CDPQ to scale back US investments due to concerns over stagflation and US tax measures.

CDPQ's CEO Charles Emond plans to trim US assets from 40% to a lower level due to concerns about a tax measure in President Trump's fiscal bill, which could impact investors and companies from certain countries. He also cites Trump's tariffs as a potentially stagflationary shock. Infrastructure assets are likely to be most impacted.

Charles Emond, CEO of the Caisse de dépôt et placement du Québec (CDPQ), has announced plans to reduce the portfolio's U.S. assets from 40% to a lower level, citing concerns about a tax measure included in President Trump's fiscal bill. The measure, known as Section 899, could potentially impact investors and companies from certain countries [1].

Section 899 allows the U.S. to impose taxes on foreign-parented companies and investors from countries deemed to have "unfair foreign taxes" on U.S. companies. This provision could cause international companies to avoid expanding into the U.S. out of concern over potential steep taxes [1].

Emond's decision to trim U.S. assets is also influenced by concerns about Trump's tariffs, which he believes could lead to stagflation. Infrastructure assets, in particular, are likely to be most affected by these tariffs [1].

The tax provision has sparked debate in the Senate, with the Global Business Alliance estimating it could cost the U.S. 360,000 jobs and $55 billion annually over 10 years in lost gross domestic product. The measure could also cut a third off the economic growth anticipated from the overall tax cuts [1].

House Republicans, however, see the provision as a tool to protect U.S. interests by giving the president a retaliatory measure against countries with tax codes that disadvantage American companies. The measure would allow the federal government to impose taxes on foreign companies and investors from countries deemed to have "unfair foreign taxes" [1].

The Investment Company Institute, representing financial firms, has warned that the provision could limit foreign investment in the U.S., a key driver of growth in American capital markets. The tax could be applied to companies based in countries that tax digital services, potentially impacting passive investment income [2].

While the fate of Section 899 rests with the Senate, the provision has sparked concern among investors and financial professionals. The potential impact on foreign investment and job growth has raised questions about the bill's overall economic impact.

References:
[1] https://apnews.com/article/trump-taxes-investment-section-899-f343d4418707335d8db844c9242751a9
[2] https://www.cnbc.com/2025/06/08/revenge-tax-trumps-spending-bill.html