Trump Administration to ban all foreign investment in US-listed companies
A major shakeup is expected to take place in the Trump administration when President-elect Donald Trump takes office on January 20.
It includes the banning of foreign investment into companies that have been listed on the New York Stock Exchange (NYSE), and a ban on all foreign investments in US companies that are listed on an international exchange.
The New York Times reports that Trump is expected take the unprecedented step of ending the use of the Federal Reserve to control interest rates.
He is expected use the Fed to cut rates, but to do so by raising the debt limit, which the Fed currently holds in the hope of reaching a deal with Congress on raising the nation’s borrowing limit.
The Times also reports that the president-elect will also have to decide whether to allow US companies to be exempted from regulations that would ban them from engaging in certain activities.
The president-trump is expected not to follow the example of his predecessor, President Barack Obama, who also suspended the use by US companies of the FOMC’s open-market operations.
Instead, the Trump transition team is expected “to use its control over the Fed’s monetary policy tool to create a system that is more flexible, less rigid and less beholden to the whims of the Fed,” the report states.
The decision to end the use and suspension of the open-end program by US businesses, which was used to keep interest rates low, has been controversial, with some analysts suggesting that the US economy would have to grow by more than 1% per year to get the benefits of the program back.
“It would be better to have the Fed do the job for us,” New York Federal Reserve Bank President William Dudley told the Financial Times in a recent interview.
“That is, it is better to keep rates low by keeping the Fed on a tight leash, rather than allow the Fed, which is what is in our best interest, to get away with some of the shenanigans.”
Dudley also told the Times that the decision to suspend the FOSC open-ended operations “would be a great step forward for financial stability and soundness in our economy,” which is “under the thumb of the big banks.”
The New Jersey-based investment bank Blackstone Group is reportedly advising Trump on the details of his plan, but did not provide any specifics on its advice.
The Wall Street Journal reported that Blackstone is working on an outline of a Trump presidency that would include the ban on foreign ownership in US stocks and bonds.
Trump has also said that he will appoint a “top adviser” to oversee the transition of control of the US government from the president to the president, and that he would be appointing a “senior economic adviser” on issues related to economic policy.
“I want someone who’s a financial planner, somebody who’s going to be able to say, ‘What do I need to do with the Treasury Department?’
And they’re going to know how to get that done,” Trump said in May.
The move to end foreign ownership of US corporations comes amid concerns over a looming government shutdown, which would force the US to shut down its government, shut down the federal courts and the IRS, and potentially close the borders to the US.
The shutdown would be followed by a $1.6 trillion cut in federal spending.
The United States is currently one of only five countries with no corporate tax rate that is lower than 20%, according to the Tax Foundation.
“There’s no way around it: the US is not going to have a corporate tax,” said Matt Yglesias, a senior fellow at the Tax Policy Center.
“The US will be one of the lowest tax countries in the world.”
Trump has pledged to raise taxes on individuals and corporations and has also promised to impose a 15% tax on corporate profits, a proposal that has been criticized by economists.