Globalisation or De-globalisation?
I am not much of a conspiracy theorist and am still sitting on the “is Donald Trump a great political strategist?” fence, but is his tariffic idea really part of a strategy to prevent China from overtaking the US as the World`s premier superpower and economy in years to come via Trump`s seeming attempts at de-globalisation?
Martin Hutchinson, former investment banker, journalist and Breakingviews columnist says “there is a case for de-globalization” and although Martin avoids implying any conspiracy, he reminds us that tariffs are by no means unheard of and that globalisation and therefore, free trade is not that simple. After all Ronald Reagan and George W. Bush took similar actions on tariffs.
Hot on the heels of this is yesterday`s news that President Trump has blocked the hostile Broadcom takeover of Qualcomm, both chip makers and Broadcom was reincorporated in Singapore a few years ago and so although it`s operating headquarters are in California, it is foreign owned and held. The proposed deal has been under investigation by the Committee on Foreign Investment (CFIUS) in the US. Treasury Secretary Mnuchin said that the decision was based on “national security sensitivities” This decision is part of a string of decisions in recent years. Trump halted the takeover of chip maker Lattice last year by a private equity firm with ties to China. President Obama barred a Chinese-owned business from buying into Aixtron. President Trump`s administration is also using Section 301 Trade Act investigations into foreign take-overs of US companies. Many of these investigations seem to surround Chinese connections.
All arguably part of a de-globalisation plan.
So what has this got to do with what we, as traders do? Potential additional volatility as investors nerves fray upon each and every headline implying a de-globalisation type event, comes out. Something will likely give, so beware.
Give Martin Hutchinson`s piece a read and let us know what you think.