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?
- 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
Trump is an anomaly, even if he has been elected twice, that hopefully cause the American people to wake up and realise that you cannot bully every single other country in the world without their being a backlash. Trump will never admit it, but he caved after seeing that other countries would not bow to his bullshit tariffs (they'll make minor concessions so he can appear victorious but China would not even do that). When the ports started to empty and it looked like the US economy was ready to fall of a cliff, he blinked. He definitely has and maybe intended to engineer a scenario where the dollar weakens because it is actually advantageous to manufacturers - at the expense of every other industry that has replaced it.
This urge to return to a manufacturing economy is so naive and short sighted, but he wants to return to some imagined golden era of his childhood back in the 1960's - yet the world moved on.