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Last time, I began our annual survey of Forstrong’s Super Trends for 2025 with Super Trend No. 1: Still no soft landing. In this article, I’ll look at Super Trend No. 2: The protectionist paradox.
Donald Trump once declared “tariff” the most beautiful word in the English language. But let’s not mince words: Protectionism is rarely a positive force for global growth. Trade restrictions drive up production costs, distort supply chains, and invite retaliatory measures from trading partners. Politicians, eager to resonate with voter grievances, increasingly position globalization as the root of economic challenges. Yet the benefits of a globally integrated economy are substantial, and reversing decades of progress would trigger a painful and protracted adjustment process.
Tariffs in particular, are economically illiterate, prescribing bilateral solutions to deeply interconnected global challenges. America’s substantial trade deficit, spread across over 100 countries, cannot be “fixed” by imposing tariffs on a select handful of trading partners like Canada, Mexico, or China. In reality, such measures simply divert trade to higher-cost producers, effectively acting as a hidden tax on domestic consumers.
Heading into 2025, most investors anticipate a return to Trump’s 2018-style trade wars. But the world has changed. Back then, U.S. trading partners were unprepared. Now, many countries have taken steps to fortify their economies, erecting their own tariffs, export controls, and alternative trade networks that bypass the U.S. A new class of “connector countries” has emerged – economies like Vietnam, Brazil, and Malaysia – that act as intermediaries in global supply chains, bridging gaps between U.S. and Chinese trade flows.
While this adaptation has kept global goods trade resilient (hitting record highs of $23 trillion recently), it has come with tradeoffs: diminished efficiency; higher inflation; and elevated private-sector borrowing costs in nations imposing tariffs.
The global economy’s adaptability has been driven by two key forces: the agility of multinational corporations and the strategic pivot of nations toward self-reliance. China, for example, has accelerated its domestic industrial policies, becoming a global leader in industrial machinery, renewable energy, and electric vehicles (selling over 9 million of the total 14 million units sold worldwide in 2023).
With Trump’s tariff agenda returning, other nations will double down on similar strategies. Expect heightened fiscal stimulus, increased support for local industries, and expanded domestic manufacturing as countries compete to bolster their economic resilience. As in the U.S., these measures will be bullish for domestic corporate profits over the near-term, as government deficits expand to fund local industries and foster strategic self-reliance.
The world is moving toward an era of fragmented globalization — not its end, but its reinvention. Embrace this shift by focusing on sectors and geographies poised to benefit from competitive economics.
Watch this space in the coming weeks, when the Forstrong investment team – drawing on centuries of combined experience – unpacks more of the world’s most influential Super Trends. Our hope is that these reports provides clarity amid the noise, helping you navigate this era of fragmentation with confidence.
Tyler Mordy, CFA, is CEO and CIO of Forstrong Global Asset Management Inc., engaged in top-down strategy, investment policy, and securities selection. This article first appeared in Forstrong’s 2025 Super Trends Report: Fifty Shades Of Greatness. Used with permission. You can reach Tyler by phone at Forstrong Global, toll-free 1-888-419-6715, or by email at tmordy@forstrong.com. Follow Tyler on X at @TylerMordy and @ForstrongGlobal.
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Content © 2025 by Forstrong Global. All rights reserved. Reproduction in whole or in part by any means without prior written permission is prohibited. Used with permission.
The foregoing is for general information purposes only and is the opinion of the writer. The author and clients of Forstrong Global Asset Management may have positions in securities mentioned. Performance statistics are calculated from documented actual investment strategies as set by Forstrong’s Investment Committee and applied to its portfolios mandates, and are intended to provide an approximation of composite results for separately managed accounts. Actual performance of individual separate accounts may vary with average gross “composite” performance statistics presented here due to client-specific portfolio differences with respect to size, inflow/outflow history, and inception dates, as well as intra-day market volatilities versus daily closing prices. Performance numbers are net of total ETF expense ratios and custody fees, but before withholding taxes, transaction costs and other investment management and advisor fees. Commissions and management fees may be associated with exchange-traded funds. Please read the prospectus before investing. Securities mentioned carry risk of loss, and no guarantee of performance is made or implied. This information is not intended to provide specific personalized advice including, without limitation, investment, financial, legal, accounting or tax advice.
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