In the early 1950s, the U.S. security establishment debated how to conserve America’s “wasting asset” of nuclear superiority, and even considered preemptively striking the Soviet Union before it developed a hydrogen bomb. Seven decades later, the Trump administration is thinking about how it can act to conserve another wasting asset – America’s relative economic size and geopolitical influence – against the rise of China, whose economy is on course to overtake the U.S.’s in the next two decades, and on some measures is already larger.

In this context, investors should see tariffs as part of a dispute much wider than just trade. Trump administration documents demonstrate that current concerns around China span economic policy, technology investment and military capabilities.

Get more analysis from Mark Haefele, UBS Chief Investment Officer, Global Wealth Management, in UBS House View.

Investment conclusion: Watch to see if Chinese geo-political pressures spill into global markets