The Trump Legacy: How U.S. Trade Policy Ignited a Global Economic Realignment

The global economic playbook is being rewritten, and nations are scrambling to find their place in the new order. According to Lisa Shalett, Chief Investment Officer of Morgan Stanley Wealth Management, the policy shifts of the recent U.S. administration have served as a wake-up call, compelling countries to wield their unique economic assets with newfound assertiveness.

Speaking at a recent global outlook forum, Shalett outlined how the U.S. economy had long been bolstered by a powerful trio: aggressive monetary policy, substantial fiscal spending, and the import of disinflationary goods—primarily from China. This formula, she noted, fueled corporate profits and growth for over a decade, allowing consumers and businesses to thrive amid supportive domestic policies without severe inflationary pain.

"That era has decisively shifted," Shalett stated. "The catalyst was a fundamental change in U.S. trade posture, which demonstrated the raw power of leveraging economic size in bilateral negotiations. The rest of the world watched and learned."

The analyst pointed to the ripple effects now visible across the globe. With the U.S. recalibrating its trade relationships, other nations are moving to fill the void and secure their interests. China, for instance, is redirecting its export engine, sending goods that once flowed to American consumers to other markets. Customs data from January showed China's overall exports rose 6.6% year-on-year in December, even as shipments to the U.S. plummeted by 30%—the ninth consecutive monthly decline.

"We're witnessing a multipolar reality take shape," Shalett explained. "Countries are looking at their central banks and treasuries, realizing they may now have more policy flexibility. The mantra is becoming: 'We need our own monetary and fiscal stimulus, and we must invest in our economic—and often literal—defense.'" This is evidenced by commitments from NATO allies to significantly raise defense spending.

The final piece, Shalett argues, is a synchronized move toward easier monetary policy by major economies outside the U.S., further enabling this global rebalancing. The result is a landscape where bilateral deals are prioritized, and nations are keenly assessing their "cards to play."

"Canada controls critical uranium processing; China dominates rare-earth minerals. These are not just resources; they are strategic leverage," Shalett said. "This dynamic creates a blueprint for others to craft their own version of economic resilience, mirroring in some ways what the U.S. achieved."

For investors, Shalett sees this as a structural, multi-year trend. "This isn't a short-term trade based on currency fluctuations," she concluded. "It's a fundamental realignment. Portfolios that reflect a more globally balanced exposure are likely to be better positioned for what comes next."

Michael Torres, Economic Historian: "Shalett's analysis is spot-on historically. We're seeing a return to mercantilist-like strategies where national economic security trumps pure free-trade ideology. The 21st-century 'Great Game' will be fought with supply chains and critical minerals, not just armies."

Janet Chen, Portfolio Manager, Global Fund: "The investment implications are profound but nuanced. Simply chasing 'ex-U.S.' assets isn't enough. It requires deep analysis of which nations have sustainable advantages and governance to actually leverage them. It's a stock-picker's macro environment."

David R. Miller, Political Risk Analyst (sharper tone): "This is a polite way of saying the world is fragmenting into blocs. Morgan Stanley is dressing up de-globalization as an 'investment phenomenon.' What we're really seeing is a failure of multilateralism, rising systemic risk, and a recipe for more inflation volatility down the road. Calling this an 'opportunity' feels myopic."

Sarah Al-Jamil, Emerging Markets Strategist: "For resource-rich developing economies, this is a potential lifeline. It allows them to negotiate better terms and build value-added industries. However, the risk is a brutal scramble where only the most strategically aligned or geopolitically savvy nations benefit."

This analysis is based on a recent address by Morgan Stanley's Lisa Shalett and associated economic data.