Economic Effects of U.S. Putting ‘America First’
At the start of this century, the internet enhanced global communication, and the world transitioned into one massive economy. But this new landscape came at a cost, and after years of hardships, including terrorist threats, domestic recession, income gaps and divisive politics, the country is now turning its focus inward on “America First” economics.1
The United States has pulled away from some global trade agreements and enacted higher tariffs on imported goods, presenting an interesting conundrum for investors, who were advised for years to diversify portfolios to take advantage of international holdings.2
If investors mirror the federal government’s economic policies by focusing only on U.S. holdings, they could stand to lose out on both the advantages of diversification and the opportunity for positive performance by companies abroad.3 If you’re wondering how current U.S. policies might affect your investment strategy, please contact us for a comprehensive portfolio review.
The U.S. isn’t the only country focusing on more populist policies. Since the United Kingdom (U.K.) voted to exit the European Union, there has been a trend of decentralization. London has previously led the way in European entrepreneurialism and technology, but the U.K.’s separation efforts sparked an outcrop of new tech startups in Eastern European countries previously off the IT radar.4
Don’t count the U.K. out, though — it recently launched major investments into the artificial intelligence field, putting together a $1.4 billion deal that could potentially launch U.K. companies to the forefront of AI technology.5
The tech industry has also grown in Latin America, where international investment in Latin American startups have doubled since 2013.6
India and France have joined forces to advance renewable energy in the world’s electricity markets.7 However, when it comes to the renewable energy market, China is poised to become the new world leader now that the U.S. has pulled back its investment interest.8
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1 Anthony Davidow. Charles Schwab. April 2, 2018. “Why Global Diversification Matters.” https://www.schwab.com/resource-center/insights/content/why-global-diversification-matters. Accessed May 11, 2018.
4 Zoe Henry. Inc. March 21, 2018. “Why Business Is Booming in These 6 Unlikely European Cities.” https://www.inc.com/zoe-henry/6-emerging-eu-hot-spots.html. Accessed May 11, 2018.
5 Jeremy Kahn and Alex Morales. Bloomberg. April 25, 2018. “U.K. Unveils $1.4 Billion Drive Into Artificial Intelligence.” https://www.bloomberg.com/news/articles/2018-04-25/u-k-announces-1-4-billion-drive-into-artificial-intelligence. Accessed May 11, 2018.
6 Julie Ruvolo. TechCrunch. Feb. 27, 2018. “Global tech firms and investors are reshaping Latin America’s startup environment.” https://techcrunch.com/2018/02/27/global-tech-firms-and-investors-are-reshaping-latin-americas-startup-environment/. Accessed May 11, 2018.
7 Economic Times. March 7, 2018. “Modi’s global solar ties set to brighten with Macron push.” https://energy.economictimes.indiatimes.com/news/renewable/modis-global-solar-ties-set-to-brighten-with-macron-push/63200252. Accessed May 11, 2018.
8 Helen Davidson. The Guardian. Jan. 9, 2018. “China on track to lead in renewables as US retreats, report says.” https://www.theguardian.com/environment/2018/jan/10/china-on-track-to-lead-in-renewables-as-us-retreats-report-says. Accessed May 11, 2018.
We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial or investment advice. All investments are subject to risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.
The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.
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