From the courtroom to the supply chain, U.S. economic policy sent shockwaves through tax planning again this week. A new S&P Global analysis shows Trump-era tariffs may cost businesses over $1.2 trillion in 2025—with consumers bearing most of the burden. Meanwhile, the Supreme Court is now the battleground for legal fights over Trump’s executive powers, from tariff authority to agency control.
Universities are also reacting fast: tax hikes on endowment income are triggering sweeping spending cuts across elite institutions. And in D.C., the federal government shutdown entered its 24th day—now the second-longest in U.S. history—with no budget resolution in sight.
Here’s what tax professionals need to know this week.
1) Tariffs to Cost Companies $1.2 Trillion in 2025, Says S&P
A new S&P Global report estimates that Trump’s revived trade tariffs will cost global businesses more than $1.2 trillion this year, with two-thirds of the cost passed on to consumers. Only a third will be absorbed by companies themselves.
Key insights:
- 10% blanket tariffs now apply to all imported goods
- “De minimis” exception for sub-$800 goods was removed in May
- Analysts project a 64 basis point decline in corporate margins this year
Advisors should review how clients’ supply chains and pricing models are being affected—and prepare for Q4 disruptions.
2) Trump Tariffs, Fed Firings Head to the Supreme Court
A sprawling docket of cases involving Trump’s executive power is now in front of the Supreme Court—including a major challenge to his use of the International Emergency Economic Powers Act to impose global tariffs.
Also on the docket:
- Trump’s attempted firing of a Federal Reserve Governor
- Fights over the FTC, Education Dept., NIH, and immigration policies
- Legal efforts to dismantle birthright citizenship and federal employee protections
If upheld, these cases could have long-term effects on regulatory independence, monetary policy, and how tax-related decisions are enforced.
3) Elite Universities Slash Budgets Amid Endowment Tax Hikes
Top U.S. universities are cutting spending despite strong investment returns, in anticipation of a new tiered excise tax on endowment income, enacted under the One Big Beautiful Bill.
What’s changing:
- Tax jumps from 1.4% to 4–8% for top institutions
- Harvard, MIT, Stanford and others expected to pay $1B+ each over 5 years
- Austerity measures already include hiring freezes, research cuts, and PhD enrollment limits
Expect further pressure on private foundations and non-profits, especially those managing significant assets subject to excise taxes.
4) Shutdown Hits Day 24 With No Deal in Sight
The federal government shutdown continues with 750,000+ furloughs and no clear resolution. Trump says he will not meet with congressional Democrats until they agree to reopen the government.
What’s affected:
- IRS, USDA, and FAA face deep staffing shortages
- SNAP and WIC may run out of funds in early November
- Air travel delays are mounting, especially in Houston and Newark
Tax deadlines are still in place, but refunds, phone support, and paper return processing remain delayed. Advisors should keep clients informed and recommend electronic filing where possible.
5) Pillar 2 Still Standing—But U.S. Demands ‘Side-by-Side’ Regime
Despite Trump’s formal withdrawal from Pillar 2, the global minimum tax regime appears likely to survive—thanks to a proposed “Side-by-Side Approach” that would exempt U.S.-owned groups from top-up taxes, while keeping the framework intact globally.
Key updates:
- U.S. insists on no Pillar 2 taxation for U.S. multinationals
- “Side-by-Side” framework may exempt U.S. groups from IIR/UTPR
- Permanent safe harbour rule still in progress, with simpler ETR calculations expected
Global tax teams should monitor jurisdiction-level implementation, especially for clients with cross-border operations subject to local QDMTTs.
Your Takeaway This Week
From trillion-dollar tariff costs to Supreme Court power tests and new tax burdens on education and philanthropy, this week is a reminder of how politics and tax planning are deeply intertwined. With year-end approaching, advisors should prepare clients for operational and compliance risks that can’t be delayed.
Need help navigating complexity as 2025 policy changes accelerate?
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