America first trade
America first trade could be a long term win. The Trump administration’s America first policy is not just political rhetoric. US president Trump’s willingness to escalate tariffs on China is a clear sign of a foreign policy shift in Washington.
America first policy comes from the interwar period and was advocated by the America First Committee, a non-interventionist pressure group against the American entry into World War II.
America first trade is being jet-propelled by an America first policy
It is a policy of American nationalism, unilateralism with the emphasis on bilateral agreements which are being promoted and now implemented enthusiastically by the current US administration.
America first trade has a domestic and international angle
Atlanticism is making a comeback and I believe that it’s the dawn of a geopolitical macro trend with long term implications on investment portfolios.
America first trade is going to provide investors with winners and losers
US treasuries along with the dollar are likely to benefit from the America first trade.
USD hegemony is being defended and maybe even strengthen due to the policy shift in Washington.
If so, perhaps then the USD appreciation against a basket of foreign currencies reliant on international trade, particular along the new Silk Road (outside the dollar sphere) could be a trend in its infancy.
America first trade means go long (buy) stocks in US Strategic industries
These are companies that a country considers vital for its economic development. For example, the steel industry, important commodities, and the techno-driven sector, particularly those active in next-generation technology. are likely to do well in a US-China trade war.
America first trade will also offer investors with short selling opportunities
Foreign companies which are considered to be a threat to US national interests will be hit hard from an America first policy.
The Trump administration’s latest move was to ban Huawei, the Chinese telecommunications equipment giant from the US. Huawei was cited as being a “foreign adversaries” and deemed to pose unacceptable risks to national security including from cyber espionage and sabotage.
But banning Huawei, on national security grounds, is a double-edged sword as the telecommunications equipment maker helped to build broadband in rural America faster and at a lower cost.
Does America first trade mean that Europe will be on the losing end?
Member states within the European Union (EU) are obliged to adopt the EU’s foreign policy.
So if the EU undergoes a policy shift, in other words, embraces Atlanticism (the US international brand of Americanism) then the economic impact of an America first policy would be less severe.
But there is no indication of an EU policy shift, in fact, the rift between the EU and the US has never been so wide. The worst-case scenario would be that the EU is the next in line for a raft of trade barrier biting sanctions, quotas.