I’m starting this thread because there’s more going on than just another “Trump policy bluster, markets get jumpy, everything returns to normal”. You may probably seen that the U.S. threatened this mega-tax on foreign capital (Section 899), markets freaked, and then they stop at the last minute. At first I thought, “Okay, here we go again". Looking into the details, it’s obvious this event could set a standard for how global capital might be managed from now on. This is stuff that, frankly, should have everyone wide awake right now
What Went Down?
Why Bother? I care because I’m tired of seeing international agreements that only apply to smaller countries, while the big players give themselves special treatment. I am a realist, of course the U.S. has leverage, but this was on another level: threaten capital flows instead of tariffs, get Wall Street and central banks to amplify the panic, pull back only when allies cave, and keep the threat ready for next time. And people wonder why the appeal of Bitcoin and decentralized finance is exploding… Some things I noticed:
This must be a time of reckoning to those who still believe that the "dollar" is neutral. When policy can be weaponized this quickly, you can bet capital will begin seeking exits. I used to believe that the majority of companies would not even dare to park reserves in BTC. Now I can see that the boardrooms are already doing it. They are not stupid. They see the writing on the wall
U.S. will continue to exploit this strategy. When they want a carve-out (carbon border taxes, tech standards, you name it), another Section 899 moment will occur. Allies may retaliate, or just quietly mimic the game. Nobody believes the OECD as a neutral referee any more. Crypto becomes the default hedge for geopolitical and regulatory risk. The risk premium for U.S. assets might go up for the first time in years. Think about that if you are heavy in stocks or Treasuries
What Went Down?
- Section 899 was basically a threat to drop 20%+ “revenge taxes” on any country the U.S. didn’t like, especially if they dared tax American multinationals. It would have smashed treaties, nuked cross-border finance, and sent a warning shot to every ally that the U.S. will throw markets into chaos if it doesn’t get its way
- Wall Street lost it. So did real estate. Data was timed perfectly. First outflows, then a record current account deficit. Treasury made sure everyone felt the heat, and then at the climax, the U.S. got exactly what it wanted: an exemption from new global taxes on its own companies. The rest of the world? Deal with it
Why Bother? I care because I’m tired of seeing international agreements that only apply to smaller countries, while the big players give themselves special treatment. I am a realist, of course the U.S. has leverage, but this was on another level: threaten capital flows instead of tariffs, get Wall Street and central banks to amplify the panic, pull back only when allies cave, and keep the threat ready for next time. And people wonder why the appeal of Bitcoin and decentralized finance is exploding… Some things I noticed:
- The payload was Super BEAT tax: the bill was not about foreign companies sending dividends, but would have roped thousands of midsize firms, made U.S. supply chains upside-down, and threatened any non-U.S. business with a presence in the U.S. No one is speaking about that
- The data drops (outflows, deficits) choreography of the Treasury was theater. Policy by Bloomberg headline
- Europe/Japan were the ones most affected by the outcome. Their MNEs are saddled with a 15% minimum tax, U.S. firms are sheltered. The regulatory has become a corporate risk. Are you even paying attention when you are on a board and do not have at least some Bitcoin or decentralized assets?
- Prenetics, a Hong Kong healthcare firm, transferred the majority of its treasury to Bitcoin in the crisis. Neither a tech company, nor a fund, a healthcare company. That speaks louder than IMF report
This must be a time of reckoning to those who still believe that the "dollar" is neutral. When policy can be weaponized this quickly, you can bet capital will begin seeking exits. I used to believe that the majority of companies would not even dare to park reserves in BTC. Now I can see that the boardrooms are already doing it. They are not stupid. They see the writing on the wall
U.S. will continue to exploit this strategy. When they want a carve-out (carbon border taxes, tech standards, you name it), another Section 899 moment will occur. Allies may retaliate, or just quietly mimic the game. Nobody believes the OECD as a neutral referee any more. Crypto becomes the default hedge for geopolitical and regulatory risk. The risk premium for U.S. assets might go up for the first time in years. Think about that if you are heavy in stocks or Treasuries