The second Trump adminstration has laid bare how America built the new exceptionalism, a Morgan Stanley economist has explained, meaning other countries around the world will now begin leveraging their own economic firepower against trade partners.
Speaking at a global outlook roundtable last week, Morgan Stanley Wealth Management’s chief investment officer, 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.
