The global economic landscape is shifting beneath our feet.
For decades, we’ve watched as supply chains stretched across continents, manufacturing concentrated in specialized hubs, and goods flowed freely across borders. But now, this carefully constructed system is under strain.
I would say the dampening of globalization didn’t start with liberation day. It began when the pandemic sent global supply chains into shock, making countries and businesses painfully aware of a hard truth: you can’t optimize based solely on lowest cost and outsource everything.
This approach makes your country and businesses fragile to shocks.
And I used the word “dampening” instead of “reversal” intentionally. Globalization is like letting a genie out of a bottle—you can’t really put it back in.
Countries have spent decades specializing in certain areas. Since the U.S.-China trade war escalated in 2018, businesses have scrambled to diversify manufacturing. But they’ve learned a tough lesson: even in supposedly “low-cost” regions, replicating China’s intricate supply chain expertise is far more challenging than expected.
Supply chains don’t shift overnight because of tariffs.
It’s not like Apple is suddenly going to be able to manufacture iPhones in America overnight and Nike can’t magically drive down costs in America fast enough to offset the new tariffs on developing nations.
Let’s be clear about what tariffs really are, especially when applied in this broad magnitude—it is a tax on American consumption.
Politically, raising tax revenue directly (through higher Goods and Services Tax (GST) or Value-Added Tax (VAT)) is a minefield—any administration attempting it risks a massive political backlash.
But frame it as “punishing” other countries for taking advantage of America? Suddenly, it becomes an easier sell.
Still, economic realities don’t care about political narratives. As rising costs eat into American paychecks, consumer sentiment—and voting behavior—may shift just as quickly.
We’re in for a turbulent ride. But here’s the remarkable thing about the U.S.—it always finds a way to self-correct.
Over a decade ago, I spoke with an American ambassador who put it bluntly:
“America will screw up from time to time—that’s a given. The pendulum will swing to extremes. But the beauty of the system is that it self-corrects.”
The U.S. Constitution’s checks and balances between the executive, legislative, and judicial branches ensure that no single entity has unchecked power. This mechanism is already at play—the Senate recently vetoed reciprocal tariffs on Canada, demonstrating that cooler heads can still prevail.
But make no mistake, the road ahead will be volatile, and not all businesses will be affected equally.
Boycotting American alcohol and beef isn’t the same as overhauling your entire tech stack. Business decisions aren’t just about costs—they’re about reliability, usability, and revenue potential.
For long-term investors, what matters now?
We want to invest in businesses that can not only survive but potentially strengthen their market position during these turbulent times. This means looking for companies with:
- Strong balance sheets — to weather unpredictable cost increases and potential revenue disruptions
- Wide economic moats — to maintain competitive position despite changing trade dynamics
- Products/services that provide significant value to consumers — ensuring continued demand even at higher prices
- Pricing power (relatively inelastic demand) — the ability to pass along price increases without losing customers
In times of uncertainty, markets tend to enter “sell first, think later” mode.
This is exactly when the best opportunities emerge. The discerning investor—one who can separate signal from noise—will find the Steady Compounders that don’t just survive this economic realignment but capitalize on it to build lasting advantage.