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Conservative legal group New Civil Liberties Alliance (NCLA) has filed what it says is the first lawsuit seeking to block Donald Trump's new tariffs on imports from China, arguing that the president is overstepping the limits of his authority. The group is representing a Florida-based stationery business called Simplified, which claims it will suffer “severe” harm from his “unconstitutional” tariffs on China. “By invoking emergency power to impose an across-the-board tariff on imports from China that the statute does not authorize, President Trump has misused that power, usurped Congress’s right to control tariffs, and upset the Constitution’s separation of powers", NCLA senior litigation counsel Andrew Morris said in a statement. Trump has declared an emergency over China's alleged complicity in the U.S. opioid epidemic, framing tariffs as a negotiating tool for ending the influx of the drugs. Meanwhile, earlier this morning Beijing announced a 34% tariff on all U.S. imports starting April 10, mirroring the U.S. reciprocal tariff of the same rate. Additionally, China has suspended chicken imports from two U.S. suppliers due to health violations and added 27 firms to its trade sanctions list. 

 

The Hill

Bloomberg

Los Angeles Times

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Reuters

The U.S. Senate is set to begin a lengthy session focused on passing significant tax cuts and budget reductions, despite strong opposition from Democrats. The Senate narrowly voted 52-48 to initiate debate on a budget blueprint for the upcoming fiscal year, which is crucial for fast-tracking the tax cuts. Senate Majority Leader John Thune (R-SD) managed to keep most Republicans united, with only Senator Rand Paul (R-KY) dissenting. The proposed tax cuts could add approximately $5tn to the national debt over the next decade, which currently exceeds $36.6tn. President Donald Trump is advocating for a comprehensive bill that includes funding for border security and immigration enforcement. Senate Democratic Leader Chuck Schumer (D-NY) criticized the Republican plan, commenting: "Democrats will expose the dark corners of the Republican plan." Concerns about Medicaid cuts and the overall cost of the legislation remain contentious issues among lawmakers.

 

US News and World Report

Loan applicants and mortgage companies are facing uncertainty as the IRS undergoes significant downsizing. The Income Verification Express Service (IVES), crucial for authorizing income-tax information for lenders, is expected to remain insulated from these cuts, according to Curtis Knuth, president and chief executive of consumer reporting agency NCS. He said: "It's unlikely that IVES will be impacted due to association within submission processing." Despite this, the IRS plans to cut thousands of jobs and billions of dollars, which could affect processing in the future. Past issues, such as the 2019 government shutdown, have shown how these cuts can disrupt mortgage closings. As demand for loans based on self-employment income rises, potential borrowers may struggle to secure mortgages without a solid income track record.

 

Accounting Today

Chair of the Oversight Subcommittee David Schweikert (R-AZ) has expressed frustration over the IRS's phone service, commenting: “I’ve had no one to talk to for a while.” Despite having two IRS officials assigned to him, he has struggled to get responses to his inquiries. Schweikert's panel is focused on improving the IRS, highlighted by a recent hearing titled “IRS Return on Investment and the Need for Modernization.” He criticized the agency's reliance on special funding from the Inflation Reduction Act for hiring rather than investing in automation and artificial intelligence. The National Taxpayers Union, represented by Pete Sepp, has suggested that Congress should regain direct access to IRS technical personnel, a practice that existed 15 years ago. Sepp noted, “The Chairman’s questions now are precisely why that kind of access once existed.” The IRS is yet to comment on these issues.

 

Tax Notes

Washington Gov. Bob Ferguson has expressed his refusal to sign a budget that depends on a proposed wealth tax from state Democrats. He stated, "They need to immediately move budget discussions in a different direction," highlighting concerns over the tax's implementation. The state faces a $16bn budget deficit over the next four years, worsened by federal funding cuts. The proposed tax would target individuals with over $50m in stocks and bonds, making Washington the first state to tax wealth. Ferguson is open to a small wealth tax to test its legality but warns against relying on a potentially unstable revenue source. Rian Watt from the Economic Opportunity Institute noted that while capital flight is a concern, it shouldn't dominate the discussion.

