The Trump administration is backing a provision in the Republican reconciliation bill that would allow the Treasury Department to implement a so-called “revenge tax” on certain foreign investors.

The provision, called Section 899, in the bill first gained steam among Republicans in 2023 as a response to former President Joe Biden‘s endorsement of a 15% global minimum corporate tax rate. It was added to the House’s tax legislation before its passage last month.

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Now that an amended Section 899 has made it into the Senate’s version of the One Big Beautiful Bill Act, foreign companies and financial organizations from Europe, Canada, and beyond have ramped up their lobbying against the provision. The Trump administration argues that it will be a critical tool in Trump’s efforts to reset trade and tax relationships with American partners.

The provision itself allows the Treasury Department to identify countries that levy Digital Service Taxes, Undertaxed Profits Rule taxes, and other deemed unfair taxes on American companies abroad as “discriminatory.” Second, the provision allows the Treasury to raise taxes on income generated inside the U.S. by foreign companies, or domestic companies with foreign ownership, on an annual basis with an eventual cap of 15%.

Andrew Lautz, the associate director for the Bipartisan Policy Center’s Economic Policy program, told the Washington Examiner that, despite concerns raised by foreign financial groups, Section 899 certainly aligns with Trump’s overall economic theory.

“I think it’s fair to see [Section 899] as a complement to where Republican policymakers and where the Trump administration have been going on tariff policy and the U.S. relationship with other nations,” he said in an interview. “It’s definitely a part of that story. If you go back to the Teddy Roosevelt phrase, ‘Speak softly and carry a big stick,’ Section 899 is an effort to carry a big stick.”

Opponents to Section 899, on the other hand, argue that the measure will undermine Trump’s efforts to drive new foreign investments into domestic manufacturing through tariffs and policy.

“Trump wants onshoring, and now if we’re going to penalize people who are doing the onshoring or the foreign direct investment in the U.S., it’s counter to his goal,” Don Schneider, Piper Sandler’s deputy head of U.S. policy, suggested.

According to Global Business Alliance CEO Jonathan Samford, the measure could have an especially heavy impact on the energy sector and its more than $750 billion in annual foreign investments.

“Energy companies are going to face a tremendous punitive tax,” Samford said in a statement. “The president talks about driving U.S. innovation on energy forward, but they’re going to hamstring the companies that are best positioned to do that.”

Furthermore, the Joint Committee on Taxation’s own scoring of the Senate’s bill suggests that Section 899 could limit foreign investments in domestic companies by some $52 billion over a decade.

Still, senior Trump administration officials sought to downplay those concerns to the Washington Examiner, claiming that Section 899 remains a key tool in the president’s toolkit as he continues tax and trade negotiations with other countries. One White House official told the Washington Examiner that countries would only be identified as offenders if they refuse to engage in “good-faith” negotiations with the administration, and that Trump’s deregulatory initiatives would still incentivize foreign interests to invest in American industry.

“We’re bringing countries to the table on the tax front, and obviously on the trade front, and having ongoing conversations as it relates to the future,” one senior Treasury official said. “There’s a loud lobbying effort, and obviously a very well-funded one that’s getting a lot of the airtime right now.”

“Much of the pushback is coming from overseas companies, and overseas companies are worried that their countries may try to usurp U.S. authority,” Treasury Secretary Scott Bessent testified on Capitol Hill earlier this month. “This is a fiscal bill, not a revenge bill.”

Lautz suggested that the president’s vacillation on his economic road map and refusal to clarify what policies he views as negotiating tools versus actual red lines are only further muddying the waters.

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“The existential issue with section 899 is … is it meant to be a tool in the negotiating toolkit for the administration, the primary purpose of which is to get countries to change their behavior, to get rid of certain taxes, or is the primary purpose to raise revenue, or is it some kind of hybrid of the two?,” Lautz said. “And I don’t think that’s been settled yet, and I don’t know if it gets settled before this is signed into law.”

The Senate could vote on the One Big Beautiful Bill Act as early as this week.