MSQ Capital’s Paul Miron says Trump’s return could reshape global trade and fast-track deglobalisation — with major consequences for Australia.
6 min
Regardless of whether you are a Trump supporter or not, given the stock market turmoil and what can only be interpreted as personal attacks on global trading partners, Trump is quickly becoming one of the most globally polarising presidential figures in US history.
The trade war threatens global economic stability and reverses 80 years of globalisation. Geopolitics shape the global financial landscape, resulting in trade wars, wars, and sanctions, forcing nations to rethink their economic strategies.
Expect significant volatility to continue because we are in for a bumpy and uncertain ride during the remaining term of Trump’s presidency; diversification across lowly correlated asset classes has never been more critical.
Trumpenomics might be the most crucial economic experiment in modern history, and if you think this has no impact on Australians, think again.
The US economy is the world’s largest consumer of products, and its trade deficit is running at US$147.9 billion per month. This is certainly not sustainable.
Federal debt stands at an all-time high of US$36.4 trillion, equating to 123% of GDP. This has been built up over decades because of the American consumer’s voracious appetite for cheap products delivered to them through globalisation.
However, the music has to stop one day to avoid continuing to fall into the inevitable debt spiral.
Trump argues that the fall in manufacturing in the US from 15.8% to 10.1% of GDP in the past 25 years has resulted in the single most significant deterioration in the living standards of the middle class, with the wealth being transferred to manufacturing economies such as China and Japan.
Despite Trump’s bizarre public interpretation of tariffs, they essentially tax US citizens’ consumption. Trump is infatuated by the Gilded Age in the US (1870 – 1900), when there was no personal income tax and governments raised most of their income through tariffs.
Over the past 80 years, globalisation has been a powerful growth engine, lifting billions out of poverty, lowering consumer prices, and fostering unprecedented economic interdependence.
For the US economy, globalisation enabled access to vast export markets, cheap imports, and global capital flows, keeping inflation in check and sustaining consumer demand.
Globalisation has delivered extraordinary prosperity to the US, with the complex, interconnected global supply network we enjoy today.
The benefits of this network have been built over decades, with many US firms opening complex international supply chains to extract maximum global competitiveness. We do not know how they will be impacted, what the unintended consequences of these companies needing to trade under the new world order will be, and how this will affect both US and global markets.
Before the Global Financial Crisis, global trade exceeded 60% of world GDP. Since then, geopolitical fragmentation, supply chain vulnerabilities, and rising protectionism have ushered in an era of deglobalisation. The peak of globalisation is widely considered to have occurred in the mid-2000s.
A deglobalisation trend gathered pace during the COVID-19 pandemic, highlighting countries’ vulnerabilities and sovereignty in severe crises. It is important to note that from an economic standpoint, we have reached a pivotal point where the benefits of globalisation have been fully absorbed by our current Western economies.
Therefore, the current costs of global trade outweigh the benefits and a growing group of economists such as Dani Rodrik, Richard Baldwin and Nouriel Roubini firmly support deglobalisation.
The irony of Trump’s intentions regarding tariffs is that they have a sound fundamental economic basis when applied evenly, fairly, and measuredly. They are not an attack on trading partners, but a tax placed on consumers.
However, when tariffs are intentionally imposed to harforeign countries, we enter a different geopolitical game, resulting in trade wars, shifting alliances, increased global tensions, conflicts, and the risk of wars.
1https://www.economist.com/international/2009/02/19/turning-their-backs-on-the-world
Two historical case studies provide glimpses of rational thinking that supports tariffs: the US-China trade war initiated by Trump in his first term in office, and Russia’s economic resilience under Western sanctions, offer valuable lessons for Australia.
While distinct in their circumstances, both examples underscore the importance of self-sufficiency, local manufacturing, and strategic economic policies to withstand external pressures.
During Trump’s first presidency, he launched a tariff war, primarily targeting China, to reduce the US trade deficit and encourage domestic manufacturing. His administration imposed tariffs on billions of dollars’ worth of Chinese imports, arguing that unfair trade practices and intellectual property theft had disadvantaged American businesses.
