Wealth Outlook 2024 - Slow then grow

101 Wealth Outlook 2024 | Unstoppable trends The implications of G2 polarization on global technology FIGURE 2 US imports from China, non-China Asia and Mexico Tariff rates (USDbn) China Non-China Asia Mexico 180 60 JAN 19 JUL 19 JAN 20 JUL 20 JAN 21 JUL 21 JAN 22 JUL 22 JAN 23 Source: Haver Analytics, as of November 22, 2023. Note: Non-China Asia includes Taiwan, South Korea, Japan, and some key ASEAN such as Singapore, Vietnam, and Malaysia. FIGURE 3 US reshoring & FDI job announcements Job announcement Reshoring + FDI 500,000 0 2010 2012 2014 2016 2018 2020 2022 Source: Reshore.org as of Aug 18, 2023. For illustrative purposes only. Impacts of the new status quo The impact of G2 polarization on global supply chains, trade patterns and foreign direct investment (FDI) is plain to see in the data. For example, China’s exports to the US have dropped 30% since peaking in the first quarter of 2022, as exports fromMexico to the US have steadily risen and ex-China Asia exports to the US have leveled off ( FIGURE 2 ). Meanwhile, there has also been a sharp drop in semiconductor exports from the US and two of its allies – South Korea and Taiwan – to China, with year-to-date declines of 29%, 24% and 13%, respectively, through October 2023. In March 2023, the US entered an agreement with Japan to help strengthen each other’s critical minerals supply chains and reduce their dependency on China through, among other strategies, the development of EV batteries using fewer rare earths. In the US, manufacturing job announcements related to reshoring and FDI have climbed and may top 400,000 in 2023 ( FIGURE 3 ). If that happens, the US will have recovered 40% of the 5 million jobs lost to offshoring prior to 2010, according to the Reshoring Initiative. Many of the job announcements are skewed toward areas targeted by recent US industrial policy.