Explore how rising political tensions are re-ordering trade and commerce into rival economic blocs. Discover the influence of geopolitics on business decisions and supply chains. Learn about the impact on what we buy and the costs through AI automation. Understand the challenges for companies amidst geopolitical uncertainty and the consequences on the US and China economies.
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Quick takeaways
Geopolitical tensions are reshaping trade and commerce, leading to the formation of rival economic blocs.
Geopolitics is becoming a driving factor in business decisions, influencing investment choices and supply chain reorganization.
Deep dives
Geopolitical schisms reshaping the balance of power
The high-level talks at the UN highlight geopolitical schisms that are reshaping the balance of power in the world. These divisions are not only affecting nations but also corporations. The Bloomberg analysis reveals that political divides and tensions are disrupting commercial relationships and forming economic blocks reminiscent of political fault lines. Trade wars between the US and China have already led to some decoupling between the countries. This geopolitical divide is influencing where companies choose to invest and build new factories, with winners and losers emerging.
Politics driving corporate decisions
Geopolitics is starting to drive business decisions, a change from the traditional focus on returns and profits. The story explores how political factors, such as UN votes on Russia's invasion of Ukraine, are shaping where companies choose to allocate their capital and invest. The data shows a significant decrease in new projects and investments in countries that did not condemn the invasion. The impact of geopolitics is difficult to measure, but it is creating uncertainty and influencing supply chain reorganization efforts by companies.
Impact on global economy and inequalities
The shift towards economic blocks and geopolitical tensions has significant implications for the global economy. Economists warn that the world economy as a whole is not expected to benefit from this fragmentation. Estimates suggest that a 25% tariff between the blocks could decrease global GDP by around 3.5%. The article highlights that poor countries that used to attract manufacturing investments may suffer from reduced investment as companies opt for safer bets in developed countries. This could potentially increase poverty and inequality worldwide.
Bloomberg’s Shawn Donnan and Maeva Cousin join this episode to explain how rising political tensions around the world are leading to a re-ordering of trade and commerce into rival economic blocs.