The Trump administration’s latest tax reform announcement has been labelled a “non-event” by €56 billion French asset manager Carmignac.

Carmignac managing director, Didier Saint-Georges, commented: “This announcement is a non-event. Just the reiteration of an opening gambit for what will surely be a long and tough negotiation with Congress. The Freedom Causus has visibly held on to its very strict posture so far, which calls for difficult discussions. The Trump administration will be lucky if the reform gets passed this year, and if it gets half of what it is asking for.”

He added that the Fed will hopefully be aware of the difficulty of passing the tax reform passage and this will mean it does not adopt hawkish policies. “A key criteria to evaluate the final outcome will be whether it is a genuine tax reform, approximately revenue-neutral over 10 years, or whether it is an agreement that expires at one point and leads to yet another fiscal cliff,” Saint-Georges said.

Separately, AXA Investment Managers senior economist, David Page, said that the details of the tax reforms, which includes a plan to cut corporation tax to 15%, were underwhelming. He added that there appeared to be no clear plan on getting the tax reforms passed by Congress. Page said that there were no details for a controversial border adjustment tax on imports, and said: “As has been apparent over recent weeks, proposals for tax reform appear to be shifting to a simple tax cut and dollar repatriation scheme.” He said that without a fiscal stimulus, AXA IM would need to cut its growth forecast for the US economy.


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Published: April 1, 2017
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