The strategy was designed to make imported goods more expensive, incentivising firms and consumers to buy domestically produced alternatives.
While the immediate effects included increased costs for US consumers and retaliatory tariffs from China, the broader goal was to shift supply chains, encourage domestic production, and reduce reliance on foreign economies. Some industries benefited—such as steel and aluminium manufacturing—while others, such as agriculture, suffered from reduced exports due to retaliatory measures.
The long-term impact remains debated, but the lesson is clear: economic policy tools, such as tariffs, can strategically reorient an economy toward self-reliance.
A parallel case is Russia, which, despite facing heavy sanctions from Western nations, after its 2014 annexation of Crimea and, more significantly, after its 2022 invasion of Ukraine managed to sustain and even grow its economy.
Sanctions aimed to cripple key industries, limit access to global financial markets, and pressure the government into compliance. However, Russia’s response was instructive. The country aggressively pivoted toward self-sufficiency, particularly in food and energy production.
Russia mitigated the impact of sanctions by increasing local manufacturing and shifting trade to non-Western partners such as China and India. The Ruble remained relatively stable due to strict capital controls and alternative trade agreements.
This demonstrated how a nation can adapt when forced into economic isolation by fostering domestic industries and securing alternative markets.
Perhaps it is worthwhile to delve into Trump’s psychology, which has been formed throughout his career, a businessman deeply rooted in high-stakes negotiation, underpinned by access to immense financial resources and brand capital.
Inheriting a real estate business from his father, Trump expanded the empire into Manhattan’s luxury property market, leveraging aggressive deal-making and media-savvy self-promotion.
Trump consistently positioned himself as a power negotiator, unafraid of risk or confrontation. This negotiating style, as erratic and aggressive, comes from a position of power and wealth, which has paid off all his life and is all that he knows.
Now, as President, he is applying the same leadership style while in charge of the largest economy in the world, as he has done throughout his life. Regarding the position on tariffs, do not expect any consistency; he will pivot and change his position as frequently as he changes his underwear, leaving everyone consistently guessing.
Meanwhile, Trump-esque logic and rationale will always justify his actions with gusto and unquivering confidence.
Perhaps this is where the high-risk strategy evolves. There is no doubt he is going for broke, and it is anyone’s guess as to where this will end. There may be global recessions with markets overwhelmingly turning pessimistic.
Alternatively, he will end up with low interest rates so that government debt is more manageable, thereby reducing income tax and regaining local popularity by reorienting the economy in record time as world leaders cave into Trump’s outrageous demands and hurt the Chinese economy. It is also plausible that straight base 10% tariffs are applied, with the exception of China; only time will tell.
Despite Trump’s overall strategy with tariffs in these unprecedented times, any politician, economy, asset class, or equity fund manager can go from hero to villain back, and then back to hero overnight.
Investors should take note and ensure they do not make decisions based on pure emotion and be led by animal spirits (the collective mood of the market).
Many economists and politicians have been calling for an emergency rate cut. This is highly unlikely, despite these recent events damaging consumer and business confidence. There are endless permutations on how this may impact our economy.
Our Reserve Bank Governor has on many occasions said that they make decisions based on data. There is still inflationary pressure that could be placed on our economy from the shifting nature of trade and geopolitics, and there is no need to rush to a decision that could be made in haste.
Whether Trump plays the long or short-term game, tariffs will accelerate the deglobalisation trend. Australia must focus on reducing import dependence, strengthening local manufacturing, and diversifying trade partnerships.
From an investment perspective, there has never been a more critical time to ensure the right diversification in one’s investment portfolio.
Despite the best research conducted by large fund managers regarding the correct composition of shares, fixed interest, alternative assets, and private funds within the portfolio, there is often a lack of understanding of how these types of, either black swan events or long structural changes to the economy, can set back one’s portfolio so considerably.
As a private credit fund manager, we can only see increased investor demand in Australia as there continues to be growing uncertainty and volatility in the equity markets.
Paul Miron has more than 20 years of experience in banking and commercial finance. After rising to senior positions for various Big Four banks, he started his own financial services business in 2004.
