The high tariffs that were proposed by the Trump administration in April have been shelved for the time being. Uncertainty remains elevated, however, and the sense that the USA is no longer a reliable trading partner is probably here to stay. In asset allocation, now is a good time to take on risk.

What does this mean for other countries? Teasing out a consistent strand of logic in the current environment is unusually hard but, while the case for a reset of current account positions is compelling when we look at the build-up of net external assets across countries, trying to lose the dollar’s reserve currency status is probably not the way to go.

Instead, the big ‘surplus countries’ — China, Germany, Japan and the major oil exporters — should seek to increase domestic demand substantially and permanently. Without such a structural shift, tariffs and the like are unlikely to make much difference in the long term.

There is a chance such a reset will happen in Europe, driven by the possible withdrawal of the US security umbrella. But China, Japan and the oil exporters are still a long way from making such a structural change. Emerging economies, meanwhile, are quietly doing rather well.