Trump’s ‘Big, Beautiful Bill’ Could Allow Him To Hit Back With Retaliatory Taxes On Countries Targeting US Tech Giants - Alphabet (NASDAQ:GOOG), Alphabet (NASDAQ:GOOGL)

The U.S. Congress is reviewing a provision in the ‘Big, Beautiful Bill’ that would grant President Donald Trump the authority to impose retaliatory taxes on countries targeting major U.S. tech companies with digital service taxes.

What Happened: The provision would allow Trump to impose taxes on foreign companies and residents doing business in the U.S., reported Reuters on Friday. This provision, Section 899, could potentially generate $116 billion over the next 10 years.

“If foreign countries want to come in the United States and tax U.S. businesses, then those foreign-based businesses ought to be taxed as well,” said Representative Ron Estes, a Kansas Republican who was instrumental in drafting the provision.

The bill, narrowly approved by the House of Representatives on May 22, is now moving to the Senate. It features several of Trump's core priorities, including stricter immigration measures, an extension of the 2017 tax cuts, and the rollback of certain green energy incentives. Despite this, experts caution that such retaliatory taxes could discourage foreign investment in the U.S.

Why It Matters: The provision in the tax bill comes in the wake of several countries, including Britain and Italy, announcing or considering digital service taxes on U.S. tech giants. The levies have been drawn bipartisan criticism. Germany is contemplating a 10% tax on major online platforms, including Alphabet GOOGL GOOG and Meta META. This move could further escalate trade tensions with the U.S.

Earlier in May, the Trump administration had criticized Europe’s digital regulations, arguing that they posed a risk to free speech and American commercial interests. The U.S. State Department had initiated an effort to identify European government attempts to restrict free speech, focusing on the EU’s legislation that sets standards for tech giants to regulate online content.

These developments indicate a growing rift between the U.S. and its European allies over digital taxation and regulation, with the proposed provision in the tax bill potentially escalating these tensions.

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