Interest Deduction Tweak Prompts Thoughts of Offshore Borrowing

American companies with a big global footprint are reconsidering their debt strategies in the US after a change in Republicans’ 2025 tax law that limits their ability to deduct interest expenses.

The change has added another “element of friction” to the factors that multinationals consider in making debt decisions — like foreign exchange exposure, capital markets, and liquidity — said Pat Brown, a partner and co-leader of PwC’s National Tax Office.

“This is one of those things where now you have the tax department saying, ‘Wow, as a result of this change, our cost to borrowing in the United States ...