Trump Administration Pushes New Tariffs While States Clash Over Tax Relief Measures

The Trump administration is doubling down on tariffs, aiming to cement a more durable legal foundation for them even as temporary levies expire. This week, the Office of the US Trade Representative launched hearings under Section 301 of the Trade Act of 1974, targeting forced labor and alleged overproduction by major trading partners. This move signals a strategic pivot to maintain tariff revenue streams that courts have recently challenged and struck down.

The current Section 122 tariffs, set to expire on July 24, are on the chopping block, but the administration’s push for longer-lasting tariffs underscores a broader pattern of weaponizing trade policy for political and economic gain. These tariffs have already contributed to economic chaos, trade wars, and higher consumer prices, hitting American workers and allies alike.

Meanwhile, on the domestic front, the tax battles rage on. The House recently passed the Doug LaMalfa Federal Disaster Tax Relief Certainty Act, designed to ease the tax burden on families recovering from natural disasters like hurricanes and wildfires. As Rep. Greg Steube (R-FL) put it, disaster victims should not face extra tax penalties while rebuilding their lives. This legislation reflects ongoing tensions over how best to support Americans in crisis amid rising climate disasters.

States are also embroiled in their own tax skirmishes. New Hampshire Governor Kelly Ayotte (R-NH) has ordered an investigation into Vail Resorts for what she calls an unauthorized sales tax on some Epic Pass products. New Hampshire prides itself on its no-sales-tax status, and Ayotte frames this as a defense of state identity and principle. Vail counters that the passes cover resorts outside New Hampshire where taxes apply, but the dispute highlights how corporate practices can clash with local tax policies.

In New York, Mayor Zohran Mamdani (D) is targeting tax breaks for the wealthy by urging the state to scale back the pass-through entity tax credit (PTET). Cutting the credit from 100 percent to 75 percent could generate nearly $1 billion, mostly from taxpayers earning over $1 million annually. Despite pushback from Governor Kathy Hochul (D), who calls the proposal a personal income tax increase, the move reflects growing pressure to address budget shortfalls by taxing high earners more fairly.

Indiana offers another twist, with Governor Mike Braun (R-IN) resisting calls to suspend the state’s 36-cent-per-gallon gas excise tax. Even as some Democrats push for relief at the pump, Braun is holding firm, though he leaves the door open to revisit the issue later. Hoosiers currently benefit from a temporary suspension of the sales tax on gasoline, but that break expires soon, and the state sales tax is set to rise.

These battles over tariffs, tax breaks, and relief measures reveal a fractured and contentious tax landscape shaped by the Trump administration’s aggressive trade policies and states’ divergent approaches to fiscal challenges. The stakes are high for American families, workers, and taxpayers caught in the crossfire of political maneuvering and economic uncertainty.

For ongoing updates on tariffs and tax policy, the Tax Policy Center remains a critical resource tracking these developments.