Take Brexit Britain and Trump’s America. Add climate change, instability in the Middle East, cryptocurrencies, and self-driving cars… and you have the world in 2018: hopeful, yet seemingly unpredictable.

We have assembled 11 unlikely events that - if they somehow happened - have the potential to profoundly affect the world as we know it.

To assess the political, economic, financial, and social impacts, IG brought together global economic/political experts to give their perspectives and predictions.

Explore some of the great unknowns facing us all today

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What If

Apple repatriates all $200 billion of its foreign assets

A change to US law means American companies are no longer able to avoid paying tax on profits stashed overseas. The move closes a rather large loophole, landing multinational corporations with huge tax bills. Could the rule change see Apple, one of the world’s biggest companies, bring all its assets back to the US?

Category: Tech Region: North America

map of USA

Our panel of experts (interviewed March-May 2018):

Thomas Hale

Thomas Hale

Associate Professor of Global Public Policy, University of Oxford

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Dr Thomas Hale is Associate Professor of Global Public Policy and Director for China Engagement at Blavatnik School of Government, University of Oxford. He holds a PhD in Politics from Princeton University, a Masters degree in Global Politics from the London School of Economics and an AB in public policy from Princeton’s Woodrow Wilson School. Hale has published four books, most recently Beyond Gridlock and Between Interests and Law: The Politics of Transnational Commercial Disputes.

John Kicklighter

John Kicklighter

Chief Currency Strategist, IG

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John Kicklighter is Chief Currency Strategist and head of DailyFX in New York City and San Francisco. He specialises in combining fundamental and technical analysis with money management. On his personal accounts, he trades spot currency, financial futures, commodities, stocks and options. Kicklighter holds a Finance and Investment degree from the Zicklin School of Business at Baruch College in New York City.

Robert Kelly

Robert Kelly

Professor of Political Science and Diplomacy, Pusan National University

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Robert Kelly is a Professor in the Department of Political Science and Diplomacy, Pusan National University in South Korea. His work focuses on international security and political economy. His areas of interest are East Asian security, US foreign policy, the Middle East, the World Bank and the International Monetary Fund. Kelly has appeared as an analyst on television news services, including the BBC and CNN.

[ What if this happened? ]

Thomas Hale
Thomas Hale
It depends what Apple wanted to do with the money. It could overnight buy any number of companies, or set up a serious new business – perhaps in areas like 3D printing or mobility. There would be a large effect in the targeted sector, or sectors, but not much beyond that.
John Kicklighter
John Kicklighter
Beyond Apple’s balance sheet showing the adjustment, the impact would likely be rather moderate. Reinvestment of those funds in the US would require that the revenue potential from those invested funds would need to be particularly more attractive to the bottom line, which doesn’t change dramatically just because of a tax holiday.
Robert Kelly
Robert Kelly
This would lead to higher dividends for shareholders and share buybacks. That is what most other firms have been doing with the Trump tax savings. There will be some capital expenditure, but the actual impact of that will take a while to feed through into the economy.

[ Likelihood ]

We asked our experts to rate how likely it is that Apple will repatriate its assets.

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[ Impact ]

Panel members also rated the impact they would expect this event to have.

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The Political Impact

John Kicklighter

John Kicklighter

Chief Currency Strategist, IG

Politicians would claim it as a victory of how conservative business policy can benefit the economy with inflated expectations for what it will mean for the economy.
Robert Kelly

Robert Kelly

Professor of Political Science and Diplomacy, Pusan National University

So long as the GOP holds Congress, there will be no political effect. Indeed, repatriation was one of the major thrusts of the bill. If the ‘blue wave’ materialises this autumn, the Democrats will flag this in the media as a political issue, but without the White House, there is little the Democrats can do. And again, Apple has a unique vibe and is popular with the left, so the Democrats will target other firms if it comes to that.
Thomas Hale

Thomas Hale

Trump would call it a “win”, but it would likely fade within a news cycle or two.

The Economic Impact

Thomas

Thomas Hale

Associate Professor of Global Public Policy, University of Oxford

There would be potentially large effect in the targeted sector, but little reason to expect significant indirect effects on others.
John Kicklighter

John Kicklighter

Chief Currency Strategist, IG

The economic effect would likely be modest in the short term, but minimal in the long run.
Robert Kelly

Robert Kelly

Professor of Political Science and Diplomacy, Pusan National University

Of Apple’s repatriation specifically, there would be little economic effect. Wealthier stockholders and institutional investors, a few more Apple stores, but not much more. The wider impact of the Trump tax bill is more interesting. All this money coming back in is supposed to ignite an investment and employment boom. Trump’s re-election effort will be judged in part on whether than happens.
Trump’s corporate tax on incomes earned abroad was one of the first policies he introduced as president. Apple already owes $38 billion in tax as a result of this policy and says it will bring 20,000 more jobs to the US over the next five years.

The Financial Impact

John Kicklighter

John Kicklighter

Chief Currency Strategist, IG

It is very unlikely that all these funds would be transferred at one time, as any time a particularly large trade is crammed through the market, there is the risk of exceptional slippage. This would be much more than a large trade. If they did bring back all of their offshore profits, it would likely be done in a slow and measured manner so as not to upend the market. There is such a thing as an orders-oriented trading approach, such that the focus is ‘working’ the position in a set time frame without detrimentally impacting the price of the security you are executing in. Given the sheer depth of the US dollar market which this would theoretically impact, and the accounting interests the company would have, it is unlikely that the currency would reflect much impact.
Robert Kelly

Robert Kelly

Professor of Political Science and Diplomacy, Pusan National University

This one is easy. Apple’s stock price will go up. It always goes up. The market loves Apple, and it loves corporate tax cuts. So Apple should improve, and the stock market generally should go up too.
Thomas Hale

Thomas Hale

There would be a potentially large effect in the targeted sector, but little reason to expect significant indirect effects on others.

The Social Impact

John Kicklighter

John Kicklighter

Chief Currency Strategist, IG

There would be a goodwill benefit for Apple as it is no doubt spun by the company’s PR team as a move for America.
Robert Kelly

Robert Kelly

Professor of Political Science and Diplomacy, Pusan National University

This would cause a sharpening of the discussion around inequality. The big reason the left opposed the Trump tax bill is because it benefited corporations a lot during a period of growing inequality. As the repatriation savings go to shareholders, there will be further criticism along these lines. But only elites really worry about this stuff, so there will be little cultural impact. And Apple’s unique cachet will protect it specifically from a lot of that criticism.

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