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By Opalesque:

The Trump administration's first five months have brought significant disruption to global trade norms, creating both challenges and opportunities across emerging markets. Despite initial market optimism following Trump's election victory, investors have witnessed severe equity volatility following "Liberation Day" and escalating trade tensions, with tariffs on China reaching 145%.

Strategic trade rebalancing

According to Michael Arno, portfolio manager at Brandywine Global, a US-based asset manager owned by Franklin Templeton, the administration is moving away from the previous "small yard, high fence" approach - a metaphor for protecting critical competencies while maintaining broad economic ties with China - toward a more aggressive trade rebalancing strategy.

Treasury Secretary Scott Bessent is coordinating with the 14 most strategically significant US trading partners to create unified pressure on China's state-directed industrial overcapacity, particularly in steel, aluminium, and solar sectors. This coordinated approach aims to prevent regulatory arbitrage and force Beijing to reduce excess capacity through harmonized standards and enforcement mechanisms.

Dollar dynamics and market implications

The US dollar's real effective exchange rate has reached historically elevated levels, driven by years of ca......................

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