A U.S.-China Trade Deal May Disappoint Investors
America’s share of the global economic pie is shrinking, and its financial markets are increasingly dependent on developments elsewhere.
The U.S. may come out ahead in the trade wars, but investors may still suffer.
Photographer: Qilai Shen/Bloomberg
When data showed China’s industrial production and retail sales slowed significantly in the final months of 2018, U.S. President Donald Trump took credit, telling Fox News that “China’s economy, if it’s in trouble, it’s only in trouble because of me.” The implication is that global trade is a zero-sum game, and losses in China resulting from U.S. tariffs translate to gains for the U.S.
For investors, that may turn out to be a Pyrrhic victory. The U.S. accounted for 24 percent of the world’s economy at the end of 2017, down from 31 percent in 2000, according to World Bank data. The share will continue to shrink over coming decades. According to a study by PricewaterhouseCoopers Global using a somewhat different methodology, the U.S. will be only the third-largest world economy by 2050, accounting for 12 percent of gross domestic product.