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

Woman in celebratory fist move looking at phone
Broker Notes

Top brokers name 3 ASX shares to buy next week

Brokers gave buy ratings to these ASX shares last week. Why are they bullish?

Read more »

A young man pointing up looking amazed, indicating a surging share price movement for an ASX company
Broker Notes

These ASX 200 shares could rise 20% to almost 30%

Analysts are tipping these shares to deliver big returns over the next 12 months.

Read more »

A young woman carefully adds a rock to the top of a pile of balanced river rocks.
Share Market News

Here's how the ASX 200 market sectors stacked up last week

Energy and utilities stocks led the way last week with 4%-plus gains.

Read more »

Animation of a man measuring a percentage sign, symbolising rising interest rates.
Share Market News

Here's when Westpac says the RBA will now cut interest rates

Will borrowers need to wait until the middle of next year for relief? Let's find out.

Read more »

Boys making faces and flexing.
Opinions

3 ASX 300 shares to buy and hold for the long run

I believe these stocks have loads of growth potential.

Read more »

Young girl drinking milk showing off muscles.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a great end to the trading week for ASX investors today.

Read more »

Hands reaching high for a trophy with a sunset in the background.
Record Highs

The ASX 200 Index is on its way to another all-time high today. Here's why

These blue chip stocks are driving the index towards a new record today...

Read more »

Group of friends trading stocks on their phones. symbolising the 3 most traded ASX 200 shares today
Share Market News

3 ASX mining stocks topping the most-traded list in October

Chinese stimulus news and company announcements likely contributed to the higher trading activity.

Read more »