Geopolitics, capital markets, and what businesses need to know
A conversation with Fabio M. Natalucci, Chief Executive Officer, Andersen Institute for Finance & Economics*
Insights, analysis & key takeaways.
23 April 2025
Following recent announcements on US tariff measures, Andersen Australia invited Fabio Natalucci (CEO, Andersen Institute for Finance & Economics) and Brad Rode (Managing Director, Corporate & International Tax, Andersen US) to share their perspectives on how trade and economic policy is evolving, and what businesses might consider in response. The conversation addressed themes ranging from trade policy volatility and supply chain disruption, to automation, capital markets, and the future of cross-border investment strategy.
This note is intended to summarise the current thinking on a fast-moving issue and provide clients with context to support planning and dialogue. It is not investment advice but offers a macro-informed perspective based on current observations.
US trade policy is evolving rapidly
In recent decades, trade measures were not the centrepiece of newly elected administrations – both Republican and Democratic – and were introduced only after first implementing major domestic reforms such as tax cuts or infrastructure investment. For example, in 2017, during the first Trump administration, the US passed major corporate tax cuts before introducing more selected tariffs. In contrast, under the second Trump administration, the latest wave of US tariff changes rolled out as a first step. These have included blanket tariffs on certain imports, reciprocal measures, carve-outs for strategic industries, and product-specific exemptions. The policy direction appears to be focused on incentivising domestic production and building economic self-reliance.
The key challenge for businesses is not the existence of tariffs, but the pace and unpredictability with which they are introduced, modified, or paused. For example, tariffs introduced one week may be suspended the next, or exemptions granted for certain products may be retracted shortly after.
This type of volatility complicates business planning. As Fabio Natalucci points out, companies can adapt to tough rules if they’re stable. What’s hardest is planning when the rules keep shifting.
The situation is made more complex by the fact that the US runs a trade surplus in services but a deficit in goods with many countries. Services include business services such as professional and management consulting services, travel, financial services and intellectual property. This imbalance leaves it open to countermeasures, such as digital services taxes, that target US services exports.
During the current 90-day pause, the direction of negotiations will be key. Some firms may benefit from adjusting early, but could suffer if more carve-outs are announced. Others may prefer to wait and see, with the risk of getting a less favourable deal.
Another key unknown is the off-ramp with China. The key question is which country has “escalation dominance”. Will the current trade war evolve into broader restrictions on both inward and outward investment? There is speculation that it could extend to capital market measures, such as the delisting of Chinese companies from US exchanges.
Supply chains are under pressure, but structural change is not immediate
Brad Rode shared that some US-based businesses are reviewing their supply chains to understand exposure to tariff-affected goods and jurisdictions. In sectors such as retail, technology, and automotive, companies are asking whether they should shift production from offshore to onshore, or diversify sourcing into less affected countries.
However, supply chains are capital-intensive, relationship-dependent, and often contractually locked in. Shifting suppliers or production locations involves cost, risk, and time. Many clients are still in the data-gathering phase, conducting impact analysis and stress testing. A full reconfiguration may only occur if current measures persist or expand in scope.
Australian businesses with US-facing exports or operations are also beginning to ask what these developments mean for pricing, intercompany arrangements, and their market position. Some are considering whether finishing processes or added value steps could be located in the United States to satisfy local content tests. Others are reviewing contract terms for pricing adjustment clauses or force majeure triggers.
Planning is constrained by uncertainty
A recurring theme in the discussion was the lack of predictability. Many businesses might accept a higher cost structure if it came with stability. For instance, if tariffs on imported components were set at 15 percent and fixed for a defined period, firms could factor this into pricing and sourcing decisions. But when measures are applied, reversed, or suspended within days, the risk of error rises significantly.
In some cases, final products are exempt from tariffs while the components used to make them are not. This creates counterintuitive incentives that may encourage production to remain offshore rather than bring it home. Fabio Natalucci described this as a situation where businesses may hesitate to move decisively because the policy signal is unclear.
From a planning perspective, this means businesses need to have a range of contingency options mapped out, even if they are not immediately acted upon. Flexibility is key, but so is staying informed through trusted networks.
Policy volatility has implications for capital markets
Beyond trade and logistics, policy uncertainty can affect how global capital is allocated. Fabio Natalucci highlighted that for many decades, the United States has been considered a trusted anchor of the global financial system. Investors from around the world have allocated capital to US assets based on the assumption of stability, rule of law, and consistent policy frameworks.
