A New Era of Global Trade
Whether the latest US tariffs will go ahead as announced or are eventually rolled back, there’s no doubt we’ve entered a new era of global trade.
The fact that broad-based tariffs can be introduced suddenly, targeting over 150 countries, will change how companies think about risk. Businesses now have to prepare for scenarios they might not have considered before. They’ll need to reassess manufacturing locations and sourcing strategies, not just for political reasons, but also for risk management.
Countries like Vietnam, long seen as manufacturing alternatives to China, are now being drawn into the crossfire. But the good news is this also opens up new opportunities for the right businesses in the right sectors. Some companies will lose out. Others will adapt and come out stronger. That’s where investors should be looking.
Stock markets worldwide have been rattled over the past week, and the temptation in moments like this is to overreact. But the best approach is to stay calm, step back, reassess, and look for the opportunities that always emerge in times of uncertainty.
Tariffs are forcing companies to rethink their supply chains. This shift was already underway during Trump’s first term, but this time, it’s likely to accelerate. Firms will need to source more locally or automate more of their processes to keep costs under control. That puts companies in automation, robotics and advanced manufacturing technology in a strong position. They’re providing the tools businesses need to stay competitive in this environment.
On a country level, Vietnam, for example, has already signaled it’s open to negotiating a trade deal with the US. Countries that are willing to engage and adjust will likely be in a stronger position.
As for China, there’s still a chance it may come out a winner, but it’s facing a tougher road. If it can strengthen trade ties with other countries and redirect more of its exports outside of US channels, it may soften the blow. But this won’t be easy. Just yesterday, Trump announced a 90-day pause on “reciprocal” tariffs for most countries, excluding China. He has also raised tariffs on Chinese goods substantially due to the “lack of respect that China has shown to the world’s markets.” US tariffs on imports from China now stand at a staggering 145%. It’s clear the pressure is squarely on Beijing.
One angle that’s often overlooked in trade is the volume of Chinese goods flowing to the US through other countries. Vietnam is a good example. A significant amount of Chinese products are exported to Vietnam and then re-exported to the US. But it’s not just Vietnam. If you look at global trade balances, many countries run trade deficits with China and trade surpluses with the US. That’s often because they’re importing Chinese goods and then shipping them onward to the US. This gives China an indirect channel into the American market, even under heightened tariffs.
Meanwhile, the tariff war has prompted growing concerns about a US recession, and I believe it’s a real risk. But this isn’t just about the US, a global slowdown is possible, especially if trade tensions ripple through supply chains and consumer demand. That said, if the US follows through with pro-growth measures like reducing regulation and cutting profit taxes, it could set the stage for a quicker rebound.
Now more than ever, cash matters. Not because you want to sit on the sidelines, but because it gives you the flexibility to invest when opportunities appear. And they will. Some stocks are being dragged down by gloomy news headlines, not by their fundamentals. That’s where value often hides.
Gold also has a role to play. In a world of rising uncertainty, it remains a reliable hedge.
We’ve entered a new phase of global trade. The winners will be the ones who stay flexible, stay calm and focus on strong fundamentals and the ability to adapt.
