22 January 2025 What to expect in Washington (January 22) President Trump returned to the White House January 20 and issued a host of executive orders on a variety of topics, including the OECD-led global tax agreement, "America First Trade Policy," and "Unleashing American Energy." Trump also issued several new executive orders and memorandums impacting the federal workforce, beginning the process to withdraw the US from the World Health Organization, requiring federal agencies to "deliver emergency price relief" to Americans to address the cost-of-living crisis, including "eliminate unnecessary administrative expenses and rent-seeking practices that increase healthcare costs," and more. He also rescinded dozens of executive orders signed by former President Joe Biden, including those related to the DEI programs, the Affordable Care Act (ACA), public health, prescription drug costs, and artificial intelligence. Tax — The OECD EO clarifies "that the Global Tax Deal has no force or effect" in the US and directs Treasury and US representative to the OECD to "notify the OECD that any commitments made by the prior administration on behalf of the United States with respect to the Global Tax Deal have no force or effect within the United States absent an act by the Congress adopting the relevant provisions of the Global Tax Deal." In conjunction with the United States Trade Representative, the officials are directed to investigate whether any foreign countries are not in compliance with any tax treaty with the US or "have any tax rules in place, or are likely to put tax rules in place, that are extraterritorial or disproportionately affect American companies, and develop and present … a list of options for protective measures or other actions that" the US should adopt or take in response, within 60 days. The trade EO said Treasury, Commerce, and the USTR "shall investigate whether any foreign country subjects United States citizens or corporations to discriminatory or extraterritorial taxes pursuant to section 891 of title 26, United States Code." Section 891 allows for the doubling of rates of tax on citizens and corporations of certain foreign countries if the President finds that US citizens or corporations are being subjected to discriminatory or extraterritorial taxes. In 2019, Senate Finance Committee members urged the prior Trump administration to consider using this tool in retaliation for unilateral digital tax measures. Citing the President's executive orders, House Ways & Means Chairman Jason Smith (R-MO) and all other Committee Republicans this morning reintroduced the Defending American Jobs and Investment Act, which would:
Trade — The order does not include the enactment of new tariffs, although President Trump did indicate during the signing his plan to impose 25% tariffs on Canada and Mexico as soon as February 1. Instead, the memorandum outlines a cross-agency effort to investigate a range of trade issues: trade deficits, unfair trading practices, currency manipulation, de minimis exemption for low value imports, a comprehensive review of the existing tariff regime, and exemptions. The EO also initiates a public consultation process for the 2026 USMCA review. Most of the EO's cross-agency investigations have a deadline of April 1, 2025. The New York Times reported on holding off on tariffs: "The decision suggests that Mr. Trump is taking a more measured approach to fulfilling a key campaign promise of using tariffs to reorder America's trading relationships. It will also delay — at least for now — fights that have been brewing with foreign governments, which have promised to answer Mr. Trump's levies with tariffs of their own." Asked whether he's still considering a universal tariff, Trump said, "I may" and that he's "not ready for that yet," according to press reports. "You put a universal tariff on anybody doing business in the United States because they're coming in and they're stealing our wealth, they're stealing our jobs, they're stealing our companies, they're hurting our companies. So you put a you put a tariff on to keep them from doing that," he said. Energy — The energy EO said, "All agencies shall immediately pause the disbursement of funds appropriated through the Inflation Reduction Act of 2022 (Public Law 117-169) or the Infrastructure Investment and Jobs Act (Public Law 117-58), including but not limited to funds for electric vehicle charging stations." It also calls for agencies to "review their processes, policies, and programs for issuing grants, loans, contracts, or any other financial disbursements of such appropriated funds." Deadlines and reconciliation — On Day Two of the new Administration, President Trump convened Senate Majority Leader John Thune (R-SD) and Speaker Mike Johnson (R-LA) to discuss action-forcing deadlines unrelated to the tax bill, including a government funding bill due March 14 and addressing the federal debt limit, which is due by sometime midyear; and to address lingering questions about their legislative agenda, including whether to pursue two reconciliation bills, border first and tax second, or one big bill. The group didn't arrive at a definite conclusion, according to reports. "There's a lot to do, and part of it is just figuring out how to stage it," Thune said in the Wall Street Journal. Punchbowl News reported that there was a greater focus on the trio of issues that may require Democratic support — government funding, debt limit, and wildfire disaster relief — and "what Democrats will want in return for this support." A big part of the discussion, the report said, was what vehicle the debt limit should ride on: a government-funding package or minibuses, or a disaster funding bill, with earlier plans to address the issue through a GOP-only reconciliation bill seemingly falling away. Democrats have resisted Republican assertions that wildfire disaster aid be conditioned on their support for addressing the debt limit. Nominations — The Senate Finance Committee January 21 approved 16-11 the nomination of Scott Bessent to be Treasury Secretary. Democrats Mark Warner (D-VA) and Maggie Hassan (D-NH) joined Republicans in approving the nomination. Financial regulators — President Trump named a series of acting heads of key financial regulators on January 20-21 as those agencies await confirmed chairmen. At the Securities and Exchange Commission (SEC), Republican Commissioner Mark Uyeda was named acting chairman to serve until the expected confirmation of Paul Atkins as the next chairman. Atkins, a former SEC commissioner, is the CEO of Patomak Global Partners in Washington. Both former chairman Gary Gensler and Democratic Commissioner Jaime Lizárraga have stepped down from the SEC, leaving Caroline Crenshaw as the only Democrat on the Commission. Crenshaw's term has expired, but she is permitted to remain as a commissioner for up to a year until a successor is confirmed. One of Uyeda's first actions Monday was to launch a crypto task force "dedicated to developing a comprehensive and clear regulatory framework for crypto assets." Uyeda appointed Commissioner Hester Peirce to lead the task force. A news release from the SEC said that "to date, the SEC has relied primarily on enforcement actions to regulate crypto retroactively and reactively, often adopting novel and untested legal interpretations along the way … The result has been confusion about what is legal, which creates an environment hostile to innovation and conducive to fraud. The SEC can do better." Meanwhile, at the Federal Deposit Insurance Corporation (FDIC), Republican Vice Chair Travis Hill was appointed acting chair after the departure of former chair Martin Gruenberg. Hill is also seen as a top contender for the permanent FDIC job. On Tuesday (January 21), Hill released a list of matters he hopes to address in the weeks ahead, including: 1) a "wholesale review of regulations, guidance, and manuals to ensure our rules and approach promote a vibrant, growing economy"; 2) A "more open-minded approach to innovation and technology adoption," including "more transparent approach to fintech partnerships; 3) Withdrawing "problematic proposals from the past three years" on brokered deposits and corporate governance; and 4) Updates to the bank merger approval process, "to ensure that merger transactions that satisfy the Bank Merger Act are approved in a timely way." Finally, at the Commodity Futures Trading Commission (CFTC), Republican Caroline Pham was named acting chair on January 20. Pham will replace former chair and Biden appointee Rostin Behnam, who will remain on the Commission until he steps down in February. Reuters reported that during her time at the CFTC, Pham has "advocated for clearer crypto rules and focused on American competitiveness and right-sizing regulations to promote market liquidity." The CFTC would become a key regulator of digital asset trading under bills circulating in Congress that classify most crypto tokens as commodities. Pham has also advocated for the CFTC to create a regulatory framework to allow election-betting platforms to operate safely. Friday, January 24 (12:00 p.m.) is the EY Webcast, "Tax in a time of transition: Legislative, economic, regulatory and IRS developments."
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