Page 70 - Bloomberg Businessweek - November 19, 2018

Bloomberg Businessweek The Year Ahead 2019 Global Economics

It’s been a massive businesses. Any effort to Despite the increased it sorts out internal
lamprey attached to the extricate the country from momentum, on trade the differences.
U.S. economy.” supply chains may have U.S. is still playing catch-up Trump’s trade war
its limits. with its rivals. The EU and with China, meanwhile, is
② RESHORING Japan are close to finalizing being fought in the name
③ NEW PACTS their own trade agreement, of protecting American
One stated aim of Trump’s to take effect in 2019. The companies’ intellectual
trade policy has been to U.S. presidents have TPP is also coming online property and safeguarding
bring manufacturing jobs for decades fought to in the new year, leaving strategic sectors such
back to the U.S. His tit-for- shore up the nation’s American companies and as semiconductors and
tat tariff war with China place as the center of farmers at a disadvantage artificial intelligence. Its
has prompted companies the global economy to competitors from the main target is Xi’s “Made
to reevaluate supply via an interlocking web 11 nations that are party to in China 2025” plan, which
chains. It’s not clear that of investment treaties the deal. aims to nurture national
the U.S. is going to come and trade agreements. champions in a range of
out the winner, though. The unintended irony ④ TECHNOLOGY leading- edge industries,
Consider the case of Trump’s “America including electric vehicles
of German carmaker First” push so far is From automated indoor and robotics.
BMW AG. Its plant in that he’s appeared to hydroponic farms that If the U.S.-China
Spartanburg, S.C., which be surrendering that grow summer produce trade conflict continues
makes X3 and X5 SUVs, hegemony. year-round to 3D printers to escalate, the next
is one of its biggest in That may be changing. that churn out jet engine $257 billion wave of
the world and has been There are plenty of skeptics parts on demand for imports to be hit with
a major source of U.S. around, but 2019 may buyers in far-off lands, tariffs will include Chinese-
auto exports to China. be the year Trump starts technology is disrupting made tech products such
Yet, starting this year, delivering on his promise the model of seaborne as smartphones, laptops, 15
the carmaker also began of a new raft of trade deals. trade that’s ruled for and lithium-ion batteries.
building the X3 in China His administration hopes decades. And trade At the same time,
to avoid the 40 percent to push the U.S.-Mexico- agreements today have as Washington and some
duties Beijing now charges Canada agreement through much to do with data flows European governments
on American-made autos. Congress. It also notified as physical goods. are tightening regulations
In July it detailed plans for legislators in October that Technology is on acquisitions by Chinese
an expanded joint venture it plans to negotiate pacts also becoming the companies.
with Brilliance China with the EU, Japan, and the main battleground in Faced with these
Automotive Holdings Ltd. U.K., among others. the contest for the pressures, China is
that will make the country The White House’s future of globalization. accelerating its push for
an export hub for the proposals borrow heavily Governments are taking tech self-sufficiency, which
electric version of the X3 from deals the president aim at Google, Amazon may influence the direction
when it enters production put on hold. For instance, .com Inc., and other of globalization more than
in 2020. That amounts to any bilateral pact with dominant companies. The Trump ever could. <BW>
a long-term bet on China— Japan will largely replicate EU and the U.K. have both
and a wager against the the terms of the TPP. unveiled plans for a digital
U.S. as a reliable location Elections for the services tax, though
for an export industry. European Parliament in Brussels has put
Other companies have May mean there’s a narrow implementation
begun shifting some window of opportunity for on hold while
production—especially an EU pact. And the limited
final assembly—outside agreement on industrial
China, to the benefit of goods that Trump is
countries such as Vietnam. offering Brussels is far
But, as BMW’s less ambitious than the
experience shows, push for a comprehensive
China isn’t just an export Transatlantic Trade and
platform, it’s also an Investment Partnership BMW is building
important market for many he nixed. X3s in China