U.S. Corporate Tax Cuts and Trade War Tariffs on Multinational Firms' Foreign Income

This study examines the combined effects of U.S. corporate tax cuts and trade war tariffs on the foreign income of multinational enterprises (MNEs) from 2015 to 2019. Using firm-level data, the analysis shows that lower corporate tax rates did not reduce profit shifting abroad. Instead, in industries highly exposed to import tariffs, tax savings were used as financial buffers against tariff-related costs rather than for domestic reinvestment. The results indicate that the effectiveness of tax cuts diminishes when paired with protectionist trade policies. These findings suggest that fiscal and trade policies must be designed in an integrated manner to support multinational competitiveness during periods of geopolitical and economic uncertainty.