The U.S. Treasury Department’s move to exempt U.S.-headquartered multinational companies from the OECD’s Pillar Two global minimum tax framework drew strong praise from manufacturers and a Pennsylvania Republican lawmaker, who said the agreement protects American jobs, investment, and tax sovereignty.
The Treasury Department said Monday that the United States finalized a “side-by-side” agreement with more than 145 countries participating in the OECD/G20 Inclusive Framework, ensuring that U.S.-based companies will remain subject only to U.S. global minimum taxes while being exempt from Pillar Two.
The deal builds on an initial agreement reached in summer 2025, according to a statement U.S. Treasury Secretary Scott Bessent released Jan. 5.
“This side-by-side agreement recognizes the tax sovereignty of the United States over the worldwide operations of U.S companies and the tax sovereignty of other countries over business activity within their own borders,” Bessent said.
Further, said the secretary, the agreement protects the value of the U.S. R&D credit and other congressionally approved incentives for investment and job creation in the United States, fulfilling the shared goal of U.S. leadership in innovation and technological advancement.
Industry leaders welcomed the announcement, saying it responds to long-standing concerns that global tax rules could discourage manufacturing investment in the U.S.
Jay Timmons, president and CEO of the National Association of Manufacturers, said the finalized agreement will protect both domestic and foreign-headquartered manufacturers investing in the U.S. from “oppressive, job-killing taxes.”
“Heeding the call of our industry, this deal will shield manufacturers from damaging taxes that unfairly stifle job creation in the U.S.,” said Timmons, adding that the deal gives manufacturers greater certainty to unlock the full potential of the tax provisions manufacturers supported in Trump’s One Big Beautiful Bill, which was enacted last summer.
“The side-by-side global tax system will ensure that manufacturers in the U.S. can compete on a level playing field, invest in their operations and hire more workers. In short, this deal is a massive triumph for manufacturers in the United States,” Timmons said.
On Capitol Hill, U.S. Rep. Mike Kelly (R-PA), chairman of the U.S. House Ways and Means Subcommittee on Tax, also applauded the Treasury’s action, contrasting it with how the Pillar Two framework was initially negotiated under the Biden administration.
“Thanks to the leadership of the Trump administration, today’s agreement protects American businesses and workers from burdensome global bureaucratic overreach and recognizes the tax sovereignty of the United States,” Kelly said Monday. “The Biden administration went around Congress and sold out American-based companies.”
The congressman also thanked the Trump administration for working with Republicans in Congress in charting an America First path forward, saying this will allow American job creators to prosper and compete on a level playing field abroad.
Bessent also pointed out that the Treasury Department will continue engaging with foreign countries to ensure full implementation of the agreement, build greater international tax stability, and move toward a constructive dialogue on the taxation of the digital economy.