Congressional Republicans are about to pass a new tax and spending bill that could become a “big and beautiful bill,” but mostly for wealthy Americans.

Republicans, who are majority in both the House and Senate, are working to pass one big beautiful bill law established in 2017 that is set to deliver a permanent, massive tax cut.

Republicans say the new bill will “reduce spending on families and job creators and cut taxes forever,” and ultimately “the government works more efficiently and effectively for all Americans,” House Speaker Mike Johnson said after the bill was passed.

However, the biggest deduction is ultimately sent to the wealthiest Americans. The wealthiest Americans will stand to save hundreds of thousands of dollars in taxes a year if the 2017 tax cut is permanent.

For most Americans, the 2017 Tax Cuts and Employment Act (TCJA) reduced taxes slightly after standard deductions and rates for most tax ranges were reduced. The bill also raised the child tax credit from $1,000 to $2,000 per child.

The bill was a huge boon for wealthy Americans who saw massive savings after the tax cuts. The bill established a 20% deduction of revenue through certain business entities known as pass-through entities, including LLCs and partnerships. It also doubled the real estate and gift tax exemptions of between $5.5 million and $11.2 million per person. This is primarily aid to wealthy families.

This bill cuts taxes even among the wealthiest Americans in the highest portion of the top income bracket, meaning that Americans in the top 0.1% percentile of earners are saving much more than low-middle or middle-class Americans.

The controversial cuts in the corporate tax rate, which have fallen from 35% to 21% since the tax cut was passed, will also be permanent with the new bill.

Corporate tax rate reductions are spending billions of dollars in revenue losses from the federal government. From 2018 to 2021, top US companies saved a combined $240 billion in taxes following the cut, according to an analysis by the Institute for Tax and Economic Policy Research.

Trump defended corporate tax cuts in 2017, saying it was “great for middle-income people and jobs,” meaning businesses will use their tax savings to invest in more workers and higher wages.

However, some economists say the tax cuts have done little to help the middle class. Two years after the cuts were passed, wage growth slowed in 2019, with slightly growing due to workers inflation and high demand shortly after the pandemic.

Meanwhile, companies have spent much of their savings buying back on shares when they bought their own shares, a move that would benefit shareholders more than ever before.

Last year, Goldman Sachs estimated that the first share buybacks this year would reach $10 as stock buybacks grew. An analysis from the Groundwork collaboration of the Progressive Think Tank found that 11 top consumer goods companies, including Procter & Gamble, Pepsico and General Mills, have spent $463 billion in stock buybacks since 2017.

As for the economy as a whole, economists say much of the government’s revenue growth could be attributed to inflation and recovery from the pandemic recession seen in the US stock market, rather than the 2017 tax cuts.

“In general, the economy has not shown any dramatic changes as a result of the tax cuts passed in 2017,” said Joseph Rosenberg, a senior fellow at the Centre for Tax Policy. “Most of the quality evidence we have suggests that the impact on the economy was relatively modest.”

Estimates say the tax cuts will cost the federal government 4.6 tons of loss in revenue over the next decade.

To offset the costs of tax cuts, Republicans are cutting back on major government assistance programs and cuts and cuts that Republicans say will save 1TN to the federal government. The more stringent work requirements of the Medicaid and Supplementary Nutrition Assistance Program (SNAP) programmes result in fewer people accessing government health insurance and food assistance.

The bill is set to end the Clean Energy Tax Credit passed under the Biden administration, which encourages businesses to use carbon-free energy sources and strengthen production of clean energy technologies.

Trump also said his tariffs would bring “trillions of trillions of dollars to cut our taxes and pay back our government bonds.” Estimates show that all Trump’s announced tariffs will only bring an estimated 3.1 tonnes over the next decade, including suspended retaliatory tariffs. Universal tariffs of 10% generate $217 million in revenue.

However, tariffs are also a form of tax on the majority of American companies importing goods from overseas. Over the past few months, businesses including Walmart and toymer Mattel have said they will ultimately have to hand over some of the tariff costs to consumers.

