De-globalization's Silver Lining: How Trump's Trade Policies Are Fueling Private Credit's Golden Age in U.S. Infrastructure

The world is undergoing a seismic shift from globalization to de-globalization, driven by geopolitical tensions, supply chain vulnerabilities, and protectionist trade policies. Nowhere is this more evident than in the U.S., where President Trump's tariffs and reshoring initiatives have created a $200 trillion global infrastructure supercycle—one that is primed to redefine the role of private credit in financing the future. Moody's 2025 analysis reveals that tariffs and trade uncertainties are accelerating demand for domestic infrastructure and data center projects, positioning private credit as a high-yielding, low-correlation asset class for investors.

The De-Globalization Imperative: Tariffs, Trade Wars, and the Rise of “Made in America”

Trump's trade policies—including tariffs on steel, aluminum, and semiconductors—have forced businesses to reorient supply chains toward U.S. soil. This reshoring boom is not just about avoiding tariffs; it's a strategic response to geopolitical risks, energy security concerns, and the need for resilient supply chains. Moody's estimates that the U.S. alone faces a $1.2 trillion annual shortfall in clean energy infrastructure spending by 2030, with public funds covering only a fraction of this need.

Enter private credit: a $3 trillion industry by 2028 (up from $1.5 trillion in 2020), fueled by asset-based finance (ABF) and infrastructure debt. Unlike traditional equities or bonds, private credit offers low correlation with public markets and inflation resilience through long-term contracts tied to CPI.

Why Infrastructure Debt is the New Bond Substitute

Moody's highlights infrastructure debt as the “sweet spot” of private credit, with default rates of just 2.4% over five years—far below corporate lending's 9.6%. This stability stems from the sector's structural advantages:

1. Regulatory Stability: Toll roads, utilities, and data centers often operate under 30+ year contracts with government-backed revenue streams.
2. Inflation Protection: 60% of infrastructure loans feature CPI-linked cash flows.
3. Covenant Strength: Senior loans rank above public bonds in bankruptcy, offering downside protection.

Marc Pinto, Moody's Senior Vice President, emphasizes that the $2.5 trillion in data center investments needed by 2030—driven by AI, cloud computing, and hyperscalers like Amazon and Microsoft—are perfectly suited for private credit financing. These projects require long-term, patient capital, which public markets often can't provide.

The Policy Tailwind: Inflation Reduction Act and CHIPS Act

The U.S. government is not sitting idle. The Inflation Reduction Act ($370 billion) and CHIPS Act ($280 billion) are reshaping the investment landscape:
- Tax incentives: 30% investment tax credits for green infrastructure (e.g., solar farms, EV charging networks).
- Subsidies: Direct payments for semiconductor factories and domestic data centers.

These policies reduce project risk, lowering the cost of capital for private credit funds. For example, Brookfield Asset Management's infrastructure debt fund has secured 10-year loans for a Texas semiconductor plant at 5.2% yields—a 300-basis-point premium over 10-year Treasuries, with minimal volatility.

Risks to Navigate: Policy Uncertainty and Liquidity Constraints

No investment is without risk. Moody's warns of three key headwinds:
1. Regulatory Shifts: A potential Biden administration could reverse Trump's trade policies, creating uncertainty.
2. Economic Downturns: Infrastructure projects are less sensitive to recessions, but overleveraged sponsors could default.
3. Opacity: Private credit's lack of public disclosures requires rigorous due diligence.

Investment Strategy: Allocate to Infrastructure Debt Funds with a Domestic Focus

For investors seeking yield and diversification, private credit funds focused on U.S. infrastructure are a must. Here's how to play it:

1. Target Sectors:
2. Data Centers: Backed by hyperscalers and $2.5T in projected spending (Pinto).
3. Renewables: Solar/wind projects with 20+ year power purchase agreements.

4. Critical Manufacturing: Semiconductor plants and EV battery facilities.

5. Favor Senior Debt:

6. Senior loans (5–7% yields) offer capital preservation.

7. Subordinated debt (7–9% yields) provides upside for risk-tolerant investors.

8. Key Players:

9. Brookfield Infrastructure Partners (BAM): A $50 billion firm with 150+ infrastructure assets.
10. Macquarie Infrastructure & Real Assets: Focuses on data centers and renewables.

Final Take: Private Credit is the New Gold

In an era of de-globalization and rising inflation, private credit is emerging as the ultimate “anti-public market” asset. With yields of 5–9%, low default rates, and minimal correlation to equities, it's a no-brainer for investors seeking to hedge against economic uncertainty. As Moody's concludes: “The reshoring revolution is not just about tariffs—it's about building the infrastructure of the future, and private credit will be the engine of that growth.”

Allocate 5–10% of your portfolio to infrastructure-focused private credit funds today. The next decade's winners will be those who bet on America's comeback.

Disclaimer: Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.