Goldman Sachs takes a $5 billion net income hit that results from its offshore cash repatriation under the new Trump tax law. This income hit reflects 10%-15% tax payments that each large bank can spread over 8 years. Citigroup also expects to experience a temporary $20 billion net income hit due to offshore cash repatriation while Bank of America expects a similar one-time $3 billion net income hit. Several other banks such as JPMorgan Chase and Wells Fargo are likely to receive similar preferential treatment under the Trump tax holiday. This preferential tax treatment allows most financial institutions to repatriate offshore cash stockpiles to invest in domestic job creation, R&D innovation, and capital equipment usage.

In effect, the Trump tax holiday empowers multinational banks to experience short-term pains in exchange for long-term gains under the territorial tax system. This new tax law is a major legislative victory for the Trump administration with strong support from Republicans over the joint opposition of Democrats. The recent ripple effects apply not only to key multinational banks but also multinational corporations (especially tech titans such as Facebook, Apple, Microsoft, Google, and Amazon). Overall, the medium-to-long-term tax cuts can continue to extend the Trump stock market rally.