An analysis from Yale Budget Lab estimates that when prices rise, the average American consumer spends $2,800 on tariffs. Those at the bottom of the income distribution could lose $1,300.

Democrats, along with Senate minority leader Chuck Schumer, have universally criticised the bill and denounced it as a “cruel and dangerous plan,” which is particularly harmful to working-class families affected by Trump’s tariffs.

“It’s really obvious that this bill is financially irresponsible and regressive,” said Daniel Hornn, former deputy director of Biden’s National Economic Council and a senior fellow at MIT. “People who earn less than $50,000 a year will actually see their income drop, primarily funding tax cuts for high-income people.”

The European Union’s trade chief threw a rebellious tone after Donald Trump threatened to place 50% tariffs on all goods from the bloc.

The US president made his announcement after expressing his dissatisfaction with the pace of progress in trade deals with the EU. The new rates will take effect from June 1st.

EU trade commissioner Malossyvchovich posted to X after a call with US trade representative Jamieson Greer and Secretary of Commerce Howard Lutnick.

“The European Commission is ready to work in good faith. The EU-US trade is unparalleled and must be guided by mutual respect rather than threats. We are ready to protect our interests.”

Trump had posted on Truth Social, a social media website he owned.

He went on to claim that there was a trade deficit of $250 million a year with the EU. “Our discussion with the EU is not going anywhere,” he said. Previously, he added that there are no duties on products built or manufactured in the United States.

Trump later told reporters: “I’m not looking for a deal – we set up a deal,” he said immediately, adding that a major investment in the US by a European company might delay him.

The EU is one of the largest trading partners in the United States, sending over $600 million (528 billion euros, £443 billion) last year, buying $370 billion worth of it.

The US has imposed a 20% “mutual” rate on most EU goods since April 2, but after a week they cut them in half to allow trade consultations. It maintains a 25% import tax on iron, aluminum and vehicle parts, threatening similar movements on pharmaceuticals, semiconductors and other goods.

At the same press conference, Trump said it could add a 25% tax to all Apple and Samsung phones purchased by US customers. It will take place at the end of June, he said. His comments fell into leading US stock indexes and European stocks, the Associated Press reported.

European politicians said they were disappointed with the news of further tariffs from the US. French trade minister Laurent Saint Martin said Trump’s new threat had nothing to help negotiate.

“We’re keeping the same line: de-escalation, but ready to respond,” he wrote to X.

Italian Foreign Minister Antonio Tajani told ANSA News Agency that the target remains “a tariff of zero.”

Speaking to a reporter in The Hague, Dutch Prime Minister Dick Schuf supported the EU’s trade talks strategy and said the EU is likely to see this latest announcement as part of negotiations. “We’ve seen before that tariffs can go up and down in meetings with the US,” he said.

Mishal Martin of Ireland’s Taoisiech said Trump’s proposal was “very disappointing.” He continued: “It was clear in my view that tariffs are always causing damage to all aspects.”

In a statement posted to X, he said: “Taxes at the suggested level not only push prices up, they seriously undermine one of the world’s most dynamic and important trading relationships, but disrupt the wider global trade.

“We don’t have to go down this path. Negotiations are the best and only sustainable way.”

German MEP Bernd Lange, head of the EU’s trade committee, threatens to apply a counter-attack against the United States. “We will not allow ourselves to put pressure on ourselves and will try to start negotiations objectively next week,” he said in a comment reported by the German newspaper Die Welt. “If negotiations fail, the European Union is strong enough to implement measures such as rebuttals to offset the economic damage.”

Donald Trump calls his tax and spending plans “big and beautiful,” calling for a first generation opportunity to strengthen the prosperity of the US economy. The bond market disagrees.

After the chaos was unleashed by the tariff announcement last month on “liberation day” in the latest showdown with Wall Street, global financial markets are rattling once more by the US President’s one big beautiful bill law. Plans to hit the EU with 50% tariffs on all import duties have been added to investors’ headaches.

