ASX 200 boom as Joe Biden unveils massive infrastructure, tax package?

Will US President Biden's new infrastructure tax plan be a boon for ASX 200 shares? Here's all the details so far, and what they mean

| More on:
Biden stimulus effect on bluescope share price represented by us dollars being printed

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

US President Joe Biden has unveiled plans for a massive infrastructure program for the United States.

It's only been a few weeks since President Biden's Democratic Party ushered in a mammoth coronavirus stimulus package. This package, which included direct cheques and support for vaccination programs, cost US$1.9 trillion.

New infrastructure bill on the table

But now that that law has been passed, the Biden administration is now turning its attention to infrastructure. According to the White House, President Biden stated that the 'American Jobs Plan' will be the largest American jobs investment since World War Two and "will create millions of jobs".

Biden's proposal is set to cost approximately US$2 trillion, but that cost will be spread over 8 years. Here are some of the details from the President's address:

The American Jobs Plan will build new rail corridors and transit lines, easing congestion, cutting pollution, slashing commute times, and opening up investment in communities that can be connected to the cities, and cities to the outskirts, where a lot of jobs are these days. It'll reduce the bottlenecks of commerce at our ports and our airports… modernize 20,000 miles of highways, roads, and main streets that are in difficult, difficult shape right now. It'll fix the nation's 10 most economically significant bridges in America that require replacement.

It will also reportedly include funding for more modern infrastructure, such as internet connections and electric vehicle charging stations.

This package will not be entirely funded with debt, like the stimulus package was. President Biden is proposing a raft of changes to the American tax code to help come up with the extra cash.

This most prominently includes raising the US corporate tax rate to 28%, from the current level of 21%. It also includes various tax loophole closures and plans for a "global minimum tax rate" for companies.

What does this proposal mean for ASX shares?

Any large stimulatory program in the United States, the world's largest economy, is likely to have positive flow-on effects for the global economy, which of course includes Australia. As such, this package is likely to be a piece of good news for S&P/ASX 200 Index (ASX: XJO) companies.

Infrastructure requires a lot of raw commodities, such as copper and iron ore for steel. As such, this plan could be beneficial for ASX mining companies in particular, such as BHP Group Ltd (ASX: BHP) and Rio Tinto Limited (ASX: RIO).

Of course, this plan is only a plan at this stage. Biden will need to wrangle it through the US Congress, where his party only holds slim majorities in both houses. This could result in significant changes to the measures we've discussed. Particularly around the tax plans.

But this space is certainly one to watch for any ASX investor.

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Market News

asx share price boosted by us investment represented by hand waving US flag across winning athlete
Best Shares

Here are the best-performing ASX 200 shares since the US election result

We reveal the 10 ASX stocks that have had the highest share price gains since the US Presidential election.

Read more »

A young man sits at his desk working on his laptop with a big smile on his face due to his ASX shares going up and in particular the Computershare share price
Share Market News

5 things to watch on the ASX 200 on Friday

A decent finish to the week is expected for Aussie investors.

Read more »

A smiling man at a shop counter takes payment from a female customer, with racks of plants in the background.
Best Shares

Here's why I think Wesfarmers shares are a great buy for any ASX investor

I argue that Wesfarmers offers investors both growth and income potential.

Read more »

A golfer celebrates a good shot at the tee, indicating success.
Share Market News

Here are the top 10 ASX 200 shares today

ASX investors finally enjoyed a win this Thursday...

Read more »

a man sits back from his laptop computer with both hands behind his head feeling happy to see the Brambles share price moving significantly higher today
Industrials Shares

Up 39% in a year, is there more growth to come for this ASX 200 share?

IML Equity Analyst Josh Freiman shares his views on a major ASX 200 industrial stock.

Read more »

Man looking at his grocery receipt, symbolising inflation.
Share Market News

What the latest US inflation print means for ASX 200 investors

The ASX 200 is likely to benefit if the US Fed cuts interest rates again in December. But will it?

Read more »

guy helping girl invest in shares and dividends
Opinions

5 ways for investors buying ASX shares to stay focused during economic uncertainty

AMP Chief Economist, Dr Shane Oliver, offers advice on how to handle the Trump factor.

Read more »

A worried man holds his head and look at his computer.
Share Fallers

Why Graincorp, Light & Wonder, Orica, and Wildcat shares are falling today

These shares are having a tough time on Thursday. But why?

Read more »