We are all mercantilists now
13 days ago
- #investment strategy
- #mercantilism
- #global economics
- Bridgewater Associates focuses on understanding global markets and economies to provide insights for institutional investors.
- The global economic system is shifting from free trade to 'modern mercantilism,' with increased government intervention in economies.
- Key tenets of modern mercantilism include state orchestration of the economy, avoiding trade deficits, promoting self-reliance through industrial policy, and protecting national corporate champions.
- China's adoption of mercantilist policies has significantly disrupted the previous global free trade system, leading to concerns about supply chains and manufacturing dependencies.
- The US and China's move towards mercantilism is pressuring other regions, like Europe, to reconsider their economic policies to remain competitive.
- Modern mercantilism will reduce market competition, as government policies will increasingly determine corporate success through tariffs, industrial policies, and export controls.
- Countries with trade deficits may have an advantage in trade wars, but retaliation could take various forms, including restrictions and taxes targeting specific industries.
- The shift to mercantilism marks a profound change in the global economic order, with significant implications for asset portfolios and investment strategies.