No Rate Cut, Tax Bill Impacts Until 2026, Monica Guerra

Monica Guerra, Executive Director and Head of US Policy at Morgan Stanley Wealth Management, discusses her new research note on tariff talk, dollar moves, and longer-term tax bill impact.

Stakeholders are just starting to evaluate key tax policy changes in Republicans’ multi-trillion-dollar reconciliation package, including the long-term impact of several new and modified business tax reforms.

But less than two weeks after President Donald Trump signed the sprawling legislation into law, key congressional leaders, including House Budget Committee Chairman Jodey Arrington (R-Texas) and Senate Finance Committee Chairman Mike Crapo (R-Idaho), already have expressed interest in considering a second tax-and-spending package before the end of 2025.

While Congress prevented the expiration of key provisions from the 2017 tax bill, the potential for a second tax and spending package means industry must again prepare to advocate for their policy priorities and defend against adverse tax changes.

With less than six months left in 2025, businesses should consider the following measures that were used to navigate the new $3.4 trillion fiscal package known as the One Big Beautiful Bill to prepare for a second reconciliation process—which is possible under the rules because it will happen during a different fiscal year.

- President Donald Trump is readying plans for industry-specific tariffs to kick in alongside his country-by-country duties in two weeks, ramping up his push to reshape the US’s standing in the global trading system by penalizing purchases from abroad.

Administration officials could release details of Trump’s planned 50% duty on copper in the days before they’re set to take effect Aug. 1, according to a person familiar with the matter. That’s the same date so-called reciprocal levies on products from more than a 100 nations are slated to begin.

Trump said Tuesday he is likely to impose tariffs on pharmaceuticals by month’s end, adding that import taxes on semiconductors could come soon as well.

One person familiar with the process said after copper, Trump’s team has discussed making announcements on lumber, chips, critical minerals and drugs in that order, though that cadence has not been finalized and may change.

Those would follow existing duties on steel, aluminum, automobiles and car parts. Once fully implemented, all the sectoral tariffs would cover 30% to 70% of a country’s imports, with much of the rest being hit by country-specific charges, according to a person familiar with the matter.

The coming wave of US customs taxes will test the calm in financial markets, where investors mostly see Trump’s tough tariff talk as a negotiating ploy prone to delays and de-escalation rather than a prolonged economic headwind.

After investigations that can last about nine months, sectoral duties are being imposed on national security grounds under Section 232 of the Trade Expansion Act. It’s seen as stronger legal footing than the emergency powers Trump used for his country levies, which face court challenges and are being assigned in letters to dozens of trading partners without a deal.

The European Union, Japan, India and others have sought to lower both their reciprocal and sectoral rates. That’s complicating talks, given that US Trade Representative Jamieson Greer handles country-based rates, while Commerce Secretary Howard Lutnick oversees tariffs on industries, according to people familiar with the dynamics.

Here’s where tariffs on each industry stand:

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