What will global trade and commerce look like in the coming years, and how will it influence the investment landscape? It’s a question that’s been top of mind for investors lately, as a new administration in the U.S. seeks to renegotiate relationships with key economic partners.
The rhetoric of trade negotiations often seems abrasive, and what we see unfold in the political arena over the next few months or years may not be that different.
While negotiations of this type are unpredictable, the outcomes need not be extremely positive or negative for one side or the other. In fact, in many ways, it’s the advancement in technologies and how they reshape industries that will determine the future of global business as much as political negotiations.
Digital Trade Knows Few Boundaries
The contours of international commerce have already undergone a profound transformation over the past two decades.
“If the 20th century was defined by a phenomenal rise in the transfer of goods and industrial commodities, the 21st century is being characterized by the rapid digitization of services and the increasing automation of manufacturing,” says Rob Lovelace, Capital Group portfolio manager.
Cross-border digital traffic surged in the last decade, and it’s only projected to increase more over the next seven years. Because many aspects of this digital economy cannot be easily dictated by trade agreements, the impact of trade negotiations is likely to be less severe for technology companies than, say, manufacturers.