But that trust is partly built on foreign capital. Global investors currently hold around 20% of US equities, 30% of US Treasuries, and 30% of US fixed income securities. This level of foreign ownership underscores how reliant the US is on continued global confidence.
If that perception is challenged, even temporarily, it can lead to subtle but significant changes in investor behaviour. Rather than withdrawing completely, global institutions may simply reinvest less or move incrementally into other regions or currencies. These shifts can affect exchange rates, bond markets, and valuations more broadly.
Fabio Natalucci noted that the US remains the largest and most liquid market globally, and there is no immediate replacement for the US dollar in terms of depth and trust. However, confidence can erode gradually. If questions emerge around long-term credibility or fiscal sustainability, especially in conjunction with large deficits, this could trigger downgrades or capital flight in the longer term.
Lately, the US dollar has weakened despite lower risk asset prices and higher interest rates, an unusual combination. If foreign investors begin to demand higher returns to hold USD-denominated assets, it could reflect a broader rethink of US assets risk profile. This shift would not necessarily manifest in abrupt withdrawals, but in a more gradual reweighting of portfolios away from US exposures. But such recalibration of financial portfolios, given the scale, could have significant asset price implications
Automation is reshaping the labour and policy conversation
One often-cited goal of reshoring policy is to create jobs by bringing manufacturing back onshore. However, the nature of manufacturing has changed. New factories, particularly in advanced economies, are capital-intensive and highly automated. Robotics, AI, and machine-led processes reduce the reliance on large workforces. In some sectors, automated systems can operate around the clock without human intervention.
Fabio Natalucci observed that reshoring may not necessarily lead to broad-based job growth. It may deliver productivity gains and national capability, but it will not reverse decades-long shifts in labour intensity. This trend may require governments to think more holistically about how they support job creation, education, and regional development, particularly in areas where traditional industries have declined.
Practical steps for businesses in the current environment
While many aspects of US trade policy remain in motion, businesses can take several steps to prepare for what comes next:
- Conduct a full mapping of exposure to US tariffs and potential policy changes across your supply chain and markets.
- Assess pricing mechanisms in current contracts and consider whether renegotiation may be required.
- Explore sourcing alternatives that could reduce exposure to affected goods or jurisdictions.
- Review intercompany transfer pricing arrangements in light of new margin pressures or trade restrictions.
- Establish communication channels with your international advisors, particularly in the US, Canada, and Asia.
- Monitor broader capital market indicators, such as bond yields and currency trends, which may signal further shifts in global confidence.
Final thoughts
Fabio Natalucci summed up the conversation by noting that the global economic landscape is changing rapidly. Long-standing assumptions about trade integration, capital movement, and market access are now being tested.
In his words, “We are entering a world that is less interconnected, more fragmented, and more complex to navigate. In this world, information, trust, and relationships will become even more critical.”
For business leaders, the message is not to panic, but to plan. Scenario thinking, access to timely intelligence, and a strong international network will all be essential to managing through the next phase of global trade and economic policy.
How Andersen Can Help
Andersen’s International Tax & Transfer Pricing team, in coordination with our Andersen US and global colleagues, can support clients with:
- Product-level tariff mapping and impact modelling
- Transfer pricing updates and customs valuation advice
- Strategic supply chain and fulfilment structuring
- Legal and commercial review of cross-border agreements
- Engagement with US customs authorities for ruling or clarification
- Policy monitoring and scenario planning
Further Resources
- Austrade – US Tariff Changes and Go Global Toolkit
- White House Executive Orders
- White House Section 232 Proclamations
* Fabio M. Natalucci
Chief Executive Officer, Andersen Institute for Finance & Economics
Fabio Natalucci is a globally recognised economist with over 20 years’ experience in financial markets and macroeconomic policy. As CEO of the Andersen Institute for Finance & Economics, he leads the Institute’s agenda on global economic trends including AI and technological innovation, climate and energy transition, geopolitical fragmentation, public debt, and demographic change.
Prior to joining Andersen, Fabio was Deputy Director at the International Monetary Fund (IMF), where he oversaw the Global Financial Stability Report. His earlier public sector roles include senior positions at the U.S. Federal Reserve Board and the U.S. Department of Treasury, where he played a key role in shaping domestic and international financial policy.
