By James Harrison
Donald Trump’s controversial “revenge tax” will force Australia to bargain with the United States on major points of contention as Labor looks to protect the $4.2 trillion super pool and investment.
Section 899 of Trump’s “big beautiful bill” will allow the US to force taxes on nations it believes unfairly treats US firms – such as tech giants Meta and Alphabet.
This comes as Australia targets big tech through its media bargaining incentive, while the nation’s Pharmaceutical Benefits Scheme has also drawn the Trump Administration’s ire.
If the bill passes, Australians may be forced to pay upwards of 20 per cent more tax on US investments.
WAM Global’s lead portfolio manager Catriona Burns said the Albanese government will be forced to bargain with the US.
“We give up some of the penalties that we’re potentially putting on the tech companies, for example, in exchange for walking back the penalties that would be put on Australia,” Ms Burns said on Business Now.
“There’s absolutely negotiation that will still likely go on and we could come to a much more favourable resolution than what is being proposed at this point.”
Treasurer Jim Chalmers on Wednesday told reporters he had discussed section 899 with US Treasury Secretary Scott Bessent and made Australia’s case against the looming tax.
“We do not want to see our investors and our funds unfairly treated or disadvantaged when it comes to developments out of the US Congress,” the Treasurer said.
This comes as Prime Minister Anthony Albanese vowed to protect beef trade, the media bargaining code and the Pharmaceutical Benefits Scheme after Trump first revealed sweeping “Liberation Day” tariffs.
Despite the threats to Australia’s super industry and investment returns, Ms Burns argued that investing in the US may still be more beneficial if section 899 of the bill goes through considering the greater potential for returns.
“When you look at the companies, particularly in the tech space for example, that are in America, there (are) still some wonderful businesses to invest in,” she said.
“Some of the best businesses in the world are in the US, so even with this potentially capping the returns that you can generate out of investing in the US, it still may well be the best place to invest.
“Importantly, it may incentivise the companies that you invest in in the US to actually give more back to investors in the form of buybacks rather than dividends.”
Many in Australia’s $4.2 trillion superannuation system have expressed concerns about diminished returns if the legislation passes as hundreds of billions of dollars of members’ funds is invested in the US.
AMP’s chief economist Shane Oliver earlier this month said section 899 of the bill, alongside other economic policies by the Trump Administration, “called into question ‘US exceptionalism’ and its ‘safe haven’ status”.
The Future Fund chair Greg Combet also expressed concerns about the bill where he argued the US was hurting itself by thwarting investment through section 899.
“Section 899 of the Bill will potentially and dramatically escalate tax rates for Australian institutional investors like the Future Fund,” Mr Combet said in a speech to the Committee for Economic Development of Australia earlier this month.
“In combination these policies and dynamics are making the US a more risky and uncertain investment destination.”
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