would permanently allow 100% bonus depreciation for short-lived investments. The House bill proposed to extend bonus depreciation through 2029 only.

• Reinstate EBITDA interest deduction limit: The bill would restore EBITDA-based limitation on business interest deductions under Section 163(j) permanently. The House bill limited this through 2029.

• Temporarily allow 100% expensing of qualifying non-residential structures: The Senate bill follows the House bill and would allow 100% expensing of qualifying non-residential structures in manufacturing, extraction, and agriculture sectors, with certain begin construction and placed in service requirements. Like the House bill, this would apply from 2025 to 2028.

• Reduces corporate charitable deduction: The Senate bill follows the House to allow a corporate deduction for charitable contributions only to the extent that contributions exceed 1% of a corporation’s taxable income.

• Increase 1099-MISC reporting threshold for payments: The Senate bill follows the House in repealing the $600 reporting threshold for Form 1099-K, reverting to the previous threshold of $20,000 and 200 transactions. Like the House bill, it would also increase the 1099-MISC reporting threshold for payments to an independent contractor or subcontractor from $600 to $2,000.

Energy Tax Credits

• Repeal major clean energy tax credits: The Senate bill follows the House in phasing out clean energy tax credits but has a longer time frame.

International Tax Provisions

• Permanently increase GILTI deduction: The Senate bill would increase the global intangible low taxed income (GILTI) deduction to 40%, compared to the 49.2% proposed in the House. This replaces the scheduled post-2025 reduction to 37.5%. The bill would also rename GILTI “net CFC tested income” (NCTI).

• Increase FDII deduction: The Senate bill would increase the foreign-derived intangible income (FDII) deduction to 33.34%, compared to the 36.5% proposed by the House. This replaces the scheduled post-2025 reduction to 21.875%. The bill would also rename the FDII “foreign-derived deduction eligible income” (FDDEI).

• Increase BEAT rate: The Senate bill would also increase the base erosion and anti-abuse tax (BEAT) rate from the current 10% to 14%, avoiding the scheduled increase to 12.5% after 2025. The House bill proposed to reduce the BEAT rate to 10.1%.

• Implement Section 899 retaliation against “unfair taxes”: The Senate bill would implement the House’s proposed Section 899, which allows the government to impose retaliatory taxes against countries, individuals, and entities of countries that have enacted any “unfair foreign tax.” The Senate bill would limit the rate to 15%, rather than the 20% under the House bill, and delay implementation until 2027, rather than 2026 under the House bill.

The Senate bill is only a step in the reconciliation process. The Senate must pass its proposed bill and send it back to the House for consideration and further negotiations. Both the House and Senate must pass the same budget resolution.

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Trump stated that China will supply upfront “full magnets, and any necessary rare earths,” Trump said. The United States will, in turn, allow Chinese students to attend U.S. colleges and universities. U.S. tariffs on imports of Chinese goods will be set at 55% and Chinese tariffs on imports of U.S. goods will be set at 10%.

Tariff rates

• U.S. 55% tariffs: The U.S. tariff of 55% is composed of the 20% fentanyl tariffs, the 10% IEEPA reciprocal tariffs, and the 25% Section 301 tariffs from Trump’s first term.

• Chinese 10% tariffs: The 10% tariffs restores the tariff rate that China agreed to in May.

Rare earth minerals and magnets

While Trump did not mention export controls on microchips in his announcement, U.S. officials stated that the administration may ease restrictions on the export of certain microchips if China complies with the agreement on critical minerals licenses for U.S. companies. The administration, however, would continue to restrict “very, very high-end Nvidia” chips used for AI. If China does not comply, the United States could impose additional controls that target critical industries or companies. An easing of microchip restrictions on China would reverse the Biden administration’s policy to prevent China’s access to U.S. technology that could have military application.

China restricted exports of rare earth minerals and magnets to the United States in April. After accusing China of violating the May agreement, U.S. official began to impose export restrictions on semiconductor design software, jet engine parts, chemicals, nuclear materials; they also began revoking visas for Chinese students.

Finalization

There are likely some disagreements still to be resolved, as the leaders of both sides must still sign off on the agreement. Given this uncertainty, there is still the risk that the tentative truce does not result in an official agreement.

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Trump imposed 25% tariffs on imports of steel and aluminum in March, relying on his previously invoked national security authority under Section 232 of the Trade Expansion Act of 1962.

Tariffs on steel and aluminum imports from the UK will remain at 25%. The Trump administration noted that changes were possible starting July 9, 2025, depending on the status of the U.S.-UK Trade Deal.

Trump stated that he increased the tariffs to protect U.S. industries and to “end unfair trade practices and the global dumping of steel and aluminum.”

Update: On June 16, 2025, the Commerce Department announced that the 50% tariffs on steel and aluminum products would cover home appliances including refrigerators, dishwashers, and washing machines.

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The House passed the bill by a vote of 215-214-1, with Republicans Thomas Massie of Kentucky and Warren Davidson of Ohio voting with Democrats against the bill. Andy Harris of Maryland, the leader of the House Freedom Caucus, voted present. Andrew Garbarino of New York and David Schweikert of Arizona missed the vote but support the bill. The bill now goes to the Senate, which is expected to make further changes. Key provisions in the House bill include:

Individual Tax Provisions

• Make TCJA rates permanent: The bill would make the TCJA rate and bracket changes permanent.

