On 3 July, the U.S. House of Representatives passed the “One Big Beautiful Bill Act” by a razor-thin 218–214 margin, one day after the Senate approved it 51–50 thanks to Vice President JD Vance’s tie-breaking vote. The roughly US$3.3 trillion package permanently extends the 2017 tax cuts, boosts defense and border spending, and trims Medicaid outlays along with clean-energy incentives. President Trump plans to sign the bill at the White House on Independence Day, 4 July, bringing it into force and prompting markets to reassess both growth momentum and deficit risks.

(Source: House Speaker Mike Johnson signs President Trump’s flagship bill on 3 July, Associated Press)

Largest Tax Cut in History: Personal, Corporate and “Tip-Tax Relief” All at Once

The bill makes the 2017 individual and corporate tax cuts permanent and adds three new highlights—tax-free tips, overtime-pay relief, and a special deduction for seniors. The Child Tax Credit—originally set to fall back in 2026—is raised and fixed at US$2,200, instead of US$1,000. On the corporate side, it extends 100 % immediate expensing of equipment, the 20 % deduction for passthrough income, and a higher estate-tax exemption. The Trump administration calls the measure a driver of a “blue-collar boom,” and the Treasury hails it as a victory that “prevents the biggest tax hike in history.”

Deficit Gap Widens: Debt May Rise Another US$3.4 Trillion in Ten Years

According to the Congressional Budget Office’s preliminary model, the tax cuts plus new defense, border and agriculture spending will widen the federal deficit by about US$3.4 trillion over the next decade, with the extension of the tax cuts alone slicing revenue by US$4.5 trillion. To balance the books, the bill simultaneously trims roughly US$1 trillion from Medicaid and food-stamp programs; the CBO estimates that 12 million low-income Americans will lose health coverage by 2034. Rating agencies warn that, with outstanding U.S. debt topping US$36 trillion and the yield curve rising again, higher long-term financing costs could swallow the growth dividend from the tax stimulus.

Winners and Losers: Traditional Manufacturing & Defense Heat Up, Clean Energy Cools Down

The bill ends the US$7,500 electric-vehicle credit—originally slated to run through 2032—as well as the US$4,000 credit for used EVs and the commercial-vehicle credit, all to be halted by 30 September. Clean-energy production incentives and transferable tax credits are tightened, and the IRA-era credit-trading mechanism is fully rolled back. By contrast, manufacturing and defense are seen as the biggest winners thanks to 100 % expensing and an extra US$175 billion in border and defense outlays. Hospitals, renewables and the solar supply chain are viewed as the hardest-hit sectors.

Market Reaction: Equities and Treasuries Diverge, Long Yields Lead

After the news broke, the S&P 500 traded in a tight range; banks and industrials ticked higher, while renewables and healthcare lagged. The 10-year Treasury yield jumped more than 12 basis points on expectations of massive bond supply. The dollar index firmed, and gold—on revived haven demand—reclaimed the US$2,330 level. “Short-term thrill, long-term bill” is set to be the market’s main theme.

Political Implications: Brandishing the “Tax-Cut Banner” to Cement Campaign Ammo

Following nine hours of opposition speeches and closed-door “prayer-room huddles” among Republicans, the bill scraped through with zero cross-party support, underscoring Trump’s iron grip on his party. The tax-cut feast helps him court working-class voters while shifting focus onto Democrats’ “high-tax, big-welfare” narrative. Analysts widely believe that, because most benefit cuts are deliberately postponed until 2027, the real pain will surface alongside the next congressional elections—leaving Republicans with valuable bargaining chips.