Hedge fund Elliott management warned that Donald Trump's trade war could cause "huge" losses from the United States, triggering U.S. capital flights.
The radical company, founded and co-led by Republican giant Megadonor Paul Singer, said in a letter to investors by the Financial Times that the Trump administration's economic plan could undermine the attractiveness of the dollar and conduct business in the United States.
In a letter in late April, Elliott said that this would jeopardize the "capital flight" and the "significant" decline in value of U.S. assets.
Elliott declined to comment.
Warnings on Trump’s tariff blitz has sparked weeks of turmoil in financial markets and marks the latest criticism of the White House, from the $73 billion asset asset hedge foundation that said earlier this year that the president’s embrace of cryptocurrencies fueled speculative mania.
Elliott wrote in the letter that the tariffs the government considered “maybe more than the tariffs that intensified the Great Depression of the 1930s” wrote in the letter that after Trump announced a 90-day moratorium that he conquered a 90-day pause last month, but this fueled further in our trade trade this week, which led to further gains from his trading partners.
"This tariff will bring a long, complex process of negotiations, retaliation and uncertainty for businesses around the world," the company added.
According to website OpenSecrets, singers have been a major donor to Republicans in recent years, donating $56 million to the party’s candidates in the last election cycle.
A small group of Wall Street figures oppose Trump's economic policies. Citadel founder Ken Griffin, another major Republican donor, said last year that the president's tariff plan would tilt the United States "toward nepotism." Trump’s supporter Bill Ackman described the tariffs as “a major policy mistake”, while billionaire investor Stanley Druckenmiller said he does not support more than 10%.
Elliott also said in the letter that the sell-off following Trump's "Liberation Day" tariff announcement caused "massive capital damage."
The S&P 500 fell as much as 15% in early April, but all of that loss has recovered since then as trade tensions retreat.
Nevertheless, Elliott said the episode highlights the “vulnerability” of “a massive overvalued stock markets.”
Hedge funds rose about 2.5% in the first quarter of this year, according to data in the letter. The company added that the turmoil caused by tariffs could create greater opportunities for aggressive investments, as market pressures “reveal the weaknesses of companies that need correction.”