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Investors are bracing for a bumpier fall stock market due to shifting odds of a Federal Reserve interest-rate increase and other macro challenges.
3 min
The stock market had a decent summer. Investors are bracing for a bumpier fall.
In the past couple of months, equity investors cheered soaring profits at big companies, shrugged off jitters in the bond market and nudged megacap tech shares back near records.
Now, as the post-Labor Day stretch begins, a number of new challenges lie ahead: ever-shifting odds of an interest-rate increase from the Federal Reserve. Sky-high expectations after a stunning earnings season. The persistent threat of higher consumer prices as fighting in the Middle East drags on.
“You’re moving from this earnings-driven market to this macro-driven market with the Fed, inflation and interest rates in focus,” said Keith Lerner, chief investment adviser for Truist Advisory Services. “It tends to be a choppier period.”
Historically, every major U.S. stock index experiences its worst average return in September. The Dow Jones Industrial Average has slid an average 1.1% in the ninth month of the year, in data that dates back to the 19th century. The S&P 500 has seen the same average decline—and for every September dating back to 1928, the benchmark ends the month lower more than half of the time.
Analysts caution against reading too much into those seasonal patterns. But in recent weeks, new reasons for investor caution have emerged. One of the largest: the looming threat of an interest-rate increase from the Fed, which announces its next policy decision on Sept. 16.
Chairman Kevin Warsh’s decision to ditch forward guidance and take more of his cues from markets has muddied the waters for investors when it comes to monetary policy. That has left traders scouring Fed governor speeches and economic-data reports for clues on the central bank’s next move.
“There’s going to be a lot of eyes on those numbers,” said John Luke Tyner, head of fixed income and portfolio manager at Aptus Capital Advisors.
The past couple of weeks offered just one example of how frequently those expectations can change. After Warsh struck a hawkish tone during remarks on Aug. 28, the odds of a hike at the Fed’s next meeting jumped from 35% before the speech to 58%, according to CME FedWatch data.
On Thursday, Fed governor Christopher Waller made a case for leaving rates where they are. Interest-rate futures showed coin-flip odds between a hike and a hold. Then Friday’s robust jobs report amped up rate-hike bets once more, back to a roughly 60% chance of higher rates after the meeting.
“Rates have really been driving the car for equities the last few weeks,” said Ross Mayfield, an investment strategist at Baird.
That uncertainty comes as an unruly bond market could put pressure on stocks. Treasury yields have marched higher for much of the summer, driven by concerns about rising oil prices, growing U.S. budget deficits and a deluge of tech-company bonds now competing for investors’ cash. Last week, the rout went global, pushing yields to multiyear highs in Japan, Germany and the U.K.
Higher bond yields can drag on stock prices and lift borrowing costs for companies and consumers across the economy.
Rising prices remain the top concern for bond traders, and continued fighting between the U.S. and Iran has done little to ease those worries. The national average price of diesel climbed to a record of $5.850 on Friday, according to AAA. That is up from $3.712 a year ago.
Investors will get more insight on the path of prices this week, with the much-awaited consumer-price index report due Friday and a reading on producer prices Thursday.
With another blockbuster earnings season in the books, some analysts have also warned that any boost from the third-quarter reports due in the coming months could be minimal. Back-to-back quarters of standout profits have raised expectations and made it especially difficult to impress traders. Custom-chip company Broadcom, for example, said Wednesday that it more than tripled its earnings and nearly doubled its revenue. Shares slipped 2.7% the next session.
Many analysts note there are plenty of reasons not to panic. The economy is in impressive shape, thanks to a healthy labor market and the rippling effects of the artificial-intelligence investment boom. Profits are booming at America’s biggest companies. The Cboe Volatility Index has dropped to its lowest levels of 2026. Credit spreads are tight, a sign bond investors aren’t concerned about economic conditions that could hurt companies.
But the mood has shifted from the euphoria that felt tangible when the Nasdaq was notching back-to-back records early this summer. The question, Mayfield said, is whether the fundamentals that have bolstered the bull market so far can stretch the rally into 2027.
“There are more anxieties or uncertainties about the backdrop,” he said. “It does feel like a transitional moment.”
