Morgan Stanley Fixed-Asia Economics The Viewpoint Trade Tensions, Supply Chain ...-107126478

MMarch19,202409:25PMGMTMorganStanleyAsiaLimitedIdeaAsiaEconomicsAsiaPacificChetanAhya+8522239-7812+656834-8272TheViewpoint:TradeTensions,ChiefAsiaEconomistSupplyChainDiversification,Chetan.Ahya@morganstanley.com+8522848-5652andChinaDerrickYKamTradetensionshavealreadyledtotheUSshiftingawayfromChinaandChinahasshiftedawayfromtheUS.IftradetensionsAsiaEconomistemergeinameaningfulmanner,itwouldleadtoanaccelerationDerrick.Kam@morganstanley.cominsupplychaindiversificationefforts.JonathanCheungKeyTakeawaysEconomistTradeflowsintotheUShavebecomemorediversifiedsincetheonsetoftradeJonathan.Cheung@morganstanley.comtensionsin2H18.Mexico,Vietnam,andIndiahavesinceemergedasnewmanufacturinghubs,supplyinggoodsfortheUSandtheworld.Chinahas,however,notlostout.Ithasgainedmarketshareinglobalexports,aidedbystrongerexportsinnewsegmentsandtonewgeographies.Recentdevelopmentssuggestthattradetensionsarecomingtotheforeagain,whichcouldbeanothercatalystforafurtherrewiringofsupplychains.Inparticular,tradetensionsarelikelytoemergeinthenewsectorswhereChinahadmadeprogress.Forimportantdisclosures,refertotheDisclosureSection,locatedattheendofthisreport.MIdeaFollowtheflowoftradeSupplychains–fromdiversificationtodisruptiontodiversificationagain:Ithasbeenalittleoverfiveyearssincetradetensionsemerged.Sincethen,supplychaindiversificationeffortshaveebbe...