“Investors have been on edge as the world’s two largest economies, the U.S. and China, tiptoe toward a trade agreement,” Avi Salzman and Nicholas Jasinski write for Barron’s. “Yet even if President Donald Trump and President Xi Jinping reach a deal, a tariff peace won’t mean a return to the old ways of doing business.”
“The global system of trade is being realigned. A decadeslong drive toward freer trade across borders has begun to reverse. Globalization is being overwhelmed by populism, nationalism, and protectionism. Brexit threatens to erect new trade barriers between the United Kingdom and the rest of Europe. India just moved to limit foreign operators selling goods online,” Salzman and Jasinski write. “An eroding global consensus on free trade has led U.S. companies to modify their supply chains, often bringing suppliers closer to their end markets.”
“A recent Bain & Co. survey of more than 200 executives at multinational companies who do business in China found that 60% felt that the recent trade war had given them a chance to recalibrate their business strategies. Over the next year, 48% said, they expect to seek out new suppliers, and 42% expect to find raw materials elsewhere,” Salzman and Jasinski write. ““I do think the area with the most potential is going to be Southeast Asia,” says Robert Horrocks, chief investment officer for Matthews Asia, a mutual fund outfit… A manufacturing boom benefits local economies, which opens other investment opportunities. ‘Therefore,’ Horrocks asserts, ‘the best way of investing is to invest in local businesses with a strong competitive moat that can feed off the increased purchasing power from the new industrial workforce.'”
Read more in the full article here.
MacDailyNews Take: One need only look to Apple’s increase in Indian production to see this global trade realignment in action.
Apple supplier Foxconn to begin iPhone X assembly in India; XS and XS Max also planned – April 12, 2019
Foxconn gearing up for trial run to make Apple’s newest X-class iPhones in India – April 2, 2019