The Big Beautiful Bill: Trump's Landmark Legislation and Its Implications for EU Companies

On July 4, 2025, U.S. President Donald Trump signed the One Big Beautiful Bill Act into law, a sprawling piece of legislation that consolidates a wide range of his second-term priorities: permanent tax cuts, border security enhancements, military funding, and significant reductions in social safety net programs. Spanning nearly 900 pages, the legislation passed through a contentious 218-214 House vote and a narrow 51-50 Senate vote, with Vice President JD Vance casting the tie-breaking vote. The Congressional Budget Office estimates it will increase the federal deficit by $3.3 trillion over the next decade.

Key Provisions of the Bill

Permanent Tax Cuts

The bill makes permanent the Tax Cuts and Jobs Act of 2017, preserving the 21% corporate tax rate, the 20% deduction for pass-through businesses, and immediate expensing for equipment and R&D costs. It also raises the standard deduction and increases the SALT cap from $10,000 to $40,000 for five years.

Manufacturing and Investment Incentives

Companies can fully expense the cost of new manufacturing facilities and factory improvements in the year of construction, a significant departure from the previous 39-year depreciation schedule. One hundred percent bonus depreciation for business investments is restored retroactively to January 19, 2025, for projects starting before January 1, 2029.

Energy Policy Shift

The bill phases out tax credits for clean energy, including EV subsidies up to $7,500 and incentives for wind and solar projects, by 2027. It introduces new tax penalties on renewable energy projects with supply chains linked to foreign entities of concern, including China, and adds incentives for coal and oil production.

Military and Defense Spending

The bill allocates $150 billion for military enhancements, including Trump's Golden Dome missile defense project. Combined with $350 billion for border security infrastructure, the legislation represents a major reorientation of U.S. federal spending toward national security priorities.

Implications for EU Companies

Manufacturing Investment Opportunity

The full expensing provision for new U.S. manufacturing facilities is a direct incentive for European multinationals to accelerate U.S. capital deployment. Companies like Airbus, Volkswagen, Philips, and Siemens with existing or planned U.S. operations can deduct construction costs immediately, materially improving project economics and shortening payback periods.

Defense Contracting Access

The $150 billion defense allocation creates immediate contracting opportunities for EU defense firms with U.S. subsidiaries. Companies including Thales, Rheinmetall, and BAE Systems are well positioned to participate in missile defense, shipbuilding, and military technology programs that align with the bill's priorities.

Clean Energy Exposure

The phase-out of EV and renewable energy tax credits poses a material risk to EU companies that have oriented their U.S. strategy around the clean energy transition. European automakers and industrial firms with significant EV or solar exposure in the U.S. market will need to reassess their capital allocation and product positioning.

Trade and Tariff Dynamics

The bill relies on an estimated $2.5 trillion in tariff revenues to offset its costs, signaling a continuation of protectionist trade policy. For EU exporters, this reinforces the case for localizing production in the U.S. rather than importing finished goods. The incentive structure increasingly favors EU firms that manufacture in America over those that ship from Europe.

The Big Beautiful Bill will define the U.S. operating environment for at least the next decade. EU companies that understand its incentive structure and adapt their U.S. strategies accordingly will be better positioned to capture its benefits and navigate its risks.