Trump’s Tax Retaliation Proposal May Be Dropped If Global Deal Reached

A controversial tax provision that would allow U.S. President Donald Trump to retaliate against foreign taxes on American firms could be excluded from his sweeping budget bill if an international agreement is reached before its passage, Republican leaders said Wednesday.

Known as Section 899, the measure is part of Trump’s proposed tax-cut and spending package, which Republicans aim to pass by Saturday—just ahead of the July 4 holiday. The provision targets taxes deemed unfair, such as the OECD’s "Pillar Two" global minimum tax and digital services taxes imposed on U.S. tech giants like Amazon (NASDAQ: AMZN) and Alphabet (NASDAQ: GOOGL).

House Ways and Means Committee Chair Jason Smith said the provision might be removed if the EU and other countries halt such taxes. White House economic adviser Kevin Hassett echoed this, noting the administration’s intent to use Section 899 as a negotiation tool: “Maybe it doesn’t have to be in the bill if they pull those things back ahead of the vote.”

Section 899 would impose a progressive tax of up to 20% on foreign investors’ U.S. income, raising concerns among Wall Street investors about the attractiveness of U.S. markets. The Senate version delays implementation until 2027.

Despite lobbying efforts for clarification and flexibility, lawmakers have not addressed investor concerns. The provision must also be approved by the Senate parliamentarian, who ensures all bill components have a direct budgetary impact to qualify for fast-track passage.

The White House plans to showcase the bill’s benefits at a Thursday event featuring truckers, ranchers, and other workers. Final House and Senate votes could occur Saturday as Republicans push for rapid approval of the legislation dubbed the “One Big Beautiful Bill Act.”