Treasurer Jim Chalmers has urged his US counterpart Scott Bessent to reconsider a controversial proposal that would raise taxes on super funds and companies investing in the US, as he pushed back on calls to increase Australia’s defence spending.

Institutional investors are alarmed by section 899 of the Trump administration’s so-called “big beautiful bill”. The proposed law would give the administration scope to use “revenge taxes” on foreign countries that it deemed treated American firms unfairly, such as through digital services taxes.