Reflecting growth, yields are actually threatening to increase interest rates by more than 5% on 30 years of US government bonds, reaching their highest level in 18 years. Meanwhile, Moody’s, a major credit rating agency, relied on large investors last week.

The heart of concern is that implementing the US so-called “twin deficit” position (when public spending exceeds revenue) and the trade deficit (when imports exceed exports) will expand Trump’s policies and put the US economy in a recession.

Mark Dowding, chief investment officer of hedge fund RBC Bluebay Asset Management, said the president appears to be happy with “serene and carrying” despite increasing investor anxiety.

“Laffer Curve Economics has influenced thinking in the US and has encountered an increasing number of skepticism by bond market investors interested in an astounding increase in bond trajectories,” he said. “Essentially, Washington dumped the gauntlet into the bond market.”

Under one big beautiful bill law, Trump first introduced in 2017 but expired at the end of 2025, which extended the trillion dollar tax cuts, offset by controversial cuts to some Medicaid spending areas, including the low-income health care system.

The Non-Participant Committee for Responsible Federal Budget estimates that the measure will increase the US annual deficit to 2.9TN (2.1TN) by 2034 (6.9% of US GDP), or 3.3TN (7.8% of GDP) if time-limited policies are permanently implemented.

Running these massive annual deficits was added to the US unpaid debt pile, which was 28.2TN (97.8% of GDP) in 2024, and was already on track to reach nearly 50 or more by 2034 (117% of GDP).

However, Trump’s action could add another 3.3tn in 2034, which would be 125% debt-to-GDP ratio or 5.2TN (129%) if made permanent.

Economists discuss the risks of high debt levels. In some countries, debt ratios above 100%, including Japan, are above 260%, and there are no accurately agreed risk zones. Unlike households, the government has the power to print currency, change tax and expenditure plans, and set laws. It’s pointless to compare it to family credit cards that make the most of it. Borrowing can help the government if it laid the foundation for strengthening future economic growth.

However, a sustained deficit and growing debt levels could erode investors’ confidence in the country’s ability to successfully make IOUs. This can further boost borrowing costs as investors demand higher premiums. Higher interest rates push up debt guarantee bills, but large amounts of debt can “crowd” more productive private investments in favor of government bond parking cash.

For decades, the US has enjoyed cheaper borrowing costs than many other countries, especially given the annual deficit that has become known as Washington’s “exorbitant privilege” and the scale of its vast unpaid debt pile.

But investors are warning that they have run out of patience. Trump’s increasingly unstable policymaking is because he abandons the postwar consensus that buying US assets is the safest place to put your money in.

Trump can argue that his tariff policies will bring in revenue to offset the costs of tax cuts, and that his vast giveaways could stimulate economic spending by putting more money into businesses and consumer pockets.

However, non-partisan tax foundation think tanks believe that if US tariffs are permanently enforced, they could raise 2.1TN between 2025 and 2034, but are expected to be reduced by 0.6% before retaliation measures are considered.

“Our borrowing concerns will not go away, and the irony of all the worries about tax and spending bills is that there will be little concrete differences in economic growth over the next few years,” an analyst at ING Bank wrote to the client.

Conversely, ThinkTank says Trump’s tax cuts could increase long-term GDP by 0.6%, but it costs $410 million in revenue forgotten over the same period.

The bond market has a turnover, but it also affects the world as a whole. This is because the US bond market serves as a key reference point for other securities around the world. In other words, rising US borrowing costs drag the interest rates of other governments higher.

In the UK, 30-year bond yields have reached a high since the late 1990s this year, increasing complications for British Prime Minister Rachel Reeves by boosting debt services costs.

Borrowing costs have risen in Japan amid concerns about inflation and amidst the country’s central banks involved years of slow monetary policy. As the US Treasury’s largest foreign holder, investors may start withdrawing money from the US market in favor of rising domestic bond yields.

After the rapid growth of government debt levels around the world, after the 2008 financial crisis, the community pandemic and the economic shock of the current Trump trade war, the challenges are only increasing.