Editor’s note: This article has been updated to include developments through February 3, 2025.
Since assuming office on January 20, 2025, President Donald Trump has prioritized tax policy, issuing a series of directives aimed at boosting economic growth and advancing the “America First” agenda.
Pulling out of the global tax agreement. On his first day in office, President Trump issued a memorandum declaring that the commitments made under the Organization for Economic Cooperation and Development’s (OECD’s) Pillar Two agreement have “no force or effect” in the U.S. unless formally adopted by Congress.
The memo directs the secretary of the Treasury, in consultation with the Office of the U.S. Trade Representative, to (i) examine whether foreign countries are taxing U.S. companies in violation of the tax treaties with the U.S. or international law, and (ii) provide a list of potential protective measures or actions the U.S. should take in response to any such violations.
This directive effectively removes the U.S. from the Pillar Two global tax agreement, which seeks to establish a global minimum corporate tax rate of 15% to address base erosion and profit-shifting.
Investigating discriminatory or extraterritorial taxes. On the same day, President Trump also issued the “America First Trade Policy” memo emphasizing the prioritization of American economic and international trade interests. (See our tariffs analysis as updated on February 1, 2025.) A key provision of this order directs the secretary of the Treasury, pursuant to Section 891 of the Internal Revenue Code, to investigate whether any foreign country imposes discriminatory or extraterritorial taxes on U.S. citizens or businesses.
Section 891 grants the president the authority to double tax rates on citizens and corporations of countries that engage in such practices. If such discrimination is identified, the Trump administration may invoke Section 891 to implement reciprocal tax increases.
Halting the disbursement of certain funds. President Trump also issued an executive order, “Unleashing American Energy” (Executive Order 14154), directing all federal agencies to immediately halt the disbursement of funds allocated through the Inflation Reduction Act of 2022 and the Infrastructure Investment and Jobs Act of 2021, including funds designated for electric vehicle charging infrastructure. (See our energy and environment analysis.)
Agencies are required to review their policies and processes for issuing any disbursements related to these funds to ensure they align with legal requirements and the policy outlined in the order. On January 21, 2025, the Office of Management and Budget (OMB) issued a memo clarifying that the order applies exclusively to funds supporting programs, projects or activities that may conflict with the policies outlined in the order, such as promoting increased energy production on federal lands and ending support for electric vehicles.1
Ordering a hiring freeze. President Trump has also issued a memo implementing a federal hiring freeze across executive departments and agencies, including the Internal Revenue Service (IRS), and discussed creating a “External Revenue Service” to oversee the collection of tariffs, duties and other revenues from foreign sources.
Issuing restrictions on any new regulations. More recently, on January 31, 2025, President Trump signed “Unleashing Prosperity Through Deregulation” (Executive Order 14192),2 which requires executive departments and agencies to identify at least 10 existing regulations for repeal for every new regulation they propose. Furthermore, for fiscal year 2025, agencies must ensure that the overall incremental cost of all new and repealed regulations is significantly less than zero, as determined by the OMB.
The order underscores the administration’s focus on reducing federal oversight. While the order does not specifically target tax regulations, the Treasury and IRS may review current tax-related rules for potential repeal or simplification, which could impact tax compliance and enforcement.
Establishing a sovereign wealth fund. Finally, on February 3, 2025, the president issued Executive Order 14196 directing the secretary of the Treasury and the secretary of Commerce to submit a plan within 90 days to establish a sovereign wealth fund. The goal of this fund is to manage surplus revenues and “lessen the burden of taxes on American families and small businesses.”
However, the order has raised several questions, particularly regarding the fact that the U.S. government currently operates at a deficit, leaving no surplus funds available for such investments. Additionally, the creation of a sovereign wealth fund may require congressional approval.
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1 On January 27, 2025, the OMB issued a memo directing federal agencies to temporarily suspend all disbursements of federal financial assistance, a move that faced significant opposition and legal challenges. The purpose of the directive was to allow agencies time to thoroughly review their financial assistance programs and identify any that might conflict with the president’s policy priorities. However, several federal judges swiftly blocked the directive, and OMB subsequently rescinded it.
2 This order expands on a directive from the first Trump administration — Executive Order 13771, Reducing Regulation and Controlling Regulatory Costs, issued on January 30, 2017. However, the scope of the original order was more limited, mandating the elimination of at least two existing regulations for every new regulation proposed or implemented.
See the full Executive Briefing publication
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