Treasury Secretary Steven Mnuchin said that President Donald Trump's tax reform could be delayed and not make it through Congress before August due to setbacks with the healthcare bill, the Financial Times recently reported.
What U.S. Tax Reform Delay Could Mean For GoldAnd, according to one analyst interviewed by Kitco News, a significant delay in carrying out Trump's tax reform promise could boost gold, which is known for its safe-haven appeal.
Mnuchin made the comments in an interview published by the Financial Times on Monday, describing the August deadline for the massive tax reform bill as “highly aggressive [and] not realistic at this point.”
“It is fair to say it is probably delayed a bit because of the healthcare,” he said. Trump’s administration will still try to pass an overhaul of the tax code in 2017, Mnuchin added.
Some of the issues currently under debate include a “border adjusted” plan that would put a tax on imports, while exempting exports. It is still unclear whether this measure will be left in the proposed tax reform or not, according to Mnuchin.
Tax reform was one of Trump’s central campaign promises during the election when the President pledged to lower the federal corporate tax rate to 15%from 35% and cut personal taxes.
To BMO Capital Markets, a major delay could help gold, but the gains would be limited.
“Confirmation from the Trump administration that tax reforms will be delayed could provide a slight bump to gold prices (reflecting a loss of confidence in the U.S. economy over the near term),” Sarah Howcroft, economist at BMO Capital Markets, told Kitco News in a phone interview on Monday afternoon.
Howcroft also noted that a boost to gold prices could easily be capped, as a tax reform delay has already been largely priced in by markets and Mnuchin's announcement “won’t come as much of a surprise to anyone.”
Reference: Kitco
Thai
Eng