Tensions are rising around the U.S. budget. Treasury Secretary Scott Bessent has formally urged Congress to remove Section 899 from President Trump’s latest budget proposal — a controversial clause that could strain foreign investment and rattle financial markets.


🔹 What’s the issue?

Section 899 would allow the U.S. government to impose additional taxes on companies and investors from countries that implement stricter tax policies under international agreements, particularly the OECD’s global tax deal (known as Pillar Two). Originally conceived as a countermeasure to protect U.S. multinationals, Bessent now says it’s no longer necessary.


🔹 Why the concern?

Wall Street is alarmed. Financial giants warn that a retaliatory tax could discourage foreign direct investment and make the U.S. less attractive to global capital. Some even fear it could trigger an outflow of money. And confidence among international investors is already weakening.

Bessent points out that the U.S. has since reached agreements with G7 nations, making the original retaliatory rationale obsolete. The OECD’s Pillar Two — which aimed to impose a 15% global minimum corporate tax — no longer applies to American companies. Therefore, foreign governments cannot use those rules to extract extra taxes from U.S. firms.


🔹 Trump pushed for the tax — Bessent now backpedals

The clause was first proposed during Trump’s initial term as a form of "tax defense" against the EU and OECD’s international tax push. But today, Bessent says the threat is gone and so should be the rule.

“The G7 agreement provides greater certainty and stability for the global economy,” Bessent wrote on X. “It will boost growth and investment both in the United States and abroad.” He called on Congress to strip Section 899 from the “big, beautiful budget.”


🔹 Even Republicans have doubts

Even within Trump’s own party, cracks are appearing. Some GOP lawmakers in the House have expressed concern that the tax is too risky. Bessent’s intervention offers them the political cover they need to back away from the clause.

Trump aims to sign the budget package on July 4th — a symbolic Independence Day win. Republicans are scrambling to finalize the legislation, which includes extensions of the 2017 tax cuts and new benefits for middle-income Americans ahead of the 2026 election season.


🔹 Foreign investors are watching closely

Investors are on edge. Earlier this year, demand for U.S. government debt began to wane — a trend many blame on Trump’s tariff threats and fiscal uncertainty. Section 899 could make things worse.

One of the loudest critics, Jonathan Samford of the Global Business Alliance, said:

“This is what leadership looks like — choosing economic strength over missed opportunity, investment over isolation, and American workers over misguided tax hikes.”


🧠 Summary:

After a diplomatic breakthrough with the G7, the U.S. is walking back its retaliatory tax policy. Bessent’s move could protect market stability and foreign investor trust. Now it’s up to Congress to act before confidence erodes further.



#USCongress , #TaxPolicy , #WallStreetNews , #ScottBessent , #USPolitics

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