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Trading Geopolitics: The Long View on Growing U.S.-China Tensions

Economic and financial ties between the world's two biggest economies are increasingly fraying. We discuss the long-term outlook and implications for investors.

Since the U.S.-China trade war began in 2018 with tit-for-tat tariffs, frictions between the two nations have flared in technology and finance. In addition, with the sanctions on Russia and escalating tensions over Taiwan, geopolitical considerations likely will gain more weight in investment decisions.

While this situation poses rising geopolitical risks for investors compared to the past era of globalization, our medium-term baseline still expects mutual economic and financial interests between these two large economies will offset political pressures to act more quickly and dramatically. Instead, we anticipate a gradual trend of manufacturing and supply chain shifts over the next several years, balanced by mutual interests to maintain access to each other’s large domestic markets.
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The Author

Lillian Lin

Portfolio Manager, Investment Grade Credit

Abhijeet Neogy

Portfolio Manager

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