Core Viewpoint - The "Big and Beautiful" Act, a significant pillar of Trump's economic policy during his second term, aims to fulfill his election promises regarding economic development and social welfare, with substantial implications for both the U.S. and other countries [1][2]. Group 1: Tax and Spending Implications - The "Big and Beautiful" Act is expected to reduce U.S. federal tax revenue by approximately $4.5 trillion over the next decade (2025-2034) due to the extension or permanent establishment of several provisions from the previous "Tax Cuts and Jobs Act" [2][3]. - The Act allows full tax deductions for research and development expenses and capital investments made in the U.S., reflecting a "trickle-down economics" approach aimed at economic recovery and job creation [2][3]. - The projected increase in U.S. national debt is estimated to be around $4.1 trillion to $5.5 trillion over the next decade, with the debt-to-GDP ratio expected to reach 127% by 2034 [3][9]. Group 2: International Tax Policy Changes - The Act continues and expands upon the previous tax reforms, tightening foreign tax credit rules and increasing the limit on foreign tax credits under the Global Intangible Low-Taxed Income (GILTI) provisions from 80% to 90% [4][6]. - The Act retains provisions for "retaliatory taxes" against countries imposing unfair taxes on U.S. companies, reflecting a strong stance on international tax sovereignty [5][6]. - The revisions to the Base Erosion and Anti-Abuse Tax (BEAT) rules indicate a more aggressive approach to taxing foreign entities, with significant implications for international tax relations [6][7]. Group 3: Domestic Spending and Policy Shifts - The Act significantly cuts spending on healthcare and social security by approximately $1.2 trillion while increasing defense spending, indicating a prioritization of military and border security initiatives [9][10]. - The termination of clean energy tax credits marks a shift away from the previous administration's green policies, emphasizing traditional fossil fuel production and usage [8][9]. - The Act's overall approach to tax policy is seen as a manifestation of "tax power," necessitating vigilance from other nations regarding potential impacts on their own tax systems [8][9].

Core Viewpoint - The article discusses the intensifying global competition over tax benefits, highlighting the backlash against the U.S. "America First" tax policy despite the U.S. being the world's only "superpower" [1][8]. Group 1: Legislative Developments - The "Big and Beautiful" bill, introduced by President Trump, has become a focal point of international discussion, particularly due to its "retaliatory tax" provisions, which intertwine with ongoing trade disputes [2][3]. - The bill passed the House of Representatives with a narrow margin of 215 to 214 votes and is currently under review in the Senate, where any substantial amendments would require a return to the House for further voting [2][3]. - The bill's Section 899 allows the U.S. government to impose "retaliatory taxes" against what it deems "unfair foreign taxes" targeting U.S. companies and individuals [3][4]. Group 2: Tax Policy Implications - "Unfair foreign taxes" include discriminatory taxes against U.S. individuals and companies, as well as extraterritorial tax laws, with specific examples being the Global Minimum Tax rules and Digital Services Taxes (DST) [3][4]. - The Digital Services Tax, implemented by countries like the UK and France, typically ranges from 2% to 5% and is viewed by the U.S. as discriminatory against American digital firms [3][4]. - The U.S. has been actively pushing for retaliatory measures against these foreign tax policies, with Republican lawmakers advocating for legislation to counteract perceived tax injustices [4][5]. Group 3: Negotiation Dynamics - Treasury Secretary Yellen has indicated a willingness to compromise, suggesting the potential removal of Section 899 in exchange for agreements on tax policies with G7 allies [5][6]. - The U.S. may accelerate the implementation of the G20-OECD dual pillar tax reform, which could lead to a reevaluation of the retaliatory tax stance [6][8]. - Despite the potential for compromise, the emotional decision-making of President Trump could lead to a reassertion of the retaliatory tax if foreign nations continue to impose taxes on U.S. companies [7][8].

