"REVENGE TAX Withdrawn"—On the Night Trump's "Revenge Strategy" Collapsed, Where is the Global Tax System Headed?

"REVENGE TAX"—The "hammer of revenge" wielded by the Trump administration dismantled the international tax framework built by 140 countries overnight.
Under the evening glow of Washington D.C., with the Capitol dome in the background, President Donald Trump (hereafter referred to without honorifics) introduced "Section 899"—commonly known as the "Revenge Tax," which was retracted in just a few days. However, its aftermath has hollowed out the OECD/G20's agreement on a <15% global minimum corporate tax> that took over a decade to formulate, shaking the financial ministries of various countries and the management decisions of multinational corporations. Below, we explore the behind-the-scenes of the bill, the last-minute G7 agreement, reactions from Wall Street and social media, and the potential future flashpoints from multiple perspectives.abc17news.compolitico.eu

1. The True Nature of Section 899—Retaliate Against "Discriminatory Taxation"

"If foreign countries impose discriminatory taxes on U.S. companies, the U.S. will retaliate with the same rate"—this sentence is the core of Section 899, which was stealthily included in the One Big Beautiful Bill Act. It was a powerful "negotiation card" that designated countries introducing digital taxes or UT-PR (Pillar 2 additional taxes) as "Discriminatory Foreign Countries" and imposed additional taxes of up to 21%.ft.com

2. G7's Sudden Agreement—The Shock of "Excluding Only the U.S."

In the early hours of June 29, a statement from the Canadian chair announced that "U.S. companies are exempt from the minimum tax rate." Italy's Finance Minister Giorgetti called it an "honorable compromise," with countries seemingly conceding out of fear of the "activation of Section 899." The U.S.'s quid pro quo was a post for Treasury Secretary Bessent to request the withdrawal of Section 899.politico.eu

3. Wall Street and the Real Economy—Relief and Caution

Citibank's credit note assessed that "the worst capital flight scenario was avoided." Meanwhile, JPMorgan warned that the market capitalization of European-listed companies, totaling 2.1 trillion euros, remains "exposed to political risk." Domestically, a conservative think tank pointing out a is concerned about the "twin deficits," and fiscal conservatives within the Republican Party may rebel in the final vote on July 4.kiplinger.comft.com

4. The Torrent of Social Media—The Hashtag #RevengeTax Surges

• @SecScottBessent (U.S. Treasury Secretary)

  “We will defend our tax sovereignty and resist extraterritorial taxes.”politico.eu

• @KimGCMoody (Canadian Tax Accountant)

  “Great news… the so-called revenge tax is gone, but vigilance is vital.”x.com

• Dominic Meagher, Economist at Blue Sky

  “Trump has just destroyed decades of work by 140 countries to prevent tax avoidance.”bsky.app

In 24 hours, posts related to #RevengeTax on X (formerly Twitter) surpassed 150,000. On LinkedIn, posts by CFOs of global companies sharing "Tax Plan B" have surged, and consulting firms are launching emergency webinars.

5. Ripples in International Politics—The Next Moves of the EU, Canada, and Japan

EU Commissioner Paolo Gentiloni expressed dissatisfaction with the "unilateral concession," and the French Ministry of Finance hinted at maintaining the "digital services tax." Canada immediately froze its DST bill and signaled the resumption of trade talks with the U.S., but continues to walk a tightrope ahead of the July 9 deadline for tariff increases against the EU.theguardian.com

6. Dynamics Within Congress—Vote Counting Linked to "Medicaid Cuts"

To fill the revenue gap left by the withdrawal of Section 899, Senate Republicans proposed further cuts to Medicaid subsidies. Senator T. Tillis from North Carolina rebelled, calling it a "breach of promise," and announced he would not seek re-election, leaving the fate of the entire bill uncertain.theguardian.com

7. Expert Insights—"Collapse of the OECD Pillar or Renegotiation?"

• Mark Luscombe (Wolters Kluwer)
  "Pillar 2 without the U.S. is dead, and countries will revert to unilateral taxation."

• James Knightley (ING)
  "This is not protectionism but 'negotiation realism.' However, the risk of unpredictability is increasing."abc17news.com

8. Corporate Frontline—The Dilemma of "Transfer Pricing vs. Favorable Nations"

Major multinational corporations like Apple, Meta, and Chevron are considering over . The capital, which dislikes tax uncertainty, is accelerating the "friendshoring" of supply chains.

9. Voices of Civil Society—"Fairness Over Revenge"

A nationwide poll (Gallup, 6/29) shows "support for international minimum tax" at 78% among Democrats and 32% among Republicans. While conservative influencers applaud it as "a restoration of sovereignty before Independence Day," Generation Z criticizes it as "an act trampling on efforts for international cooperation."

10. Future Scenarios and Implications for Japan

1. OECD Renegotiation Scenario
   The G6, excluding the U.S., introduces "mirror tax systems," igniting export subsidies and tariff negotiations.

2. Resurgence Scenario Within the U.S.
   If the Democrats retake the House in the 2026 midterm elections, there is a possibility of reviving Section 899.

3. Digital Tax Multipolarization Scenario
   Japan and Europe enforce GAFA taxes → U.S. retaliates with tariffs → WTO litigation.

For Japanese companies, it is urgent to adopt a three-pronged approach: ① Increase the ratio of production in friendly countries, ② Increase tax reserves for U.S. subsidiaries, and ③ Freeze plans to implement OECD Pillar 2 compliant systems. The Financial Services Agency should expedite the revision of BEPS response guidelines.