Trump Tax Plan Targets 'Unfair' Foreign Levies, Risks 'Capital War,' Say Experts

A key tax proposal in President Donald Trump’s “big, beautiful bill” has analysts raising alarms, warning that it could dissuade foreign investors and deplete global confidence in the U.S.

What Happened: The provision, referred to as section 899, targets countries imposing taxes the Trump administration views as discriminatory toward American companies. The Guardian reports that the provision authorizes the U.S. to levy escalating taxes starting at 5% and rising to 20% on individuals, firms and investors from countries that impose "unfair foreign taxes" on American entities.

These include digital services taxes and diverted profits taxes, which many European nations currently apply. The bill views this as retaliation and aims to recoup losses and pressure trade partners. It passed the House and now awaits a Senate vote.

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Why It Matters: Max Yoeli of Chatham House warned the measure "threatens to further alienate foreign investors" by marring the U.S.’s traditional openness. UniCredit noted the policy could backfire, as many foreign governments, especially in Europe, hold vast quantities of U.S. assets.

Goldman Sachs analysts added that UK-based firms are especially vulnerable, with nearly a third of FTSE 100 revenue tied to the U.S.

Some companies may even consider changing their listing from the London Stock Exchange to New York to avoid penalties, particularly if they already have many U.S.-based shareholders.

"This could transform a trade war into a capital war," warned Deutsche Bank's George Saravelos.

Last week, top executives from major multinational corporations arrived at Capitol Hill to lobby against the implementation of Section 899.

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