Trump definitions can help clarify the way for the largest tax discounts where the Congress suffers

• President Donald Trump’s upper tariff from expected The shares have been crushed, but they may raise a large amount of revenue, while reducing the economy in this process. Import taxes can generate $ 700 billion annually of revenue. This can help clarify the way in Congress for larger income tax discounts, although the customs tariff will also be equivalent to a huge tax increase on consumers.

Wall Street suffered from a huge case from the shock of posters when President Donald Trump revealed his last tour of the customs duties on “Tahrir Day”, where he wiped $ 6 trillion in the market.

But the other side of the upper duties of expected is a possible return of income that can help clarify the way to get larger tax cuts in Congress.

Legionships have already taken a basic step towards this goal. Early on Saturday morning, the Republicans of the Senate agreed on a framework to expand Trump’s tax cuts from his first term, and add new discounts such as ending taxes to social security income and reduce spending.

Some financial conservatives of the Republican Party have set out in the huge deficit and debts that could bring more tax cuts. But the economists of Citi Research said in a memorandum on Thursday that aggressive definitions “may now become a justification for the largest tax discounts.”

It is not clear whether the definitions will remain high as announced (Chinese imports face a 54 % tax) or how long, as Trump suggested that he is open to negotiating prices while his authority to impose may also face legal challenges.

But at the present time, they can provide political coverage for legislators to pay tax cuts on Capitol Hill.

“As long as the customs tariff remains in place, the administration can also indicate about 700bln in the annual revenue that they will do on the assumption of a commercial deficit that has not changed,” said City. “Treasury Secretary Bessint suggested yesterday that it can be used to compensate for the new individual tax cuts. This may be an argument used to beat financial conservatives and also comply with the previous administration data that the customs tariff revenues will be redistributed to the American people.”

Tax cuts can help reduce the effect of definitions on the economy, which is increasingly seen sliding into the recession.

On Friday, JPMORGAN analysts said they expect the GDP to shrink 0.3 % this year, reflecting a pre -expansion offer. The unemployment rate is also seen to an increase of 5.3 % of the current level of 4.2 %.

separate Analysis from the Tax Corporation The costs and benefits of Trump’s tariff also estimated.

It found that when adding new duties to the duties that have already been announced, the definitions will reduce the GDP by 0.7 % and collect approximately $ 2.9 trillion of revenues during the next decade. Foreign revenge will reduce GDP by another 0.1 %.

The definitions will also reduce income after tax deduction At a rate of 1.9 % and the average medium tax is equal to more than 1900 dollars for each American family in 2025, according to the Tax Corporation.

At the same time, estimates are different from the rate of effective tariff. The Tax Corporation was 16.5 % and said that definitions will increase federal tax revenues by $ 258.4 billion in 2025, or 0.85 % of GDP, which represents the largest tax increase since 1982.

But Fitch classifications estimated that the total effective tariff will be about 25 % –The highest since 1909– Its previous estimate is 18 % and more than 10 times last year of 2.3 %. City said it was higher than 25 %.

On Thursday note, the chief economist at JPMorgan Bruce Kemman described customs duties as the largest tax increase since 1968, which preceded the recession 1969-1970, and it seemed doubtful that it can be sufficiently compensated by the tax discounts of income.

“The impact of this tax height is likely to be amplified – through revenge, a slide in the American commercial morale, and the breakdown of the supply chain,” he wrote. “The trauma is likely to be modified by a high flexibility tariff, with more fiscal policy.”

This story was originally shown on Fortune.com