Struan Malcolm

A critical item in Friday's "America First Investment Policy" White House memo has gone completely unnoticed. The administration is considering terminating the 1984 US-China tax treaty. Currently, Chinese government entities (who hold almost $2 trillion in US assets) pay ZERO tax on portfolio income from US investments, while bond interest is exempt from withholding for all Chinese investors. Terminating the tax treaty would restore the statutory 30% withholding rate on Chinese investments - a dramatic shift that would fundamentally alter the economics of Chinese capital flows to the US. The memo's language is explicit: "That tax treaty...led to the deindustrialization of the United States and the technological modernization of the PRC military. We will seek to reverse both those trends." In our reports, "The Sovereign Wealth Effect" & “The Dollar’s Dilemma” we predicted this move writing, "until 1984, the U.S. maintained a 30% withholding tax on foreign interest income" and that reimposing this tax could be a key strategy for addressing trade imbalances. First, it reduces the attractiveness of US financial assets for Chinese investors, helping redirect capital flows toward trade rebalancing. Second, it potentially generates significant revenue: $360 billion annually from foreign holders of US securities (If done on a global basis). The US has already set a precedent of using withdrawal from a tax treaty as a policy lever when it withdrew from the US-Hungary treaty in response to Hungary’s posture in the OECD negotiations. This move, alongside the new US Sovereign Wealth Fund, confirms the administration is implementing a sophisticated strategy targeting capital flows rather than just using tariffs. It's precisely the dual approach we outlined in our report.

Non-Negotiable our comedy short by @mike_doxford @JillWinternitz @theblackpaddy @RollNineTV is LIVE on 3.7million subscriber @omeletocom following its festival run across the world where it won 6 awards & screened at 6 Oscar Qualifying festivals - WATCH IT NOW 🍿🎞️

Congratulations to this year’s winners in the #BritishPodcastAwards Interview category Gold : Different / @NickyAACampbell

Finally, tomorrow on TheMacroCompass.substack.com I'll be releasing a piece that explains (once and for all, in layman terms) what's really going on in the pension fund world. Consider subscribing so you'll receive it directly in your inbox. It's free! 18/18

There is no “apparently” anything, he did it.

Thanks to @SolaceWomensAid for trusting us with this important campaign and to Sureni Kay @TylerConti1 @Karen_Bryson for their support! Fingers crossed for @mike_doxford & the whole @RollNineTV crew 🎥 #UKContentAwards @dontpanicevents 🎬