Global Outlook & Strategy

Our title for this publication of our Global Outlook and Strategy is Tectonic Shifts. This title is a reflection on the significant changes that are likely to occur across the global economy and markets following the shifts in the geopolitical and economic landscape. The core focus in the first part of 2025 has been the aggressive policies by the incoming Trump administration across trade, budget and defence policies. The US has become far more overt about the power struggle at play between themselves and China, and this has been most acute in terms of the 145% tariffs proposed on Chinese goods at the time of publishing. These policy moves are likely to have longer term ramifications that we believe will result in:

• A degree of fragmentation in the environment for global trade that will likely result in more acute trading blocs.
• Lower levels of trust in the US administration by foreign powers than has historically been the case.
• A change in the desire of some nations to participate in the US capital markets.
• A higher resting place for inflation.
• A lower level of economic growth than what might otherwise have been the case.

We need to temper our concerns and keep front of mind the transactional nature of the Trump Administration and their ability to pivot from what is perceived as a strong position. Extreme positions have historically been quickly wound down!

The key questions going forward will be the ability of monetary and fiscal policy to support these adjustments, and the resilience for markets. The good news is that the starting position is far better than was the case in the run up to the global financial crisis.