Trump Smashes the Biden-EU "Global Minimum Tax"
The EU plan, signed off by the Biden Administration, would have prevented future Presidents from cutting taxes, and allowed foreign governments to raid U.S. companies.
by Rod D. Martin
January 24, 2025
In a decisive break with the prior Administration, President Donald Trump has decisively dismantled the Biden-EU "Global Minimum Tax" agreement.
Yes, you heard that right: a Global Minimum Tax, a scheme so radical that even the Obama Administration took a pass.
The agreement, reached in 2021 between European leaders and then-Treasury Secretary Janet Yellen, aimed to establish a 15% minimum global tax rate for multinational corporations. It sought to prevent “a race to the bottom” in corporate taxation, which is to say, tax competition between countries that might reduce the size and power of government. Want to vote for tax reform and job growth? Sorry, you can’t do that anymore.
To Democrats, like their Eurosocialist counterparts, that was a feature, not a bug. Henceforth, the tax debate would be off the table, and one of Republicans’ main issues eliminated forevermore. From now on, government could not shrink. But rest assured, future agreements would make sure it would grow.
At a more basic level, the deal disproportionately impacted American companies by allowing foreign governments to tax them at higher rates. Why? To make sluggish EU countries more competitive, not by improving themselves but by tearing down America; and also, to allow the Eurocrats to raid American corporate purses at will.
Fortunately, Biden’s attempt to implement this nightmare without full Congressional approval was met with resistance. Congress never passed the plan, leaving it in the nebulous realm of executive action.
And then we had an election. And as Obama once said, “elections have consequences”.
Acting on his strong America First mandate, Trump took swift action to stop this travesty. He issued two executive orders declaring the global tax deal "has no force or effect" in the U.S. and withdrawing America from the agreement.
The President further directed the U.S. Treasury to explore "protective measures" against countries with tax policies that could unfairly disadvantage American companies. In other words, a complete 180.
This was a clear message to international partners: the U.S. will no longer tolerate tax policies that disadvantage America, its companies, and its workers. But it's also one part of a much broader counterrevolution against the left’s willful, intentional destruction of national sovereignty and the power of the elected branches.
Trump’s tariff threats? Same thing. Trump’s demand to renegotiate the USMCA? Ditto. Trump’s call for NATO countries to spend 5% of GDP on their own defense? Likewise.
In each of these cases, America’s Cold War strategy was quite intentionally to subsidize our allies, keeping them in the fight against the Soviets, propping them up against internal threats (from Eurocommunism to the Red Brigades) at a time when they were far weaker thanks to the devastation of World War II, and tying them tightly to the U.S. market through lopsided trade deals.
That made a lot of sense, in 1945, or even 1985.
But the Cold War is over. It has been for 35 years. And the Deep State bureaucrats who run America’s foreign policy establishment are locked in a combination of nostalgia and inertia.
By contrast, Trump understands that all of our allies need us more than we need them. The American market is vast, the dollar actually is dominant (no matter what the failing BRICS may hope), and Americans profit far less from exports than any of its trading partners.
Oh, and they pay about 1/4 what Americans do for defense. Meaning they’re freeloading, and we’re indirectly subsidizing their labor unions, welfare states, and exports to the U.S.
Am I suggesting we abandon our allies? As the Apostle Paul might say, “May it never be!”
But I am saying that no-longer-flattened First World countries ought to carry their share of the collective burden. They also ought to enter new, fairer trade deals with us. The American worker has paid their bills too long.
Understood in this light, the "Global Minimum Tax" is even more egregious. It allowed EU nations (but certainly not only them!) to siphon off American companies’ profits under the guise of “tax equity”. Follow every U.S. rule and earn a lower tax bill this year? Whack! Germany, or Greece, will take whatever they consider “your fair share” on top of that, no matter what your expenses or deductions turned out to be.
This isn’t “tax fairness”. It’s just confiscation. It’s certainly a gross infringement on American sovereignty. But more immediately, it’s a legal means for allowing foreign governments to subsidize their struggling economies and massive welfare states at the expense of American innovation and enterprise.
“Well so what?” you might say. “Those fat cats can afford it!” But it’s never the fat cats who pay (well, unless you’re Elon). It’s the workers here at home who’d face layoffs, and the consumers here at home paying higher prices for American goods and lower prices for foreign exports.
Trump isn’t having any of it. In his executive orders rescinding the agreement, and in his speech yesterday to the World Economic Forum in Davos, the President sent a clear message to Europe: "Touch our companies, and there will be consequences." His EOs voided Yellen's agreement, set up mechanisms for retaliation against foreign tax grabs, and most importantly, protected American businesses from being the cash cows of foreign governments.
This includes the nuclear option: invoking Section 891 of the U.S. tax code, which allows for the doubling of tax bills on foreign companies whose home countries engage in tax practices detrimental to American businesses. This approach is proactive: it ensures that any attempt to exploit U.S. companies through foreign tax policies backfires.
The Europeans are panicking, and rightly so. They thought they had a done-deal with Biden, and that Trump was done and gone. But the reports of Trump’s death were greatly exaggerated. And the President has shown that America will not be tied down like Gulliver with the Lilliputians by any such schemes.
The global minimum tax was never about fairness. It was about stealing from American companies, funding EU bureaucracy, and killing U.S. competitiveness. Europe's struggling economy was looking to raid American success stories rather than fixing their own issues. And by limiting the powers of Americans to assert their own priorities at the ballot box, it sought to increase the power of the Transatlantic Elite, the extended Deep State, at your and your family’s expense.
Trump's move has forced these Eurocrats into a corner. They’re going to have to either compete fairly or face the brutal economic consequences of their actions.
And in a fair world, like the Lilliputians, they know they cannot compete.
See the article that got 20 million views on X this week:
👏👏👏👏- for your reporting, Trump and his advisors. Unfortunately, both as Fed Chair and Treasury Secretary Janet Yellen’s pay grade was well above her ability level. Like so many educated, informed and supposedly intelligent people, even if she had good intentions ( and her global counterparts clearly did not) she only considered the first order effects of such a systemic change in the complex world of global economics , rather than the second and third order effects which would inevitably occur before a probably greatly inferior equilibrium occurred . Need an example - just look at the unintended consequences which have occurred since the formation of the EU. Now every member suffers from Eurosclerosis, not just the most socialist regimes there. All of Europe is mired in low growth and is experiencing voter backlash.
Lilliput was not a fair world. Neither will be Brobdingnag