Donald Trump’s proposed “revenge tax” on foreign firms could backfire and damage the US’s appeal to international investors, experts have warned.
A clause in Trump’s One Big Beautiful Bill Act known as section 899 would impose escalating taxes (starting at 5%) on businesses and individuals from countries deemed to have “unfair” tax policies toward US entities. That includes digital services and diverted profits taxes used in the UK, France, and other European nations.
Analysts at Chatham House and UniCredit say this could undermine confidence in US markets and even threaten the dollar’s role as a global safe haven. Deutsche Bank warns it could escalate trade disputes into a “capital war”.
UK firms are particularly exposed, with about 30% of FTSE 100 revenues tied to the US. Some may now consider shifting their listings to New York to avoid the tax, as companies majority-owned by US investors would be exempt.
The bill has passed the House but awaits Senate approval, with a White House deadline set for 4 July.