Deutsche Bank reportedly warns that a capital war can be activated by the ‘One Big Beautiful Bill’ of the White House.
Analysts from the bank have called section 899 of the bill a ‘revenge tax’ that could harm the attractiveness of American assets, Fortune reports.
The aim of the bill is to implement tax reforms, reduce government spending and to promote elements of the “America First” agenda of President Trump.
Says George Saravelos, head of FX Research at Deutsche Bank,
“We see this legislation as creating the scope for the US government to transform a trade war into a capital war as it wishes, a development that is very relevant in the context of the decision of the contemporary court that limits President Trump on trade policy …
It is not unreasonable for the market to conclude that if the president is limited to the use of trade policy, taxing foreign capital can be a new use agent. “
Saravelos says that the provision is trying to use tax on foreign investors as leverage to promote US economic priorities and only have to meet a low bar before being enforced.
Elias Haddad, a strategist at Brown Brothers Harriman & Co., also told Bloomberg that the bill would deter foreign investments.
“A foreign tax provision in the One Big Beautiful Bill Act is alarming … If the bill is currently in force as is currently being written, the foreign investments in American assets at a time when the country is confronted with an increasing dependence on foreign capital to finance its ballooning debt.”
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