After the US-China tariff pause earlier this year, something strange occurred on Wall Street. Many investors were convinced that the worst was over—that the real “blows” and “uncertainty” were behind them. Such a sentiment drove new market rallies and “absorbed” the shocks of new trade tensions, like between the US and EU or the US and Japan (see sidebar).
[Sidebar: For now, the US-Japan trade deal is in limbo as Washington and Tokyo lock horns on how Japan’s $550 billion investment commitment should be spent in the US. And, as the White House proposes government investment to revive factories and manufacturing, further bringing the state into the economy, kind of like China.]
Many on Wall Street, and elsewhere, seemed to ignore the signs, all of which pointed to the same thing: there was no trade war between the US and China. Instead, a 21st-century economic war had begun that would reshape the world—a sentence I have repeated for months now. A tariff pause did not mean the worst was over. Far bigger and more significant shocks would strike. Within 60 days, by July, global alarm bells were ringing as China weaponized rare earth exports.
👁 GEOPOLITICAL FORESIGHT ON US-CHINA FUTURE
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