Group 1 - The Australian pension industry, valued at AUD 4.1 trillion (approximately USD 2.7 trillion), expressed relief over the U.S. government's decision to cancel the proposed "retaliatory tax," which would have increased tax burdens on foreign investors' asset income [1] - The cancellation of the retaliatory tax is expected to reignite investment enthusiasm among Australian pension funds and global institutional investors in the U.S. market, particularly in U.S. equities, leading to a renewed "Buy America" trend [1] - Australian pension funds have already invested approximately USD 450 billion in the U.S., covering various asset classes including infrastructure, equities, U.S. Treasuries, and corporate bonds [1] Group 2 - The U.S. Treasury's announcement of an agreement with G7 allies, which excludes U.S. companies from certain taxes in other countries, is seen as a positive outcome for large institutional investors from countries like Australia [2] - Australian Treasurer Jim Chalmers expressed concerns directly to U.S. Treasury Secretary Scott Behnke, highlighting the importance of resolving tax uncertainties for Australian pension funds seeking deeper investment opportunities in the U.S. [2] - The potential tax reform had previously caused Australian pension funds to reassess their investment positions in the U.S. due to rising uncertainties [2] Group 3 - The original proposal for the retaliatory tax led to caution among Australian institutional investors, with some, like Cbus Super, refraining from U.S. infrastructure transactions this year [3] - The Australian Superannuation Funds Association (ASFA) welcomed the recent developments but noted that further legislative action is required in the U.S. Congress to finalize the changes [3] - ASFA's Chief Policy and Advocacy Officer indicated that the potential legislative changes could alter the risk-return profile of U.S. investments for Australian funds, which would be detrimental to all parties involved [3]

Core Viewpoint - Japan's Finance Minister, Kato Katsunobu, will continue to monitor the developments regarding the United States' "retaliatory tax" proposal [1] Group 1 - The Japanese government is currently unable to implement bond buybacks [1] - The government will carefully consider the possibility of bond buybacks in the future [1]

Market Overview - Major global stock indices showed mixed performance, with the Dow Jones Industrial Average rising by 404.41 points (0.94%) to 43,386.84, while the S&P 500 increased by 48.86 points (0.80%) to 6,141.02 [1] - In contrast, the European Stoxx 50 declined by 7.98 points (-0.15%) to 5,244.03, and the Shanghai Composite Index fell by 7.52 points (-0.22%) to 3,448.45 [1] Trade and Economic Policies - U.S. trade partners, including Japan, India, and the EU, are hesitant to sign agreements due to uncertainty over potential tariffs on key exports like chips and pharmaceuticals [2] - The U.S. Treasury Secretary requested the removal of a "retaliatory tax" proposal from a tax bill, which could impose a 20% tax on foreign investors from countries deemed to impose unfair taxes on U.S. companies [2][5] Company Developments - Xiaomi announced that its Yu7 model received over 289,000 pre-orders within the first hour of availability, indicating strong consumer interest [3][4] - Nike's stock surged by 10% following the release of its quarterly earnings report, which showed earnings per share of $0.14, slightly above expectations [4] - Nike's CFO indicated that new tariffs could increase total costs by approximately $1 billion for the fiscal year 2026, prompting the company to adjust its supply chain and pricing strategies [5] Mergers and Acquisitions - CoreWeave is in talks to acquire Core Scientific to expand its cloud computing capabilities, with the deal expected to be finalized in the coming weeks [7][8] - Following the acquisition news, Core Scientific's stock price rose by 33%, reflecting investor optimism [9] Regulatory Changes - Apple modified its App Store policies in Europe to comply with the Digital Markets Act, aiming to avoid a potential €500 million fine [11][12] - The new policy introduces a complex fee structure for app developers, including a 5% commission on digital purchases made outside the App Store [12]

Group 1 - The U.S. Treasury announced an agreement with G7 allies to exempt U.S. companies from additional tax burdens in certain overseas markets, in exchange for the removal of the "retributive tax" clause from Trump's tax legislation [1] - Treasury Secretary Scott Bansen stated that the OECD's second pillar tax scheme will not apply to U.S. companies, and the implementation of this agreement will be advanced within the OECD-G20 inclusive framework [1][2] - The "retributive tax" clause, aimed at countering perceived discriminatory tax policies against U.S. companies by countries like those in the EU, Canada, and Australia, raised concerns on Wall Street about its potential to hinder foreign investment in the U.S. [1][2] Group 2 - Market reactions have been relatively stable, with the Bloomberg Dollar Index declining for the fourth consecutive day, U.S. Treasury yields rising, and the S&P 500 nearing historical highs [2] - The removal of the "retributive tax" clause from budget negotiations may relieve investor concerns, although it remains uncertain whether the market anticipated this clause would ultimately become law [2] - The OECD's global minimum tax proposal, which requires multinational companies to pay at least a 15% tax rate in each jurisdiction, faced opposition from the U.S. government, which emphasized the need for U.S. tax policy to remain independent from OECD frameworks [3]

