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Business Times
31 minutes ago
- Business Times
Trump signs ‘big, beautiful' bill on US Independence Day
[WASHINGTON] US President Donald Trump signed his flagship tax and spending bill into law on Friday (Jul 4), capping a pomp-laden White House Independence Day ceremony featuring a stealth bomber fly-by. 'America is winning, winning, winning like never before,' Trump said at the event where he signed the so-called 'One Big Beautiful Bill', flanked by Republican lawmakers. The party fell into line and pushed the bill through a reluctant Congress on Thursday, in time for Trump to sign the bill as he had hoped on the Fourth of July holiday marking America's 249th birthday. Two B-2 bombers of the type that recently struck Iranian nuclear sites roared over the White House at the start of the ceremony, accompanied by fighter jets on their wingtips. Pilots who carried out the bombing on Iran were among those invited to the White House event. The passage of the unpopular bill caps two weeks of significant wins for Trump, including an Iran-Israel ceasefire that was sealed after what he called the 'flawless' US air strikes on Iran. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Ever the showman, Trump melded his various victory laps into one piece of political theatre at the ceremony marking 249 years of independence from Britain. The sprawling mega-bill honours many of Trump's campaign promises: extending tax cuts from his first term, boosting military spending and providing massive new funding for Trump's migrant deportation drive. Trump glossed over deep concerns from his own party and voters that it will balloon the national debt, while simultaneously gutting health and welfare support. 'The largest spending cut,' Trump said with First Lady Melania Trump at his side, 'and yet you won't even notice it'. Republican misgivings Trump forced through the 'big beautiful bill' despite deep misgivings in the Republican Party – and the vocal opposition of his billionaire former ally, Elon Musk. It squeezed past a final vote in the House of Representatives 218-214 after Republican Speaker Mike Johnson worked through the night to corral the final group of dissenters. Trump thanked Johnson at the White House event. The legislation is the latest in a series of big wins for Trump that also included a Supreme Court ruling last week that curbed lone federal judges from blocking his policies, and a Nato deal to increase spending. But the bill is expected to pile an extra US$3.4 trillion over a decade onto the US deficit. At the same time, it will shrink the federal food assistance programme and force through the largest cuts to the Medicaid health insurance scheme for low-income Americans since its 1960s launch. Up to 17 million people could lose their insurance coverage under the bill, according to some estimates. Scores of rural hospitals are expected to close as a result. Democrats hope public opposition to the bill will help them flip the House in the 2026 midterm election, pointing to data showing that it represents a huge redistribution of wealth from the poorest Americans to the richest. AFP
Business Times
31 minutes ago
- Business Times
US ambassador says ‘win-win' trade deal with Canada is within reach
[OTTAWA] The US ambassador to Canada gave an optimistic assessment of trade talks between the countries, playing up the odds that a fair deal will emerge soon from negotiations between Donald Trump and Mark Carney. 'We have got two guys that are negotiating for each of our countries,' Pete Hoekstra told an audience during an Independence Day party in Ottawa. 'When they get done, I'm confident that they can both go back to their people and their citizens and say, 'I got a great deal for Canada' – and I think we will have a president who will say, 'I have a great deal for the USA.'' 'That means we have a great win-win.' The US, Canada and Mexico have an existing trade pact that Trump signed during his first term. But the president has sidestepped it and placed import taxes of 50 per cent on foreign steel and aluminium, along with levies on cars and trucks. Canada is a significant exporter of all of those products. The Canadian government has put counter-tariffs on tens of billions of US dollars of US-manufactured items, including vehicles and other consumer products. But Carney, who became Canada's prime minister in March, opted not to retaliate when Trump increased the tariffs on steel and aluminium weeks ago. The two leaders have agreed on a Jul 21 deadline to reach an agreement. 'We are going to get through this,' said Hoekstra, a former member of the US House of Representatives from Michigan, a state that's highly dependent on trade with Canada. 'When we are done, we are going to be stronger and better than what we were when we began.' BLOOMBERG
Business Times
an hour ago
- Business Times
Trumponomics 2.0 will erode the foundations of America's prosperity
