One of the main thrusts of President Donald Trump’s “America First” trade policies is to reindustrialise and revitalise the manufacturing sector, including onshoring and expanding its domestic supply chain, strengthen national security and bring back American jobs lost to the past few decades of globalisation. The combination of policies includes both carrot (lower corporate tax rate, less red tape and bureaucracy, pro-business regulatory environment, cheaper energy costs) and stick (import tariffs, political pressure, domestic sourcing requirements for federally funded projects). For sure, the scope and speed of his policies, notably the barrage of tariffs levied on the rest of the world, are disruptive, raising uncertainties and likely some price pain for businesses and consumers. And they may well result in slower economic growth in the short term. But businesses can and will adapt quickly. As we have discussed in the last few articles, we do expect to see increasing capital inflow and investments in the US as a result of Trump’s policies, which will underpin relative growth for the US economy and strength in the US dollar beyond the immediate term. In the past weeks alone, companies including Apple, Softbank, TSMC (Taiwan Semiconductor Manufacturing Co Ltd), Nvidia and Hyundai have announced plans to substantially increase investments in their US manufacturing capacity (shifting supply chains from Asia) and AI infrastructure projects.
Importantly, we foresee that new investments will not only be concentrated within the semiconductor and tech sectors, but also more broadly across industries — from critical minerals-rare earth mining and logging to general manufacturing, energy, auto, steel and aluminium and shipbuilding — where domestic productivity will be enhanced by advanced manufacturing processes enabled by AI-driven systems, automation, robotics, 3D printing and so on. And to further improve cost efficiency — that will help offset the US dollar’s strength — and global competitiveness to support reindustrialisation and economic growth, we expect increasing investments flowing into the modernisation and expansion of US ageing infrastructure. From energy and utilities (power plants and grids, pipelines, water and waste) to transportation (roads, mass transit system, rail, seaport and airport), logistics, communications (broadband and data centres) and more. Case in point, one of the key pillars of Trump’s economic agenda is to cut regulatory hurdles and boost US oil and gas production, which will lower energy costs for households and businesses. (Cheap Russian gas was one of the key drivers behind Germany’s industrialisation success.) And this forms the foundation of the longer-term theme for our portfolio investments. We think construction spending in the US will continue to grow at a rapid clip.