Group 1 - The U.S. Treasury Department is nearing an agreement that could render the so-called "retaliatory tax" irrelevant, alleviating concerns among Wall Street investors about punitive tax measures against foreign investors [1][2] - The OECD is facilitating global corporate tax negotiations, with some proposals facing opposition from the U.S. As the U.S. approaches a global agreement with European and other countries implementing a minimum tax rate for multinational corporations, Republicans are considering whether to eliminate the retaliatory tax provision [2][4] - The provision, referred to as the retaliatory tax, would only increase tax rates for countries deemed to have discriminatory tax policies against U.S. companies, which critics argue could hinder foreign investment and contradict the Trump administration's goals of boosting manufacturing and business activity [2][3] Group 2 - The 899 provision, if included in its current form in the "Beautiful Law," could lead to additional annual debt servicing costs of $2 million to $10 million for companies investing in the U.S. [3] - The National Association of Manufacturers supports targeted modifications to the 899 provision to ensure the Treasury has the necessary discretion in negotiations without penalizing foreign manufacturers investing in the U.S. [3] - The 899 provision is currently under review in the Senate, where lawmakers have yet to determine its compliance with budget rules [4]

Core Viewpoint - The upcoming U.S. Treasury auctions are increasingly scrutinized as indicators of domestic and international investor demand for U.S. debt and dollar assets, especially in light of recent fiscal policies and trade tensions [2][4]. Group 1: Auction Details - The U.S. Treasury will auction $58 billion in three-year notes on Tuesday, $39 billion in ten-year notes on Wednesday, and $22 billion in thirty-year notes on Thursday [4]. - Recent trends show that the yield on long-term U.S. bonds has hovered around 5%, with the 30-year bond yield reaching 4.97%, close to its highest level since 2023 [4][6]. Group 2: Market Sentiment and Concerns - Concerns are rising among investors regarding the U.S. fiscal deficit, which has reached 120% of GDP, and the potential impact of President Trump's policies on inflation and global growth [4][5]. - JPMorgan CEO Jamie Dimon warned that if investors lose confidence in the dollar and U.S. debt, it could pose significant issues for all market participants needing financing [5]. Group 3: Short vs. Long-Term Debt Demand - Demand for short-term U.S. debt remains robust, with indirect bids from foreign central banks accounting for 62% of the total issuance in recent auctions [6]. - In contrast, the 10-year and 30-year bond auctions are expected to face challenges, with the latter anticipated to be particularly weak due to global demand issues for long-term bonds [7][8]. Group 4: Political Influences on Demand - The political landscape, particularly Trump's proposed "Big and Beautiful" plan, is influencing investor sentiment, with potential for increased taxes on foreign entities perceived as having unfair tax policies [9]. - Analysts suggest that the recent rise in yields may attract buyers to the 30-year bonds, despite their current unpopularity [8].

Group 1 - The Speaker of the House, Mike Johnson, is working to maintain the $40,000 state and local tax (SALT) deduction cap in the tax reform bill currently under Senate review [1] - Republican senators are proposing to tighten the SALT cap during discussions with President Trump regarding the large-scale tax reform plan [1] - Johnson emphasized the importance of the SALT provision for ensuring the bill's passage in the House during the final vote this summer, given the internal divisions within the Republican majority [1] Group 2 - Johnson remains optimistic about the tax reform bill passing before July 4, despite policy disagreements with the Senate and opposition from billionaire allies like Elon Musk [2] - The Senate plans to raise the U.S. debt ceiling by $5 trillion, which has led to opposition from Senator Rand Paul and demands from three conservative senators for larger spending cuts [2] - Johnson assured that the plan will proceed as scheduled [2]