Was it just a false alarm? The panic about the world economy that followed US President Donald Trump's 'Liberation Day' tariffs in April has given way to growing optimism. Tariffs' inflationary effect has so far been muted. In private, bosses say they now expect trade fights to produce trade deals, not to be an end in themselves. Surveys show that business and consumer confidence, though low, is improving. The S&P 500 index of stocks has hit a record high. And as we report, the One Big Beautiful Bill Act (BBB) that passed the Senate on Jul 1 looks more like traditional tax-cutting, spending-slashing Republicanism worthy of Paul Ryan or Mitt Romney than it does a Maga (Make America Great Again) fantasy. Suddenly, business leaders are again willing to see Trump as the populist from his first term: a man to be taken seriously, but not literally. Unfortunately, the BBB is likely to cast a shadow over this sunny picture. It illustrates the long-term damage Trump is doing to the foundations of America's economy. Unsustainable The Bill's main effect is to extend the tax cuts from Trump's first term which were due to expire. Republicans paint this as an extension of the status quo. Yet they, like the Democrats before them, ignore the fact that the status quo is unsustainable. Over the past 12 months America's budget deficit has been an astonishing 6.7 per cent of gross domestic product. If the Bill passes, the deficit will remain around that level and the country's debt-to-GDP ratio will, in about two years, exceed the 106 per cent reached after World War II. Revenue from tariffs will help, but not enough to stop the ratio rising – meaning that the drift towards crisis will continue. To the extent the Bill tightens the belt, it does so in the wrong places. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up As life expectancies rise and the population ages, America should trim handouts to the old, for example by raising the retirement age. Instead, pensioners are getting a tax break and Republicans are cutting Medicaid, health insurance for the hard-up. Some sensible measures include reducing the ability of states to game the system for more federal cash. Yet according to official projections, the overall effect will be to add nearly 12 million to the number of Americans without health insurance. That is a scandalous number for the world's richest big country. Many of those who lose coverage will fall foul of new requirements that recipients must work. Such rules have in the past created an obstacle course of paperwork for claimants, while failing to boost employment. More savings come from repealing tax credits for clean energy passed under former president Joe Biden. The credits were littered with protectionist 'buy American' requirements. But because Congress abhors carbon-pricing, nothing will replace them. The country will once again lack a federal policy for decarbonisation, and its greenhouse gas emissions will be greater than they would have been. Trump's nostalgia for fossil fuels ignores the potential of renewables to make energy much more abundant. That is foolish when the race for artificial general intelligence is in part a race for the electricity necessary to train massive models. Even the way the Bill was passed reveals America's creeping dysfunction. The BBB is gargantuan because governing parties very rarely get more than one chance a year to pass a tax-and-spending Bill with just 51 votes in the Senate, rather than the 60 needed to circumvent the filibuster. In such a big Bill, important reforms are poorly scrutinised, and a lot of pork can be used to buy the support of congressmen. Optimists acknowledge some or all of this, but argue that economic growth will wipe out all these worries. Faster growth would ease the burden of debt, benefit the poor through more jobs and higher wages, and make political dysfunction seem economically irrelevant. Sure enough, the administration projects nearly 5 per cent more output over the next four years. Yet it is wrong to expect this Bill to create a growth boom. The tax cuts in the BBB that are already in effect offer little fresh stimulus, and tariffs are an offsetting force. In any case, interest rates are three times their level when Trump last cut taxes and the Federal Reserve is more likely to balance looser fiscal policy with tweaks to its monetary stance. Supply-side tax cuts will help boost investment, but account for just 8 per cent of the total, by cost. Many new tax cuts, including exemptions for tips and overtime, are gimmicks. The administration's deregulation agenda could help, but only on the margins. In fact, America's geyser of debt issuance will increasingly harm growth. In normal times, public debt crowds out private investment, raising the cost of capital for new projects such as data centres. And the costs of a sudden fiscal adjustment, forced on the US by bond markets, would be vast. Goldman Sachs, a bank, reckons that if Congress postpones fiscal tightening for another decade, it may then need to cut spending or raise taxes by an annual 5.5 per cent of GDP to stabilise debt-to-GDP. That is more than the austerity endured by the eurozone after its sovereign-debt crisis in the 2010s. If that proved too hard for legislators, America might resort to tactics used after World War II: inflation and financial repression. Vote-a-rama leads to borrower-drama The BBB's neglect of the long term is part of a wider malaise. Riding high on America's economic might and undoubted negotiating leverage, Trump ignores the foundations of the country's success. He has renewed his attacks on the Fed, adding another threat to economic stability. His defunding of scientific research will harm American innovation. His cavalier approach to the rule of law makes the US a riskier place to invest. And despite the moderation of his trade war, the average tariff rate is still its highest in a century and trade-policy uncertainty is a burden. Even as American assets boom in dollar terms, they have fallen behind when priced in foreign currencies. An 11 per cent fall in the dollar this year reflects long-term risks to the American economy that are real, and growing. ©2025 The Economist Newspaper Limited. All rights reserved
