Written by Felipe Guevara, Consortium Legal.
In the same week as his inauguration for a second term, the President of the United States, Donald Trump, virtually attended the World Economic Forum conference, where he referred to several issues, with those relating to his tax and tariff policies being very relevant for our country.
In this regard, Trump announced “the biggest tax cut in the history of the United Statesâ€, with the aim of boosting economic growth and attracting companies to produce in his country, while those that produce abroad will face tariffs. The proposal has a clear path ahead thanks to the Republican majority in the House of Representatives and the Senate, adding that they will include tax cuts for workers and families, and big tax cuts for domestic producers and manufacturers.
In line with the tax cuts, Trump promised tariffs for everyone, reinforcing his commitment to keeping and attracting companies to produce in the United States. In addition to this, Trump signed an executive order that scuppers the idea of a global minimum tax for companies. The international agreement for a global minimum tax, conceived and championed by the Organization for Economic Cooperation and Development (OECD), had the support of former President Joe Biden and almost 150 other countries. However, Trump’s executive order makes it clear that the US’s previous support and commitments are null and void. For a global agreement of this kind to work efficiently, the US must be part of it, especially since many of the companies that would be subject to the agreement are American, such as Amazon, Apple, Google, and Facebook.
Taking into consideration that our accumulated exports to the United States, as of October last year, represented 47% of the total, and that 71% of foreign direct investment came from that market, we must take note of how attractive and competitive we will be in the new trade order we are entering.
Above all, when the cost of social security contributions in our country has become a perverse incentive for informality and a critical issue for companies. To date, we have not been able to make progress on alternatives that would guarantee the financing of social programs, mainly at the level of health and pensions, without them being charged to company payrolls.
We are well aware of where global competitiveness is heading and we must make public policy decisions today. Let’s hope that the upcoming presidential campaign revolves around these issues.
