Trump’s ‘One Big Beautiful Bill’ Rewires American Tax—and Sparks Global Blowback
The Fourth of July Fiscal Firecracker.
By Karan Bir Singh Sidhu
Retired IAS officer and former Special Chief Secretary, Punjab. An alumnus of the University of Manchester (MA Economics), he writes from a uniquely Indian vantage point on global geostrategy, world trade dynamics, and international taxation.
Independence Day, Trump Style
On July 4, 2025, President Donald Trump marked America’s Independence with a fiscal revolution. Standing on the South Lawn, he signed into law the $4.5 trillion “One Big Beautiful Bill Act,” a sweeping tax overhaul that reshapes who pays, who benefits, and who bears the long-term burden. Described by Trump as a “gift to working Americans,” the legislation makes permanent the 2017 tax cuts, lavishes fresh relief on high-income earners, expands deductions for businesses, and guts clean energy incentives—while pushing the projected federal debt past $41 trillion by 2035. Beyond its domestic reverberations, the bill landed with a geopolitical jolt, coinciding with the BRICS summit in Rio and fanning the flames of Trump’s renewed tariff offensive.
Core Ingredients: What the Bill Contains
Individual Relief:
The Trump-era tax brackets (ranging from 10% to 37%) are locked in permanently.
The standard deduction rises to $16,000 for individuals and $32,000 for married couples. Seniors get an additional $6,000 write-off through 2028.
Income from tips (up to $25,000), overtime (up to $12,500), and even Social Security benefits are now exempt from federal taxes.
Business Bonanza:
Small business owners benefit from a permanent 20% deduction on qualified business income.
100% bonus depreciation returns, allowing full write-offs of new capital equipment.
Research and development expenses can once again be deducted in the year incurred.
Auto-loan interest on U.S.-made vehicles is now deductible up to $10,000.
Support for Families:
The child tax credit is raised to $2,200 per child through 2028.
Parents of newborns receive $1,000 in tax-free “Trump Savings Accounts.”
Even non-itemizers can claim charitable deductions—$1,000 for individuals, $2,000 for couples.
SALT Relief: A Sweetener for High-Tax States
One headline reform is the significant easing of the SALT (State and Local Tax) deduction cap. Previously limited to $10,000 under the 2017 rules, the new law raises the cap to $40,000 through 2029.
This change allows taxpayers in high-tax states like New York, California, and New Jersey to deduct more of what they pay in state income and property taxes from their federal returns. In effect, it lightens the federal load for upper-middle-class earners in those regions—though critics argue it disproportionately benefits the wealthy.
Borrowing Bigger: The Cost of Generosity
To finance these expansive tax cuts, the bill hikes the federal debt ceiling by $5 trillion. While Republicans promise future spending discipline, the Congressional Budget Office estimates a $3.3 trillion increase in the federal deficit over the next decade.
Savings are projected to come largely from cuts to Medicaid, food stamps, and the clean energy sector. The result is a lopsided fiscal trade-off: immediate tax relief now, with the cost passed to future generations.
Who Gains, Who Loses
Winners:
High-income earners enjoy tax relief via permanent bracket cuts and higher SALT caps.
Small businesses and gig workers benefit from deductions and tax-free income on tips.
Retirees receive enhanced deductions and no tax on Social Security income.
Losers:
Low-income Americans face reduced access to Medicaid and food assistance.
Clean energy companies suffer from the abrupt removal of EV and solar credits.
NRIs and legal immigrants face a new 1% tax on remittances to countries like India, and rollbacks in immigrant healthcare eligibility.
Musk’s Meltdown: The Billionaire Rebellion
Elon Musk, once a Trump ally, is now a vocal critic. The elimination of EV credits directly strikes Tesla’s business, while the broader anti-green tilt undermines Musk’s climate agenda.
After calling the bill “fiscally reckless and environmentally disastrous,” Musk hinted at launching a third political party— America Party— to challenge Trump-aligned Republicans in 2026. The feud escalated when Trump suggested reviewing federal subsidies to Musk’s companies—blurring the lines between policy and personal vendetta.
The Global Context: BRICS and Tariffs
Trump’s tax fireworks coincided with the BRICS summit in Rio, where emerging powers condemned U.S. tariffs and dollar dominance. India, a key BRICS member, backed moves toward alternative settlement systems—a sign of shifting economic loyalties.
In response, Trump threatened a blanket 10% tariff on any country aligning with “anti-American trade blocs.” That includes India, Brazil, and even long-time U.S. allies now exploring BRICS partnerships.
The Tariff Blitz
Trump's trade crusade is gathering force. Fourteen nations, including Japan and South Korea, face new import duties of up to 40% starting August 1. Analysts warn this could push the U.S. toward the highest average tariff rate since 1934—and disrupt global supply chains already under stress.
Implications for India and NRIs
For India:
Trump’s 10% “BRICS penalty tariff” could hit Indian exports ranging from pharmaceuticals to auto parts.
Lower U.S. remittances—India's largest foreign exchange inflow—may suffer due to the new tax on outbound cash transfers.
For NRIs:
The 1% remittance tax, though scaled down from earlier drafts, still bites. H-1B holders, green card applicants, and others sending money home will pay extra—up to $120 annually for those remitting $1,000 monthly.
Healthcare cuts disproportionately affect Indian immigrants awaiting eligibility under federal plans.
A Fork in the Fiscal Road
Trump’s “One Big Beautiful Bill” is more than a tax code tweak—it’s a declaration of economic intent. Its domestic message is clear: cut taxes, cut programs, and reassert American production and manufacture.
Globally, it aligns with Trump’s broader posture: confront rivals, tax allies, and disengage from multilateral norms. Whether this will deliver growth or backfire through inflation, debt, and global retaliation remains to be seen.
For India and its global diaspora, the new American playbook is unmistakably transactional. As global economic power balances shift, New Delhi must tread carefully, even as millions of NRIs recalculate the cost of their American Dream.
In a world now divided not by ideology but by taxes, tariffs, and technocrats, the “beautiful” bill may be remembered less for its ambition—and more for the friction it generated.