The world went global a long time ago and prospered. International companies, whether from the United states or any other nation, extended their production processes across their markets. They located technology research where they found the greatest skills. Factories were built to take advantage of appropriate labor. They bought components from the best suppliers whever they were, and they put distribution centres as close to their target populations as they could. Trust in governmental coherence, as well as massive investment, allowed these supply chains to be managed in a timely and efficient way.
Trump’s “little America” trade war is an assault on this trust and on the highly developed and efficient trade structures now in place. Expect multi nationals whether from the US, Europe or China to pull back from their global committments and instead to focus on their national and local markets. At first blush “little America” may look to be winning – but in the longer run I am not so sure. We may not be quite the 500lb gorilla we thought we were. Our population here in the US is relatively small at just 340 million. In the EU it is 510 million, and in China 1.4 billion!
Scale matters. All told there are now 828 million Asians millenials – we have just 66 milion – there are 300 million in China alone!
I know where I think the eventual winners will be.
Expect to see pan Asian and pan European trade agreements continue to build without the US.
It is hard to see how our chaotic trade strategies are likely to improve the shining hour!
Have a good day, James