If you ask most business and financial experts, they would tell you that the future, like the present, is global. But how true is that? Recent trends have led experts like those at Southridge Capital, a high-end financial consulting and solutions provider, to question that logic. In fact, what they see is a trend towards de-globalization, meaning that markets are shrinking and becoming more regionally or nationally dependent, which could change the way of the future of business.
Southridge Capital and other financial industry experts have noticed a lot of discussion related to national tariffs in the news lately and point to this as further evidence for the accelerating pace of de-globalization. Recently, President Trump of the United States has been making waves in the news with his talk about new tariffs on steel and aluminum imported from outside the country. This has led to a lot of panic, but is it warranted? Experts at Southridge Capital and others say that, while it may not be the bull in the china shop that some people seem to think it is, one would be making a grave error to ignore it as well.
In order to understand the rise of these de-globalization policies and practices, experts at Southridge Capital and other financial analysts note that you cannot ignore recent history. Much of this trend started in the aftermath of the financial crisis that began in 2008. Nations around the world, including major financial powerhouses like the United States and Europe, saw dramatic amounts of chaos and panic result from the housing bubble bursting which ultimately culminated in the almost collapse of the financial industry in 2008.
Average people suffered dramatic losses, whether it was their home, their retirement, or even their livelihood. Nations scrambled to try to get the situation under control, but the result was massive bailouts paid for by the taxpayer—the real victim of the financial crisis. This has led to a huge rise in voter anger and dissatisfaction with how things are being managed. They noted that they were being asked to foot the bill for the excesses of a small few, they were the ones that were losing their homes, their wealth, and their means of taking care of their family. Populist politicians, naturally, latched on to these emotions and pointed at various countries or people that are responsible for the plight that voters are dealing with.
Southridge Capital and other industry experts note that the politicians aren’t entirely wrong, but the response of trying to close off and reduce outside trade and financial dealings may also be the wrong decision, though it is the trend we seem to be currently following. For better or worse, what voters see is that international trade is not benefiting them in the ways that protected trade once did and are demanding that something be done to close the gap they see widening in the distribution of wealth.
There are a lot of flaws in the international system and the United States in particular faces a range of weaknesses as the currency of the global trading standard. There are many ways this position of seeming power can actually end up being a weakness, as other nations can actively work to devalue the currency, which has huge implications for American citizens. This can be used to achieve a trade surplus for other nations, which makes their products more competitive than American goods.
Recent talks by the United States about tariffs is, as seen by Southridge Capital, as an attempt to help rebalance that trade imbalance in favor of the United States. Regardless of where these talks go, many people expect there to be volatility in the steel and aluminum industry. These issues, coupled with the rise of populist movements across Europe and much of the rest of the world, make it likely that we are seeing one of the most dramatic political and economic realignments since World War II.
It is next to impossible to predict which financial sectors or investments will be the winners and which will be the losers, but one should expect a lot of variability and change. There will be a lot of faltering and the trend of de-globalization is one that is likely to amplify before the proverbial tide starts to turn back towards more international machinations. One must prepare for volatility and be flexible in the face of rapid change. All trends reverse themselves in due course and those who can weather the proverbial storm are those who can ride the ebbs and flows. The most recent news about the United States steel and aluminum tariffs is just further indication that the trend towards a more populist economic policy is likely to continue for some years into the future, which would mean a dramatic shift in the very nature of international economics.