Trump's 35% Tax Threat & Italian Referendum

A person taking notes from their tablet
Credit: Shutterstock photo

President-elect Donald Trump has taken to his Twitter TWTR feed again over the weekend, but instead of attacking SNL or the cast of "Hamilton," he is taking his tough talk to American multinational companies who plan to move their plants overseas. Trump has asserted a 35% tax will be slapped on companies like Rexnord, the Indiana company now relocating its plant to Mexico.

The President-elect is shredding lots of protocols here. No standard press conferences for him; Twitter's immediacy and effectiveness of message assisted Trump greatly on the campaign trail, and he shows no signs of wanting to change methods now.

But what he's talking about is enacting tariffs, and this looks to result in a trade war, and on multiple fronts -- from Mexico to China -- down the road. The two major dangers in this scenario would be much higher prices for domestic consumers, and trade impasses raising tensions and hostilities that may lead to something more volatile.

The Next Domino to Fall?

The Prime Minister of Italy, Matteo Renzi, announced he is submitting his resignation after 60% of Italians voted "no" on a referendum Renzi proposed for constitutional reform in the country. The short-hand takeaway appears to be that Italy is ripe for a Brexit-style or Trumplike shakeup in the weeks and months ahead.

Recapitalization plans at some of the country's biggest banks - in particular, Banca Monte dei Paschi di Siena SpA, which was due to start paying back a EUR 5 billion call this week - now looks in peril. If contagion spreads among Italy's biggest national banks, it could have even more dire consequences on the country's solvency and its impact on the European Union (EU) overall.

Clearly, it's part of a global trend to reject the major tenets of globalization. Nationalism is taking its place in Europe, Asia and the Americas. Will countries where similar sentiment is brewing take similar actions, such as France and Germany? It's hard to see what's stopping it, especially considering consequences down the road are difficult to comprehend.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

To read this article on click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Other Topics


Latest Markets Videos


Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at

Learn More