“If you do it relatively slowly over time – start taking steps now to shore up your supply chains and reduce single points of failure – it doesn’t embed that much cost. If you do it very quickly and you’re forced to do it very quickly, then it can become enormously disruptive and enormously costly.”
Capital Economics advises thousands of clients navigating these issues. The core guidance: start now, move slowly. Early diversification is low-cost. Forced diversification is massively expensive.
Winners: Those who take steps to plan for the fractured world early
Losers: Those forced to reorient very quickly in a short period of time
The Strategic Sector Question
The critical question for any business: Are you operating in a sector that could be perceived to be geostrategically important?
This breaks into two sub-questions:
1. Are you in a strategic sector? (chips, biotech, dual-use goods, batteries, EVs)
2. Are you using geostrategically important inputs? (critical minerals, advanced semiconductors)
Where is your final demand? (your customers, your markets) Where are your inputs coming from? (suppliers, commodities, manufacturing)
These can be different. You can source commodities from China-aligned countries while serving US-bloc final demand. The fracturing risk depends on whether those flows cross strategic sector boundaries.
The Bipartisan Reality
This is not a temporary policy that will reverse with the next election. If there’s one thing that unites an otherwise completely fragmented US political system, it’s the need to push back against China. That cuts across Trump, Biden, and Trump 2.0.
Key Takeaway
The companies that thrive won’t be those waiting for normalization. As defensibility analysis shows, they’ll be those who recognize this is the new normal – and adapt deliberately.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
