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A controversial new tax plan tucked into President Donald Trump's sweeping spending proposal is causing a stir on Wall Street and around the world.

Known as the "Revenge Tax", this part of the bill targets foreign countries that place what the Trump administration sees as unfair taxes on US businesses.

The plan, officially called Section 899, allows the US to charge extra taxes — up to 20% — on foreign companies and investors who earn money from the US, Aljazeera said.

This includes income from dividends, royalties, interest, and real estate sales, especially if the company is based in a country labeled "discriminatory" by the US Treasury.

These taxes wouldn't hit all at once. They would start with a 5% increase each year until reaching the full 20%. However, some organizations, like foreign pension funds and charities, would be excluded.

"This revenge tax move will add to economic uncertainty," said Stuart Mackintosh, director of the financial think tank Group of Thirty. "It will stop foreign CEOs from investing — the very thing President Trump says he wants."

Trump's Revenge Tax Targets Foreign Tech Tax Policies

Foreign countries that have adopted digital services taxes or rules targeting American tech giants are especially at risk.

The measure expands taxes on global profits and adds new costs for multinational companies shifting income out of the US.

It also strengthens an existing rule called BEAT (base erosion and anti-abuse tax), which aims to prevent large firms from avoiding US taxes by moving profits overseas.

According to NBC Los Angeles, while Trump's administration says this will bring in $116 billion over the next 10 years, the Joint Committee on Taxation warns it may cause a drop in future tax revenue by nearly $13 billion in 2033 and 2034.

Wall Street didn't see it coming. "Wall Street investors are shocked," said James Lucier, an analyst at Capital Alpha Partners.

The Investment Company Institute also voiced concern, warning the tax could reduce foreign investment in the US.

Some businesses, like Mattel and Stellantis, have already paused financial planning due to uncertain trade rules. Economists say this could worsen if the revenge tax becomes law.

The final decision now rests with the Senate, which is reviewing the bill. Still, House Republicans, including Jason Smith, the Ways and Means Committee Chair, are strongly backing it.

"If these countries withdraw these taxes and decide to behave," Smith said, "we will have achieved our goal."

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