Deutsche Bank is reportedly warning that a capital war could be triggered by the White House’s “One Big Beautiful Bill.”
Analysts from the bank have dubbed Section 899 of the bill a “revenge tax” that could hurt the attractiveness of US assets, Fortune reports.
The bill aims to implement tax reforms, reduce government spending and advance elements of President Trump’s “America First” agenda.
Says George Saravelos, head of FX research at Deutsche Bank,
“We see this legislation as creating the scope for the US administration to transform a trade war into a capital war if it so wishes, a development that is highly relevant in the context of today’s court decision constraining President Trump on trade policy…
It is not unreasonable for the market to conclude that if the President is constrained on using trade policy, taxing foreign capital could be a new means of leverage.”
Saravelos says that the provision attempts to use taxation on foreign investors as leverage to advance American economic priorities, and only has 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 investment.”
“A foreign tax provision in the One Big Beautiful Bill Act is alarming… If the bill as presently written takes effect, it would deter foreign investment in US assets at a time when the country faces increasing reliance on foreign capital to finance its ballooning debt.”
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