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I’ve recently been on the road a lot and have had meetings in Tennessee, South Dakota, Arkansas, and Washington DC. I also made a quick trip to Barranquilla, Colombia to give a keynote speech on navigating global uncertainty, and while in Washington, was on a panel discussing the US economy and how consumer behavior might change in the future.
As I’ve often said, travel is one of the best forms of education today, and I relish the opportunity to meet with journalists, politicians, business leaders, and academics while on the road. The exchange of ideas with people who have different perspectives on global and economic developments is one of my favorite ways to make sense of the world. Connecting the dots formed from different perspectives is, I believe, essential to understanding dynamics that appear chaotic or confusing.
Before I board a plane again next week, I wanted to reflect on some common themes that have emerged from my eclectic set of recent meetings. While this may sound like the beginning of a joke, it’s not: What do entrepreneurs in Colombia, auto dealers in Washington DC, politicians from Tennessee, farmers in South Dakota, and corporate executives in Arkansas have in common?
While there is of course a lot a nuance beyond my summary, there are three topics that came up everywhere: (1) the escalating US-China War (the use of the word “war” is mine, as I wrote earlier), (2) the health of the US economy and implications for US interest rates and consumer confidence, and (3) artificial intelligence (AI). And as regular readers of my work know, I think these three dynamics are interrelated. The tariffs and trade war with China will impact the US economy, AI is a domain of competition but also a deflationary force that replaces jobs and increases productivity, and of course, tariffs and AI will drive consumer confidence and impact the outlook for US interest rates.
Perhaps the most interesting topic that emerged from my conversations, however, was about how China’s internal dynamics might impact its external relations. There’s a rising interest in what’s happening within China and how President Xi is navigating his uncertainties. There are early signs of internal discord within the Middle Kingdom and it naturally leads to the question of how it might impact Beijing’s actions vis-à-vis global conflicts and/or their approach to trade with America.
For those that haven’t been following the story closely, China’s economy is plunging [ [link removed] ], its currency depreciating [ [link removed] ], youth unemployment is skyrocketing [ [link removed] ], its domestic debt is ballooning [ [link removed] ], and as we all hear, the trade conflict with the US is intensifying [ [link removed] ]. These internal problems have led to crackdowns on internal dissent, saber-rattling to generate nationalism, and CCP leadership efforts to solidify control. Last week, the Chinese Communist Party’s “Fourth Plenum” [ [link removed] ] was the scene of what many have called a “military purge [ [link removed] ]” as President Xi sought to tighten his grip on power.
China’s domestic discord is a topic that came up in conversations I had in Washington DC as well as in Colombia. Why’s that? Because there is an emerging sense that Beijing may be retrenching to its immediate neighborhood while it works to get its own house in order. This could mean that Xi is pulling back (on the margin) from the far-flung influence empire it was building over the past few decades. The implications for conflicts in Latin America, and specifically Venezuela, could be material.
At the same time, the US has been refocusing on the Western Hemisphere. I’ve been commenting for years that the historical US attention on East-West relations with Asia and Europe is being replaced with a North-South focus (a modern-day version of the Monroe Doctrine, something I’ve called the Trump Doctrine). It’s increasingly clear that the US is prioritizing the Western Hemisphere, and while some see this as isolationism, I have argued that this is in fact retrenchment.
Further, it’s obvious to me that the Trump Administration isn’t against interventionism altogether, it is just more selective as to where it is going to intervene. Recent events [ [link removed] ] in the Caribbean confirm this reality, and last week I wrote [ [link removed] ] about the build-up of U.S. assets in the region, which includes a nuclear sub, cruise missile destroyers, fighter jets, spy planes, B-52 bombers, and 6,500 troops. Let’s add the world’s largest aircraft carrier [ [link removed] ] to the list.
The US leaning into the Western Hemisphere while China retrenches will only hasten what I have referred to as the Global Split, a bifurcation [ [link removed] ] of the world into two camps, East and West. The Americans and the Chinese are carving out two spheres of influence and two separate economic ecosystems are quickly evolving.
The biggest implication of these observations is that countries (and therefore companies) need to pick a side. The days of seeking US legal or military protection while accepting Chinese investment dollars and maintaining close ties with Beijing are over. This also means that companies that rely on tools (software, equipment, AI tools) purchased from Chinese companies may suffer geopolitically inspired disruptions to service, support, or use of these tools.
Having a supply chain that runs through China is going to be increasingly risky for businesses focused on the US market, and may ultimately result in a higher cost of capital, higher labor costs, and less interest from forward-looking customers. Bottom line: It’s time for leaders to pick; “neutrality” is not a option. As is often said in New Hampshire, the only things you find in the middle of the road are yellow stripes and dead skunks.
VIKRAM MANSHARAMANI is an entrepreneur, consultant, scholar, neighbor, husband, father, volunteer, and professional generalist who thinks in multiple-dimensions and looks beyond the short-term. Self-taught to think around corners and connect original dots, he spends his time speaking with global leaders in business, government, academia, and journalism. He’s currently the Chairman and CEO of Goodwell Foods, a manufacturer of private label frozen pizza. LinkedIn has twice listed him as its #1 Top Voice in Money & Finance, and Worth profiled him as one of the 100 Most Powerful People in Global Finance. Vikram earned a PhD From MIT, has taught at Yale and Harvard, and is the author of three books, The Making of a Generalist: An Independent Thinker Finds Unconventional Success in an Uncertain World [ [link removed] ], Think for Yourself: Restoring Common Sense in an Age of Experts and Artificial Intelligence [ [link removed] ] and Boombustology: Spotting Financial Bubbles Before They Burst [ [link removed] ]. Vikram lives in Lincoln, New Hampshire with his wife and two children, where they can usually be found hiking or skiing.
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