$TRUMP Trump’s Section 899 Tax Proposal Sparks Market Concerns and Global Tensions
📉 Potential 5% Drop in Dollar, 10% Market Correction Warned by Allianz CIO
President Donald Trump’s newly proposed tax measure — Section 899, part of a sweeping financial legislation package passed by the House in May — is drawing growing scrutiny from global investors and economists. The provision targets nations imposing special digital service taxes on American tech giants such as Amazon, Alphabet, and Meta.
Ludovic Subran, Chief Investment Officer at Allianz SE, called Section 899 a “big scary moment” for markets, warning that its implementation could cause:
A 5% drop in the U.S. dollar
A 10% fall in U.S. stock markets
A 0.5% increase in Treasury yields
In a June 3 interview, Subran emphasized that the markets are "not pricing in the full risk" of this provision. He likened the rule to a form of “capital control”, saying it could scare off international investors who currently hold around $31 trillion in U.S. long-term assets including equities and bonds.
🌍 Retaliation for Foreign Digital Taxes
Roughly 17 countries, including Germany, France, and the U.K., have enacted or proposed digital service taxes aimed at U.S. tech firms. For instance, Germany has floated a 10% tax on platforms like Google.
In response, Section 899 would authorize the U.S. Treasury to label these levies as “discriminatory”, and impose reciprocal taxes on companies and individuals from those countries operating in the United States.
Representative Ron Estes (R-KS), a key architect of the bill, explained:
> “If foreign nations tax our businesses, we should have the ability to tax theirs.”
Although the broader bill has faced heavy opposition from Democrats, the retaliatory tax provision in Section 899 has not sparked direct pushback.
💼 Congressional Concerns and Constitutional Limits
The bill, running over 1,100 pages, raises constitutional questions. While the legislation gives the Trump administration the authority to impose tax penalties, the U.S. Constitution reserves taxation and spending powers for Congress.
Former Congressman Peter Roskam, now a leader at BakerHostetler’s federal policy team, commented:
> “Section 899 sends a clear message: the U.S. rejects being labeled a tax haven by countries unfairly targeting our companies.”
The nonpartisan Joint Committee on Taxation (JCT) projects that Section 899 would generate $116.3 billion in revenue over the next decade, but also estimates a $12.9 billion annual revenue decline by 2033–2034 due to potential capital flight.
🔍 The Bigger Picture
Trump’s tax push is part of a broader legislative effort combining several of his key priorities, including:
Extending the 2017 tax cuts
Cracking down on immigration
Scaling back some green energy incentives
The bill narrowly passed the House on May 22 and is now under review in the Senate.
As tensions rise over cross-border digital taxation, markets are watching closely. Subran warns that investors should not underestimate the potential consequences of Section 899 — which he says could shake f
aith in U.S. assets long considered a global safe haven.
$TRUMP #TrumpCrypto #TRUMP #trupmsnewproject #TrumpMediaBitcoinTreasury