• Maintain limits on itemized deductions: The bill proposes to maintain the limits on itemized deductions for high earners.

• Increase standard deduction: The bill would increase the standard deduction by $1,000 to $16,000 for individuals, by $1,500 to $24,000 for head of household filers, and by $2,000 to $32,000 for joint filers through the end of 2028.

• Eliminate personal exemption: The bill would make permanent the personal exemption elimination enacted by the TCJA.

• Increase SALT deduction limit: The bill would increase the limit on state and local tax deductions (SALT) from the current $10,000 to $40,000 for incomes up to $500,000. The cap is reduced to $10,000 at a 30% rate for taxpayers with incomes of more than $500,000. The thresholds for the cap and income will increase 1% each year over 10 years.

• Revise Pass-Through Entity Tax (PTET) deduction: The bill would eliminate the PTET deduction for Specified Service Trades or Businesses (SSTBs), which include such professions as law, accounting, and medicine. Qualified trades or businesses would still be allowed to use the PTET as a workaround of the federal SALT $10,000 cap.

• Increase the child tax credit: The bill would increase the child tax credit by $500 to $2,500 per child for 2025 through 2028. The maximum credit would be inflation adjusted after 2028, making the credit permanent.

• Temporarily make overtime pay deductible: The bill would allow a full deduction for overtime pay for taxpayers with incomes of less than $160,000. Base pay would remain taxable. This would be available from 2025 through 2028 and exclude highly compensated employees and certain tips.

• Temporarily make tips deductible: The bill would allow a full deduction for tipped wages for incomes of less than $160,000 for tax years 2025 through 2028. This would apply to individuals in customarily tipped industries.

• Temporarily increase standard deduction for seniors: The bill would increase the standard deduction for seniors by $4,000 to $19,000 for tax years 2025 through 2028. The deduction would phase out according to income.

• Temporarily make auto loan interest deductible: The bill would make the interest from auto loans fully deductible for tax years 2025 through 2028 for autos with final assembly in the United States. The deduction would be limited to $10,000 and would phase out according to income.

• Repeal individual energy credits: The bill would repeal energy tax credits for individuals, including the electric vehicle tax credit and the residential energy efficiency credits in the Inflation Reduction Act (IRA).

• Alternative minimum tax: The bill would extend the TCJA exemptions for the alternative minimum tax (AMT).

• Increase passthrough deduction: The bill would increase the Section 199A passthrough deduction for qualified business income (QBI) from 20% to 23%.

Estate Tax Provisions

• Increase estate tax exemption: The bill would increase the estate tax exemption to $15 million beginning in 2026 and make it adjusted for inflation for subsequent years.

Business Tax Provisions

• Temporarily allow immediate R&D expensing: The bill would allow business taxpayers to fully expense Section 174 domestic research and development (R&D) costs in the year they occur for tax years 2025 through 2029.

• Increases small business expensing: The bill would increase the Section 179 Small Business Expensing Cap from $1.25 million to $2.5 million per year. The bill also increases the phase-out threshold from $2.5 million to $4 million.

• Temporarily allow bonus depreciation: The bill will allow 100% bonus depreciation for short-lived investments from 2025 through 2029.

• Temporarily reinstate EBITDA interest deduction limit: The bill would restore EBITDA-based limitation on business interest deductions under Section 163(j) from 2025 through 2029.

• Temporarily allow 100% expensing of qualifying non-residential structures: The bill would allow 100% expensing of qualifying non-residential structures in manufacturing, extraction, and agriculture sectors, with certain begin construction and placed in service requirements. This would apply from 2025 to 2028.

• Reduces corporate charitable deduction: The bill would allow a corporate deduction for charitable contributions only to the extent that contributions exceed 1% of a corporation’s taxable income.

• Increase 1099-MISC reporting threshold for payments: The House bill would repeal the $600 reporting threshold for Form 1099-K, reverting to the previous threshold of $20,000 and 200 transactions. The bill would also increase the 1099-MISC reporting threshold for payments to an independent contractor or subcontractor from $600 to $2,000.

Energy Tax Credits

• Repeal major clean energy tax credits: The bill repeals and phases out clean energy tax credits. This includes various production tax credits and investment tax credits for clean electricity, nuclear electricity, and hydrogen.

International Tax Provisions

• Permanently increase GILTI deduction: The bill would increase the global intangible low taxed income (GILTI) deduction to 49.2% after 2025. This replaces the scheduled post-2025 reduction to 37.5%.

• Increase FDII deduction: The bill would increase the foreign-derived intangible income (FDII) deduction to 36.5%. This replaces the scheduled post-2025 reduction to 21.875%.

• Decrease BEAT rate: It would also increase the base erosion and anti-abuse tax (BEAT) rate from the current 10% to 10.1%, avoiding the 12.5% scheduled to take effect in 2026.

• Implement retaliatory measures against “unfair taxes”: The bill would implement Section 899, which allows the government to impose retaliatory taxes up to 20% against countries, individuals, and entities of countries that have enacted any “unfair foreign tax.” This would be effective January 1, 2026.