NN Investment Partners: Trade risks threaten permanent damage to global order

Trade truce stalling tactic not peace pact

Trade and financial integration has driven globalisation at any cost, resulting in income inequality and disparities in democratic power, driving a sense of loss at both ends of the political spectrum and inciting a rise in populism that threatens to demolish the economic status quo.

Financial markets are still struggling to gauge what Trump's increasing appetite for trade tariffs means for global growth. The appreciation of the dollar since April, largely driven by the substantial relative outperformance of US growth, has proved to be a headwind for emerging markets. The trade conflict with China is yet another headwind blowing directly from Washington. We see the recent trade truce as an attempt to buy time rather than a peace pact, and there is no guarantee that tariffs won't be introduced at a later date. An important condition for a return to calmer waters is...