Cailian Press, July 5th (Editor Xiao Xiang)
According to reports, on July 4th local time, President Donald Trump signed the “Big and Beautiful” tax and spending bill, making it effective.
Before this, on the afternoon of July 3rd, the House of Representatives had passed the bill with a vote of 218 in favor and 214 against. The bill was also approved by the Senate earlier on July 1st.
The “Big and Beautiful” bill is a landmark legislative agenda launched by Trump at the beginning of his second term in 2025.
The main content of the bill includes extending the corporate and individual tax cuts introduced by Trump during his first term in 2017, exempting tips and overtime pay from taxation, among other provisions. Its core clause is to reduce corporate taxes.
Of course, Republicans have not only included tax measures in this bill but also ventured into healthcare, military spending, immigration, and other priorities within such an “unbreakable” legislation.
This strategy seems to have ultimately achieved “success” in the legislative voting process in both houses of Congress. With enough “sweeteners” included in the bill, Republicans overcame conservative criticism of budget deficits and middle-ground concerns about too severe cuts to the social security system.
However, the bill has also been controversial due to its impact on federal aid reductions, long-term debt increases, and tax cuts for the wealthy and large corporations. Many industry insiders have pointed out that this bill has led the United States down a new, more dangerous fiscal path. According to preliminary analysis by the U.S. Congressional Budget Office, the bill will increase the U.S. deficit by approximately $3.3 trillion over the next decade and reduce national tax revenues over several decades.
It’s worth mentioning that the long-term radiating effect of the “Big and Beautiful” bill on various industries in the United States is undoubtedly significant.
The final version of the bill provides significant tax advantages for certain industries, while simultaneously reducing preferential policies for other sectors. Despite being a core focus of the healthcare subsidy program and state and local tax reductions, many industry sectors have also been impacted by the bill.
Below is an analysis from the industry perspective on some winners and losers in the American capital market due to the “big and beautiful” bill:
The “big and beautiful” bill stipulates that chip manufacturers setting up new factories in the United States will enjoy a tax credit increase from 25% to 35%. Projects eligible for this benefit must commence construction before the end of 2026. This initiative is part of the Trump administration’s efforts to promote the localization of key technologies in AI. Many industry insiders expect that companies like Intel and Micron Technology could benefit from expanding their manufacturing scale within the United States.
The “big and beautiful” bill includes provisions to restart oil and gas block leasing auctions in Alaska, the Gulf of Mexico public lands and waters, and across multiple western states, restore lower royalty rates, and increase subsidies for carbon capture and reuse projects in oil extraction. Oil and gas producers will also be able to deduct certain drilling and development costs. Several oil and gas industry lobbying groups have described the bill as a “home run” (a major victory).
The “big and beautiful” bill contains $12.5 billion in funding to modernize air traffic control systems in the United States. Airlines executives generally support the plan, having previously pointed out outdated facilities as the root cause of flight delays. Industry organizations view this bill as a significant initial investment, but emphasize that achieving system-wide modernization still requires billions more in funding.
The “big and beautiful” bill retains and expands existing tax incentives for commercial real estate investors and developers.
This includes a “Reward Depreciation” policy, one of the distinctive features of the tax reform bill passed in 2017—allowing real estate companies to deduct 100% of various property improvement costs. The bill also permanently incorporates tax incentives for investment in “opportunity zones” for real estate development projects into the tax code. The construction of affordable housing is also expected to be boosted. The bill expands the low-income housing tax credit program by 12%, which can fund approximately 50,000 new housing units annually.
Under the “Big and Beautiful” bill, within the next five years, the Pentagon will invest about $150 billion in large-scale projects such as shipbuilding, ammunition production, and missile defense systems, including paying an initial amount of approximately $25 billion for the planned “Golden Dome” anti-missile system. Defense and military enterprises like Lockheed Martin and Palantir Technologies may benefit from this.
Affected by the “Big and Beautiful” bill, private student loan institutions like SoFi might benefit from the reduction in the federal student loan cap. The new rule lowers the maximum federal loan limit for graduate students to $100,000, down from $138,500; and limits for loans for medical schools and other professional programs are also reduced to $200,000, down from $224,000. The reduction in loan limits could prompt more students to switch to private lenders to fill funding gaps.
Under the “Big and Beautiful” bill, businesses will enjoy a series of tax incentives aimed at stimulating domestic manufacturing in the United States—with full tax deductions on factory construction costs starting from January 19, 2025 (the day before Trump’s inauguration), and before they are put into use until 2031. The bill also provides a more permanent and faster deduction mechanism for equipment purchases and research and development costs.
The bill will terminate the subsidy for purchasing or leasing electric vehicles up to $7,500—vehicles purchased after September 30 will no longer be eligible for this discount. This poses a challenge to automakers such as Tesla, Ford, and BMW. These companies have struggled to promote electric vehicles in the U.S. market, with the market share of electric vehicles still hovering around 8% of new car sales. It is worth noting that an earlier version of the bill had planned to retain the subsidy for electric vehicles until 2026.
After the 12-month window period for launching new renewable energy projects ends, developers will no longer be eligible for specific tax credits. American factories producing solar panels and other renewable energy equipment are expected to see an increase in orders in the short term due to developers rushing to launch projects before the deadline. However, they will then face significant concerns about customer loss. John Gimigliano from KPMG stated, “Renewable energy companies are the biggest losers, expecting billions of dollars in subsidies from Biden’s era to vanish.”
Earlier this week, a provision that might have suspended state-level artificial intelligence regulation for up to 10 years (modified to five years) was removed from the “Bigger, Better, Brighter” bill. AI companies had previously actively lobbied for this ban, arguing that complying with fragmented regulations across states could hinder innovation in the high-risk field of artificial intelligence.
A provision in the “Bigger, Better, Brighter” bill proposes a tiered tax rate based on the wealth of private colleges and universities, with annual investment returns ranging from 8%, 4%, and 1.4% respectively, higher than the current general rate of 1.4%. Smaller colleges with fewer than 3,000 students could benefit from this exemption. The largest losers are expected to be Ivy League schools like Harvard, Yale, and Princeton, which are expected to pay taxes at the highest rate of 8%.
The “Bigger is Better” bill cuts the US National Food Stamp Program (SNAP), which will be bad news for packaged food companies. Over the past few years, large food companies have particularly relied on SNAP beneficiaries’ consumption, and many food companies now list the reduction of this program as one potential reason for a decline in sales. Bernstein analysts estimate that SNAP beneficiaries contribute nearly 9% to the food grocery spending, and food companies like Kraft Heinz and General Mills may be at the forefront if the program is reduced.
The “Bigger is Better” bill eliminates the tax exemption for small packages. In recent years, FedEx, UPS, DHL, and other freight companies have benefited from the booming growth of e-commerce parcels. If costs rise leading to a decrease in consumer demand, the volume of parcels handled by these freight logistics companies could potentially fall. Data from the U.S. Customs and Border Protection shows that it processes about 4 million parcels per day that are eligible for small exemptions.