Gallardo is the latest market commentator to voice deep concern about Section 899 of the bill. The provision would increase tax rates for individuals and companies from countries whose tax policies the US deems “discriminatory,” prompting some to dub the measure the “revenge tax.”
“The United States is no longer a safe nation for investment,” Gallardo said during a briefing on the outlook for the second half of the year. Carmignac, which had about €34 billion ($39 billion) under management at the end of 2024, entitled its presentation “’From America First’ to Global Financial Anarchy.”
The Wall Street consensus is that the tax provision would further undermine confidence in US assets, already shaken by Trump’s trade policies and America’s deteriorating fiscal accounts. It could trigger a 5% slump in the dollar and a 10% selloff in equities, Allianz SE chief investment officer Ludovic Subran said this week.
For Gallardo, Trump’s unpredictable decisions on trade and concerns around his foreign policy and the rule of law are all prompting traditional allies of the US to reduce their dependence and ties to the world’s biggest economy.
“Why de-risk? Because the United States have become a totally unreliable military ally and so, one has to secure supply chains, find new markets,” he said.
Carmignac is diversifying asset allocations from the US, notably to Europe, where Germany’s historic fiscal reforms have boosted economic growth prospects. German Chancellor Friedrich Merz has taken a series of measures to beef-up military capacity, accelerate infrastructure spending and revive the economy through comprehensive corporate tax breaks.
“Trump managed to achieve what no one had managed before, and that’s to make the Germans start to spend,” Gallardo said.
Carmignac was among asset managers who predicted the rally in global shares last year, dismissing talk of a bubble in equity markets.
European equities have emerged as clear winners worldwide this year as concerns over Trump administration trade policies encourage investors to diversify out of US assets. At the end of May, eight of the world’s 10 best-performing stock indexes were European.