French asset manager Carmignac, overseeing $39 billion in assets, warns that the US is no longer a safe place for foreign investors. Raphael Gallardo, Carmignac’s chief economist, cited risks from President Donald Trump’s tax and spending bill, especially Section 899.
This provision raises taxes on individuals and companies from countries labeled by the US as having “discriminatory” tax policies, earning the nickname “revenge tax.” Gallardo said this creates significant uncertainty and undermines confidence in US markets.
Gallardo described the US as an unreliable military ally and noted that traditional US partners are reducing their economic ties.
This has led Carmignac to shift investments away from the US toward Europe, where Germany’s recent fiscal reforms and increased military spending have improved economic prospects.
Gallardo remarked that Trump’s policies ironically pushed Germany to increase spending, something no one else had achieved.
The broader market consensus agrees that the tax changes and Trump’s trade policies have weakened confidence in US assets.
Allianz SE’s chief investment officer, Ludovic Subran, warned these could cause a 5% drop in the dollar and a 10% fall in equities. European stocks have outperformed globally this year, with eight of the world’s top ten stock indexes located in Europe as investors seek diversification away from US risk.
Carmignac had correctly predicted last year’s global equity rally and continues to favor European markets over US ones amid growing geopolitical and fiscal uncertainties in America.
The fund house’s presentation was titled “From America First to Global Financial Anarchy,” highlighting the perceived instability of the US investment climate.
