President Trump’s One Big Beautiful Bill combines sweeping tax cuts with deep spending reductions, and critics say the bill could undermine long-term economic stability, weaken US global competitiveness, and accelerate fiscal strain
Key insights:
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Debt-fueled instability — Despite deep spending cuts, the bill permanently extends tax breaks for corporations and the wealthy, which is expected to add up to $6 trillion to the deficit.
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Sectoral shockwaves — Clean energy, healthcare, and consumer sectors face major setbacks in the bill, while it gives short-term gains for the fossil fuel and defense industry.
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Trade turbulence — Aggressive tariffs and subsidy rollbacks have roiled global trade, straining global alliances and raising inflation risks.
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President Donald Trump’s sweeping tax-and-spend package — dubbed the One Big Beautiful Bill Act (OBBBA) — has cleared the legislature, gotten his signature, and is on its way towards implementation. As expected of a 940-page piece of legislation, the Act will have repercussions across vast sectors of the nation’s economy, especially in the areas of the economy and global trade.
Proponents for the bill argue the framework will unleash growth and empower businesses by cutting taxes and trimming what they consider wasteful spending. However, the consensus among economists, analysts, and global institutions is that the United States is embarking on an incredibly risky fiscal experiment.
A classic austerity budget… except
In many ways, the OBBBA looks like a classic austerity budget, with significant cuts in industrial subsidies, Medicaid, and other areas of discretionary spending. However, the United States may lose 1.7 million jobs in the clean energy sector alone as a result of the bill, according to an estimate from the research firm C2ES.
While painful, this is the type of expense reduction that one would expect a government to pass if wanted to address its multi-trillion-dollar deficit — but only if it was combined with steep increases in taxes.
The problem is that, rather than raising taxes to eliminate the bill’s own budget deficit and chip away at the larger national debt, it instead makes the 2017 temporary tax cuts permanent, while further reducing taxes on corporations and the wealthiest Americans. The result, estimated by many institutions, could increase the deficit by up to $6 trillion over the next 10 years.
Of course, the argument here is that the economic benefits of these tax cuts will trickle down through the rest of the country, boosting prosperity for everyone and strengthening the overall economy. However, the evidence is overwhelmingly against this theory. Trickle‑down economics has become more of a cautionary tale, widely debunked by economists and highlighted as an example of confirmation bias rather than a credible policy framework. In fact, no reputable forecasts predict sustained GDP growth above 3% over the next decade. And agencies like the Congressional Budget Office, the U.S. Federal Reserve, and many nonpartisan forecasters anticipate growth will be closer to between 1.5% and 2.3%.
More worrisome, Moody’s Investors Service already downgraded the US credit rating in May, citing runaway deficits; and the OBBBA may pave the way for further credit rating downgrades, especially as interest rates weigh heavier on the federal budget. In fact, interest payments alone now constitute up to 20% of all federal spending, and the pressure on future budgets will only increase. Foreign creditors and bond investors are growing uneasy, with some moving out of U.S. Treasuries due to concern over these unsustainable fiscal trends.
Industries on the line
Specific industries will see another major impact of the OBBBA, as clean energy companies, for example, face a sudden U-turn once after years of robust federal incentives. The OBBBA repeals much of the Biden-era Inflation Reduction Act’s green tax credits that, in 2024 alone, launched more than $270 billion in solar and battery projects. Now, that momentum has likely been killed at a time when America is seeking more sources of electricity to drive AI technology.
“Hundreds of thousands of manufacturing jobs in the US are now in danger,” warned U.S. Senate Finance Committee Ranking Member Ron Wyden (D-Ore.), adding that he believes “projects all over the country” are already “being canceled.”
You can find more of our coverage of the impact of the One Big Beautiful Bill Act here
In addition, the healthcare industry, especially hospitals and clinics that serve low-income or rural populations, will face strain. With nearly $1 trillion in Medicaid cuts planned for over the next 10 years, millions of Americans are predicted to lose healthcare coverage. Rural hospitals that rely on Medicaid funding fear service cutbacks or closures as revenue falls. Even the consumer sector could feel strain. Reduced benefits for lower-income households may limit discretionary spending, rippling through local economies.
While defense contractors and fossil-fuel producers stand to benefit from targeted spending boosts or tax breaks, the overall tilt away from future-looking sectors could undermine US competitiveness in the long run, critics contend.
The impact on global trade
One stated purpose of the Trump Administration’s ongoing trade conflict is to return manufacturing back to the United States; but if this is the case, the bill does little advance this goal. In fact, the OBBBA lacks the kind of large-scale, targeted investment in tooling, education, and infrastructure needed to support such a transition. With no significant federal funding behind any industrial reshoring push, there is little economic momentum for any large-scale factory-building effort.
On a more immediate level, the Federal Reserve cautions that these tariffs are likely to cause at least a temporary spike in US inflation. Given that the Fed’s number one priority is maintaining price stability, this threat of tariff-induced inflation has the Fed reluctant to lower interest rates, which in turn is driving up borrowing costs for businesses and consumers.
Meanwhile, industries benefiting from US tariffs — such as domestic steel or aluminum — might see short-term gains, but export-oriented US sectors (like agriculture and automotive) fear tariff retaliation abroad. And many US allies see the universal tariff as a blunt instrument that breaks from multilateral trade norms. The turbulence is forcing nations to diversify trade relationships away from over-reliance on the US, potentially redrawing global trade alliances that effectively bypass the United States.
Indeed, the global trade impact of the bill (and associated Trump trade policy) is a double-edged sword: While it seeks to protect some US industries, the risk of isolating the US more broadly and disrupting international commerce could backfire.
Overall, the economic and trade impact of the One Big Beautiful Bill Act harbors many of the potential drawbacks of an austerity budget without many of the resulting benefits. Its funding assumptions rely on a level of economic growth the US has rarely-if-ever sustained, and by prioritizing tax cuts for legacy industries like fossil fuels and steel — sectors whose long-term viability has been overtaken by technological and economic shifts — the bill sacrifices tomorrow’s investment in emerging industries and healthcare.
As a result, many critics contend that the OBBBA will make the federal debt more unwieldy, and there already are signs that nerves may be fraying, thus making the long-term prospects for the US economy uncertain at best.
For more on the tax impact of the One Big Beautiful Bill Act, watch our recent Clarity podcast here
