What impact will President Donald Trump’s tariffs and Elon Musk’s DOGE layoffs and contract cancellations have on Mississippi? It’s too soon to tell, but the risks of major impacts are high.

 

Trump imposed stiff tariffs on Canada, Mexico and China last week, then backed off some. All three countries announced retaliatory tariffs. A trade war risks upsetting critical supply chains and disrupting vital food markets. Mississippi export/import enterprises from farmers to refiners to manufacturers to retailers could be decimated. The president just about abolished USAID which has been a primary buyer of U.S. crops, many from Mississippi, for international food assistance.

 

Meanwhile layoffs of federal employees and contract cancelations loom. Trump and DOGE have threatened 50% or higher layoffs for HUD, IRS, VA, SSA, DOE, EPA, NSF, NOAA, GSA, USAID, and other agencies. Mississippi is home to nearly 20,000 federal employees not counting government contractors. Already, 13 federal offices in Mississippi have been ordered to close and two designated for sale.

 

To assume that huge federal spending cuts and high tariffs cannot harm Mississippi’s economy would be foolish. The president has admitted there is likely to be “short term pain.” The key questions are how much pain and how short is short term?

 

Smart states will take heed and act accordingly. Will Mississippi be one of those?

 

The hot political issue here is tax cuts. Gov. Tate Reeves and Speaker of the House Jason White want to totally eliminate the personal income tax, expressing confidence the state can afford to do so. Lt. Gov. Delbert Hosemann wants to reduce the income tax but not yet eliminate it, seeking to hold off until state revenues normalize after federal infusions and cuts.

 

It sure seems that as each day passes President Trump and DOGE announcements make the case ever stronger for the Lt. Governor’s more cautious approach.

 

There are other concerns with the House plan, the main one being tax increases, or a tax shift if you prefer. The House plan adds a 5% sales tax on fuel sales plus a 1.5% sales tax at the city and county levels on top of the state 7% sales tax. Both tax increases would take effect in 2026 but the income tax purge and a 4.5% grocery tax cut would be phased in over 10 years.

 

Hosemann’s Senate plan adds no local sales taxes; takes the income tax down to 2.99% over four years; adds three cents a gallon to the fuel tax yearly until it hits nine cents; and cuts the grocery sales tax to 5%.

 

Crawford is the author of “A Republican’s Lament: Mississippi Needs Good Government Conservatives.”