Business leaders converge on Washington to halt Trump's foreign investment tax

Irish Times

2 days ago

Dozens of executives from some of the world's biggest companies will travel to Washington this week to push back against a plan to raise taxes on foreign investments in the US, warning it may hit millions of American jobs.
The lobbying drive is targeting a provision in
Donald Trump
's budget bill, which if approved by Congress would allow the US to impose additional taxes on companies and investors from countries that it deems to have punitive tax policies.
Investors, US companies with foreign owners and international firms with American operations, could all be affected by Section 899 of the bill, which executives fear could cause a drop in corporate investment and a retreat from US assets.
Jonathan Samford, president of the Global Business Alliance, told the Financial Times that representatives from about 70 companies would meet members of Congress this week and Section 899 would be 'a central topic'.
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The threat of higher taxes has unsettled the lobby group's almost 200 foreign-owned companies in the US, which include most of the big pharma and medical device companies that have significant operations in Ireland as well as CRH, Guinness parent Diageo, Jameson parent Pernod Ricard and Kerry Group.
Many of them fear a hit to the 8.4 million jobs they provide in America.
'I think there is growing momentum to get rid of this provision in the Senate,' said Mr Samford. 'Senators recognise that it's counterproductive to the economic vision for the administration, which has made a big point about trying to get more investment to the US.'
A leading financial trade association is also planning for its members to travel to Washington this week to meet treasury officials and Republican members of the Senate banking committee to argue against Section 899.
Beth Zorc, chief executive of the Institute of International Bankers (IIB), said: 'As passed by the US House of Representatives, Section 899 will stifle foreign direct investment, risk financial market disruptions and endanger American jobs in states and communities across the country.'
The US operations of foreign banks underwrite more than 70 per cent of debt issuance for foreign companies in the US, representing almost a third of total dollar-denominated debt issuance, the IIB said.
The foreign banks said they lent more than $1.3 trillion (€1.14 trillion) to US companies in 2023 and their financing of international companies supported $5.4 trillion of foreign direct investment in the US by foreign headquartered companies, generating $270 billion of revenue.
The IIB, which represents some of the world's biggest banks including HSBC, BNP Paribas, Royal Bank of Canada, UBS, Bank of China and Mitsubishi UFJ Financial, as well as AIB and Bank of Ireland, is expected to push for a one-year delay to the tax rises and for a reduction in the scope of the measure.
'We encourage the Senate to address concerns about this provision and to consider modifications that will help preserve international investment in American jobs and businesses,' Ms Zorc told the FT.
The measure targets countries with what the US calls 'unfair foreign taxes'. Most EU countries, the UK, Australia, Canada and others around the world would be affected, according to law firm Davis Polk.
For foreign investors, Section 899 would increase taxes on dividends and interest on US stocks and some corporate bonds by five percentage points every year for four years. It would also impose taxes on the American portfolio holdings of sovereign wealth funds, which are at present exempt.
Republicans in Congress have searched for ways to keep the cost of Trump's 'big, beautiful' tax bill down; Section 899 would raise $116 billion over the next decade, according to the non-partisan joint committee on taxation. Still, the overall bill would add $2.4 trillion to the US debt by 2034, according to the Congressional Budget Office.
Jason Smith, the chairman of the tax-writing House ways and means committee, said recently that he hoped Section 899 was not imposed because other countries would change their laws in response.
'A big concern is that foreign governments, based on agreements entered by the Biden administration, are trying to suck away billions of dollars from US companies,' said Mr Smith.
'This is a way to help put them in check so that they understand that if they do that to US businesses, there will be consequences for their actions. Hopefully it'll never take effect.' – Copyright The Financial Times Limited 2025