 

Accounting Today

CPA Practice Advisor

The FASB's proposal on how businesses should account for government grants has drawn criticism for being overly flexible and lacking in scope. Industry professionals argue that the draft plan could lead to inconsistencies in financial reporting, making it challenging to compare results across companies. One American representative said that “Comparability in financial reporting is critical for investor analysis, yet the proposed amendments allow for multiple accounting approaches that reduce consistency.”

 

Bloomberg Tax

President Donald Trump's recent tariffs are expected to increase the demand for accounting professionals as companies navigate the complexities of new import taxes. Tom Hood, executive vice president at AICPA & CIMA, noted: "A lot of CFOs are thinking they are going to pass along the tariffs to their customer base." A survey revealed that 85% of business executives see tariffs creating uncertainty in their plans. Charles Clevenger from UHY Consulting emphasized the need for compliance, stating, "This is a more complex tariff environment than most companies have experienced." As companies adapt, scenario planning and financial analysis will be crucial to manage the evolving landscape of tariffs and their impacts on supply chains.

 

Accounting Today

The Commerce Department reported on Thursday that the U.S. trade deficit in February decreased to $122.7bn, having spiked to a revised $130.7bn in January. Economists had expected the trade deficit to fall to $123.5bn from the $131.4bn originally reported for the previous month. The value of imports was effectively unchanged at $401.1bn, while the value of exports grew 2.9% to $278.5bn, boosted by shipments of nonmonetary gold, capital goods and automotive vehicles, parts, and engines. Additionally, the goods trade deficit fell from $155.8bn to $147bn, while the services trade surplus inched down to $24.3bn, from $25.2bn. 

 

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Reuters

U.S. initial jobless claims moved lower last week, according to the Department of Labor, signaling continued labor market stability ahead of potential volatility from import tariffs. Initial claims dropped 6,000 to a seasonally-adjusted 219,000 in the seven days to March 29th, well below the 225,000 forecast by economists in a Reuters poll. The four-week moving average dropped 1,250 to 223,000, while the total number of claimants, reported with a one-week lag, increased by 56,000 to 1.9m. "This adverse trade news from the White House is an extreme external shock to the economy that is in all the university textbooks, and so too is the need for being on high alert for signs of recession," said Christopher Rupkey, chief economist at FWDBONDS. "Weekly job layoffs made by companies are minimal at the moment, but it is too early to forecast what businesses will do in the weeks and months ahead."

 

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More than three-quarters of companies worldwide link sustainability targets to executive pay, according to a new report from KPMG International. The study, Incentivizing Long-term Value Creation: Linking sustainability metrics to board members’ pay, found that 78% of businesses now link senior execs' compensation to sustainability performance, with the most common targets relating to climate change and internal workforces, often focusing on female leadership and injury rates. While more companies linked sustainability to short-term targets (40%) compared to both short-term and long-term incentives (37%), KPMG said that investors generally expect to see a balance between both short-term and long-term targets to measure board performance. “Despite ongoing economic and geopolitical uncertainty, the findings make clear that linking executive compensation to sustainability performance is becoming increasingly widespread within the world’s largest companies,” said Nadine-Lan Hönighaus, global ESG governance lead at KPMG International. 

 

Digit

Talks between the U.S. and the U.K. on the mutual recognition of accounting qualifications have stalled, with concerns over issues including the assessment of American audit training standards. While a pilot program initiated in 2018 between AICPA and the Institute of Chartered Accountants of Scotland allowed limited recognition of qualifications, efforts to broaden the agreement to include England and Wales have faltered. It is noted that the U.K.'s Financial Reporting Council has expressed a hope that discussions will resume to resolve the issue, while the Big Four have emphasised the importance of talent mobility for complex international audits.

 

Scottish Financial News