It all starts with the corporate tax rate.
The new rate — down to 21 percent, from 35 percent — takes the United States
from the top of the
global tax spectrum to the lower end. Countries like Australia, France, Germany and Japan, all of which have effective corporate tax rates of at least 30 percent, will be under pressure to follow.
“It’s a huge incentive to governments around the world who want to see more investment to be part of that,” said Andrew Mackenzie, the chief executive of the mining giant BHP, which has its headquarters in Australia and major operations in North and South America. “They will have to follow suit.”
Corporate rates were already on a downward trajectory. Many countries have used low taxes as an advantage over the United States, which offers a huge domestic market, plentiful venture capital and relatively light workplace regulation.
“There will be pressure for a new round of lowering corporate taxes,” said Stefano Micossi, the director general of Assonime, an Italian association of publicly listed companies.
China, a frequent target of Mr. Trump’s over its trade practices, may also be forced to play the tax game.