Talk of reinstating a 30% withholding tax on foreign holders of US financial assets has sparked a wave of speculation, set in motion by remarks from the Trump administration’s economic team that includes language that can interpreted to the possibility that this tax, eliminated in 1984, may soon be reintroduced.
Fund manager Michael McNair pointed out this alleged plan by the White House to tax foreign holdings of US financial assets “hidden in plain sight.”
The said upcoming tax bill, he said, is derived from a speech by Trump’s economic chief, Stephen Ira Miran, in which five “burden-sharing” options were outlined. While four of those focus on reducing trade surpluses, he argues that the fifth option—foreign governments “writing checks to the Treasury”—is code for taxing their interest income.
Another observer, James Chanos, argued McNair’s interpretation but highlighted that “the fact that bringing back the foreign withholding tax on US financial assets is even being remotely considered…is another very big deal.”
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“It does require connecting some dots,” McNair replies, but he insists the logic is unmistakable when looking at the bigger picture. He explains that Miran framed both US military security and the dollar’s reserve status as global public goods for which foreign holders of US assets should help pay. According to McNair, this proposal has created “emergency meetings in finance ministries across Asia,” even though mainstream financial media has largely overlooked it.
Should this measure indeed move forward, it would mark a profound change in tax policy. For many foreign investors, avoiding the 30% withholding rate has been a core incentive to purchase and hold US Treasuries.
US Treasury yields climbed on Wednesday, with the 10-year briefly reaching 4.5% and the 30-year hitting a two-month high above 4.8%, as investors reacted to Trump’s new reciprocal tariffs—including a 104% levy on Chinese imports. Fears of recession and stubborn inflation sparked foreign selling and pushed the latest 3-year note auction into “weak” territory, hinting at broader market unease.
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