Gov. Mike Braun is optimistic the trade agreement between the United States and the United Kingdom announced Thursday by Republican President Donald Trump will lead to "a cascade of others" that ultimately will benefit the Hoosier State.
The Republican chief executive said new trade arrangements are long overdue, especially in Europe where Braun said the U.S. never "weaned them off" the financial support Americans have provided "since we rebuilt Europe and the rest of the world out of World War II."
Over those eight decades, Braun observed that America has incurred a trade deficit — importing more than it exports — exceeding $1 trillion, an annual budget deficit of $2.5 trillion and a national debt of more than $36 trillion.
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He said Trump's decision to use tariffs to better balance foreign trade relations and reduce the nation's other obligations is the right policy at the right time.
"All we're asking through that policy is keep them equal and hopefully both go down mutually to nothing over time. That would be called free and fair trade. Finally, we've got somebody attending to it. It needed to be done," Braun said.
Speaking with reporters Thursday in Munster, Braun acknowledged there still needs to be a "big tariff discussion" with China. But he's confident Trump will come through and Indiana will be better off for it.
"I think that here in a month or two that austere forecast we had based upon that wrestling match could go the other way," Braun said.
The updated state revenue forecast presented to the State Budget Committee April 16 reduced Indiana's projected general fund tax collections through June 2027 by $2.4 billion compared to the December 2024 forecast due to the anticipated negative impact of Trump's tariffs and ongoing economic uncertainty.
Trump's tariffs on China in particular, which only were estimated at 60% for the revenue forecast but now stand at 245% for some products, are poised to cause job and investment losses for Hoosiers — reducing projected state income and sales tax revenue over the next two years, and potentially driving up state spending on health, hunger and housing assistance programs, budget officials said.
That prompted Braun and the Republican-controlled General Assembly to agree in House Enrolled Act 1001 to raise Indiana's cigarette tax by $2 a pack, boost taxes on vapor and other tobacco products and reduce funding for most state agencies, including colleges and universities, by at least 5% beginning July 1.
The new state budget also is based on a projection of continued, low-level economic growth over the next two years, even though the U.S. Commerce Department announced April 30 the nation's economy already contracted 0.3% between January and March — before the most significant Trump tariffs take effect.
Data released Friday by the State Budget Agency show Indiana fell short of its reduced revenue target for April by $51.1 million, or 1.7%. The monthly miss would have been $264.2 million, or 8.1%, if the revenue forecast had not been revised.
Indiana's current budget year ends June 30.
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