Definitions on goods may be provided for definitions on money

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This month, many investors are stunned and confused. No wonder: The US government also flirts with Another closure President Donald Trump is intensifying his commercial war, Indicators of economic uncertainty It rose to the pandemic of 2020 or the 2008 global financial crisis.

But uncertainty may get worse. For all customs tariff shocks, there is another question hovering: Can Trump’s free trade attack lead to attacks on free capital flows as well? Could the definitions of goods be provided for definitions on money?

Until recently, the idea looks crazy. After all, most Western economists have long witnessed capital flows as a good thing for America, as they helped finance his national debts and national actions of 36 Train. For example, Elon Musk, Trump’s advisor, benefited from Chinese investment, some of them private.

But some Mavic economists, such as Michael Betis, have A long time ago From this Orthodox opinion. Betis believes that these capital flows are not “just” unavoidable, useful, the natural result of America’s trade deficit, but as a bodies of a question. This is because the flows enhance the value of the dollar, and to enhance excessive financial and cavity the industrial base in America, he says, and this means that “the capital has become the tail that shakes the trade dog” and leads the deficit.

Betis wants restrictions, like taxes, so. Six years ago, Democratic Senator Tami Baldwin and Josh Holie, her Republican counterpart, issued a bill for Congress, The competitive dollar for jobs and prosperityWhich called for taxes on capital flows and the weak international federal reserve policy.

The bill seems to die. But last month, the American Compass, a conservative thinking center near Vice President JD Vance, announced that taxes are on capital flows You can collect 2 Trains over the next decade. Then the White House released “America is the first investment policy” The executive order pledged to “review whether or end” the Treaty of the year 1984, from other matters, to remove a 30 percent previous tax on Chinese capital flows.

This did not get the headlines, because Trump was “flooding the area” with other deviations, especially on the definitions. But that Asian observers are emoji It may have contributed to the decrease in the stock market in the last United States, as some investors fled in a proactive manner.

In fact, a tax transformation – or affects anyone other than Chinese. Trump (in) is famous for mercury, which makes prediction of future policy difficult, especially since his entourage is divided into at least three warring factions: national populists (such as Stephen Bannon), technical Newfatics (such as Musk) and the Republicans supporting the unknown. The last two factions may fight capital restrictions, due to concerns about destabilizing the treasury markets.

But Trump is also eager to use all available tools to support his influence on the world stage. Betis’s ideas appear to be influential among some advisers, such as Treasury Secretary Scott Beesen, Stephen Miran, Chairman of the Economic Counselors, and FAF.

This trio appears to be amazing to reset global trade and financing, via a The supposed Mar Lago AgreementAlthough their ambitions are broader than the Plaza 1985 Agreement. The latter is “just” the weakest dollar through the intervention of the common currency but Miran vision From the Mar-A-Lago agreement includes a potential US debt restructuring, forcing some cabinet holders to switch them to obtain permanent bonds.

Some well -connected financial analysts, such as Michael McNeer, also expect to see him Sovereign wealth fund, With the support of American gold reserves, which would buy non -dollar assets to balance capital flows (such as, for example, Greenland resources). The third idea is to impose taxes on capital flows in the broader sense. This may become the preferred approach if the idea of ​​debt bodies is left, rating agencies threatening to reduce American debt.

“The ultimate (triple) goal is not a series of bilateral (trade) deals, but rather a basic restructuring of the rules governing global flows of trade and financing (to remove) distorted capital flows,” McNeer says. “If this approach succeeds, it remains to see, but the strategy itself is more coherent and far from what most observers realize.”

Let me confirm that I do not support this, and I do not expect any confidence that this really happens. It should be noted that Betis theories are angry among many prevailing economists.

But Betis is Non. Critics should also notice that the Balden Holie 2019 bill was not greeted by conservative groups such as American Compass, But some voices of the union too. Since it has popular appeal, it may fly yet.

In both cases, the main point to be understood is that the shift in economic philosophy is likely to be deep as the rethinking reference by John Mainard Keynes after the Second World War or that Newoprolesi pushed in the 1980s. Gregnen also from the hedge fund in Bridgeter I laughed recentlyMilton Friedman: “We are all commercial now.” Do not expect this to be reversed soon.

Gillian.tett@ft.com