A world shaped by populist movements and protectionism - Jersey Evening Post
by Business Desk · Jersey Evening PostPosted inBusiness
A world shaped by populist movements and protectionism
by Business Desk 20 May 202619 May 2026
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Michael Caetano, senior investment director at TMGA Wealth, outlines how investors can develop forward-looking frameworks by drawing on lessons of the past
IT is almost one year since I wrote the article, History doesn’t repeat itself, but it often rhymes.”
This famous Mark Twain quote is as relevant and important today for investment management as it was many decades ago.
Historical cycles
Over time, history tends to reveal patterns that repeat in recognisable cycles, providing a valuable and reliable source of information when analysing different periods of economic and political importance.
By studying different eras, we can see that today’s world is shaped by populist movements, protectionism, technological innovation and conflict.
By looking to the past, investors can develop a forward-looking macro framework that informs investment decisions and identifies emerging themes central to portfolio construction and asset selection.
Protectionism on the rise
The US today remains the world’s most influential populist-led economy. Populist rhetoric and policy have shaped US politics since 2016 when Trump was first elected. The US continues to pursue a unilateral, protectionist and confrontational global strategy and one of national self-sufficiency and economic independence.
Protectionism, once a fringe idea in mainstream US policy, has become a bipartisan norm. Tariffs, industrial policy, reshoring incentives and restrictions on foreign investment are now central tools of economic strategy and national security.
These policies align with the populist narrative of defending the domestic workforce against globalisation and foreign competition as credible economic threats emerge from nations such as China.
Populism in a fragmented world
The rise of populist governments has become one of the defining political and economic forces of the 21st century. Research shows that populism is not confined to any single ideology: it spans left and right, from Venezuela’s Hugo Chavez to the US under Trump.
What unites these populist leaders are elements of shared political traits mainly in anti-elite rhetoric, leadership style, hostility towards courts, media and bureaucracies while characterising opponents not as rivals but as enemies.
Today, we are seeing a rise in populist governments in a world fragmented by conflict, rivalry and distrust. The rise of populist and protectionist leaders has led to a surge in geopolitical conflict from Russia’s invasion of Ukraine to Middle Eastern tensions, and more recently the US-Israel war with Iran.
It is too early to fully quantify the economic and financial impact of the current conflict across key industries and sectors, as higher commodity, energy and agricultural prices will take time to work through the global system.
However, over the near term, there is likely to be an inflation impulse, which may trigger a change in central bank monetary policy leading to various implications for sector, thematic and regional global market leadership over coming years.
Is history repeating?
A study by economic historians Funke, Trebesch & Schularick, which covered 120 years and 60 countries, found that populist leaders tended to undermine the rule of law and erode institutional checks and balances, which can distort capital allocation and increase policy uncertainty, ultimately damaging long term economic and financial stability.
An example of this classic populist movement combined with the pursuit of loose fiscal policies can be seen throughout the late-1960s and 1970s period.
The end of Bretton Woods in 1971 led to US dollar devaluation while oil shocks in 1973 (Arab oil embargo) and 1979 (Iranian revolution) led to inflation spikes and a subsequent period of weak economic growth.
Fortunately, the global economy and financial system are more resilient today than they were in the 1970s. However, the current populist and protectionist period highlights the present-day similarities and challenges with longer-term implications for asset, regional, sector and thematic selection.
US-China rivalry
Tensions between the US and China, where the battle for economic, financial and technological supremacy reigns, continue to shape US politics, with the US populist narrative framing China as both an economic threat and geopolitical adversary.
Protectionist measures such as tariffs, export controls, trade and investment restrictions have become powerful tools in this super-power rivalry. The conflict in the Middle East and impact in the Strait of Hormuz may only serve to increase tensions.
Whether the resulting oil supply shock leads to a persistently higher inflation regime remains uncertain. However, for investors, exposure to real assets (ie infrastructure, commodities etc) has strong merit, not only for portfolio diversification, but also because these tangible assets typically generate cash flows that are linked to inflation and can provide scarcity value. This characteristic can help insulate portfolio performance from inflation uncertainty and erosion of real returns.
USD regime
Despite global fragmentation and intensifying US-China rivalry, the US dollar remains dominant, and its reserve currency status remains largely intact. However, it is possible that the ongoing conflict in the Middle East could prompt a reassessment of the “petrodollar” system. Over the long term, such a shift could weaken the US dollar role in global trade and investment, while accelerating central bank efforts to diversify their foreign currency reserves.
While far from certain, such a regime shift could materially affect globally diversified portfolios, particularly given their typically high exposure to the US dollar, which historically has delivered strong investment returns.
By re-examining currency exposure and areas of concentration, investors can use selective currency hedging, combined with a greater global allocation ex-US, to ensure return drivers remain while increasing portfolio diversification, resilience and liquidity throughout environments of secular change.
Conclusion
Periods like today, characterised by rising populism and protectionism, are rarely unique; rather, they tend to follow recognisable historical patterns that shape macroeconomic outcomes, policy responses and market behaviour.
For investors seeking to optimise asset allocation, ignoring historical parallels risks misreading the shifts that often emerge during periods of political, social and economic transition while potentially underestimating the longer-term implications for asset returns.
This underscores the importance of a balanced investment framework that integrates macro analysis with historical context to inform investment decisions, supporting portfolio construction and thematic selection.
By using history as a guide rather than a blueprint, investors can remain flexible, active and well positioned to navigate an increasingly fragmented and populist world.
TMGA Wealth is regulated by the Jersey Financial Services Commission for the provision of investment business. The value of investments and the income derived from them may fluctuate from time to time.
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