Strategic Macro Themes: Navigating a Shifting Global Landscape

As global capital flows continue to realign across economies and corporate balance sheets, our team is closely tracking several critical macroeconomic and geopolitical developments. Below is a summary of the key themes shaping our strategic outlook:

Trade Realignments and the “Chexit” Era

Shift Away from China

The U.S. has significantly reduced direct trade with China, redirecting flows to countries such as Mexico, Vietnam, and India. These nations increasingly serve as intermediaries in supply chains that still rely on Chinese components.
In response, China is deepening trade ties with emerging markets across Africa, Latin America, and Southeast Asia to diversify away from Western markets.

Rise of Economic Nationalism

In 2025, the U.S. imposed sweeping new tariffs1:

• 30% on most Chinese imports, with exceptions like smartphones at 20%.
• 25% on steel, aluminum, and non-USMCA-compliant goods from Mexico and Canada.
• 10% baseline tariffs on most other imports, including from the EU.

These tariffs are framed as reciprocal and based on trade deficit ratios, not purely retaliatory.
Legal challenges were initially successful, but an emergency appeal reinstated the tariffs.

Friendshoring and Nearshoring

Supply chains are increasingly relocating to politically aligned nations. The EU is expanding trade with the U.S., ASEAN, and Africa while reducing reliance on Russia and China.

Fragmentation of Global Trade

The global trade system is becoming more fragmented and opaque. Regional trade blocs and indirect trade routes are replacing traditional global supply chains, resulting in higher costs, investment delays, and reduced transparency.

Strategic Sectors Under Pressure

• Critical sectors such as semiconductors, industrial production, and critical minerals are at the center of these realignments.
• The U.S. and EU are investing heavily in domestic capabilities, while China is securing long-term supply contracts with resource-rich nations.

 

→ Strategic Outlook: We are adopting a globally diversified and defensively postured approach to navigate the volatility and complexity of evolving supply chains.

Global Technological Competition

U.S. / China Rivalry

The U.S. and China remain locked in a high-stakes race for technological supremacy in AI, semiconductors, and quantum computing. Both nations are investing aggressively in domestic innovation while restricting cross-border tech flows.

Green Tech and Strategic Autonomy

The EU is leading in green technology, while the U.S. and China compete over battery supply chains and clean energy infrastructure. Reshoring is accelerating as nations seek to reduce dependence on geopolitical rivals.

Emerging Tech Hubs and Space Innovation

Countries such as India, South Korea, and Brazil are emerging as influential tech players. Meanwhile, space technology is becoming a new frontier, with both public and private entities expanding satellite and lunar initiatives.

 

→ Strategic Outlook:  The U.S. regulatory landscape is evolving rapidly to support competitiveness in the global tech ecosystem. Our focus is on understanding how firms are positioning themselves in this dynamic race.

 

“Big Beautiful Bill” – U.S. Fiscal and Tax Policy Update

Passed by the House on May 22, 2025, and currently under Senate review, the bill includes several impactful provisions:

Extension of TCJA Provisions

• Permanently extends lower individual tax rates and the doubled standard deduction from the 2017 Tax Cuts and Jobs Act.
• Maintains high estate tax exemptions and limits on mortgage interest and itemized deductions.

 

New Deductions and Credits

• Introduces temporary deductions for tips, overtime, auto loan interest, and a larger standard deduction for seniors.
• Expands credits for child care, paid family leave, adoption, and education.

 

Business and Investment Incentives

• Restores 100% bonus depreciation and expands pass-through business deductions.
• Enhances tax benefits for small businesses, manufacturers, and Opportunity Zones.

 

Health and Savings Reforms

• Expands Health Savings Accounts (HSAs) and codifies CHOICE health reimbursement arrangements.
• Adds employer incentives and adjusts eligibility for premium tax credits.

 

Revenue Offsets and Fiscal Impact

• Introduces new limits on SALT deductions, nonprofit tax rules, and international tax enforcement.
• Projected to increase the federal deficit by $2.4–$3.8 trillion over 10 years ², with tariff revenue cited as a key offset.

 

→ Strategic Outlook:  We anticipate further amendments before a Senate vote. The broader implication is a continued reliance on deficit financing to support government initiatives, which may influence long-term fiscal sustainability and market sentiment.

 

Sources:

• ¹World Economic Forum weforum.com
• ²Congressional Budget Office – cbo.gov

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