Trump’s “revenge tax” could threaten foreign investment in US
Analysts warn that Section 899 of the “One Big Beautiful Bill”—Donald Trump’s proposed retaliatory tax on foreign entities—could deter investment by imposing a tax starting at 5 %, rising to 20 %, on companies from countries that levy “unfair” taxes on US entities. Economists from Chatham House and UniCredit caution it might undermine the dollar’s safe-haven status and prompt foreign firms to redomicile or divest from US markets. Goldman Sachs highlights that UK companies like Pearson and Experian could be especially at risk, potentially triggering a wave of UK firms relisting in New York. Wall Street and asset managers are lobbying to amend the provision, warning of capital outflows, increased borrowing costs, and damage to the US energy dominance agenda.
🔁 Reactions:
- Max Yoeli, a senior research fellow in the US and the Americas programme at Chatham House, says section 899 “threatens to further alienate foreign investors”.
- George Saravelos warned Section 899 could allow the US administration to transform its trade war into a capital war by “explicitly using taxation on foreign holdings of US assets as leverage to further US economic goals”.
📰 Bias Snapshot:
- The Guardian/Reuters/AP focus on the economic risks—capital flight, investor unease, dollar stability—without partisan rhetoric (theguardian.com).
- Bloomberg/Financial Times stress geopolitical and financial market implications, framing the tax as a tool that could spiral into a “capital war” (trumptyrannytracker.substack.com).
- The Times (UK) highlights the impact on British firms, warning of near-doubling tax burdens and diplomatic repercussions (thetimes.co.uk).
📊 Sentiment: Neutral–negative.