"Speaking on a Global Outlook roundtable last week, Morgan Stanley's Chief Investment Officer in the Wealth Management division, Lisa Shalett, said for many years America's healthy economy has been underpinned by a trifecta of factors: Monetary stimulus, fiscal stimulus, and imported disinflation from trade with China.This combination was "extraordinarily powerful" for corporate earnings and growth over the past 15 years, Shalett said, as consumers and companies were buoyed by domestic policies without suffering widespread price increases."
"But on Trump's "Liberation Day" (April 2, 2025), the rules of global trade shifted: Suddenly, the world's largest economy was leveraging new deals with every single one of its trading partners. The only country to fight back was China. As the dust settles and global trade routes are reestablished, many nations may be looking to improve their standing in the new world order."
America's economic advantage rested on three pillars: monetary stimulus, fiscal stimulus, and imported disinflation from trade with China. That combination boosted corporate earnings and growth over the past 15 years while limiting widespread price increases. On April 2, 2025, global trade rules shifted as the United States pursued new deals with all trading partners, provoking resistance from China. As trade routes are reestablished, many nations seek to improve their positions in a more multipolar world. Countries are considering expanded monetary and fiscal stimulus and increased defense investment. NATO defense spending targets rose from 2% to 5% of GDP. Nations must reassess reliance on cheaper Chinese goods.
Read at Fortune
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