A prolonged trade war between the world’s two largest economies is the new normal, according to Penelope Foley, managing director of emerging markets at TCW Group Inc. in Los Angeles.

The money manager said the euphoria earlier this year about a U.S.-China truce is a distant afterthought and it now appears the two will be at loggerheads for the long haul. While that’s broadly negative for assets, potential winners include Brazil, Argentina and some smaller Asian nations.

“I doubt you’ll see a resolution in the very short term,” Foley, 73, said in an interview at TCW’s New York office. “In the event of an extended trade war, there are some obvious losers: Taiwan, Korea and Japan. They’re all deeply embedded in the global supply chain.”

Much of TCW’s forecast comes down to U.S. President Donald Trump’s political calculus. Trump probably won’t strike a deal unless there’s a much larger selloff in U.S. stocks, Foley said. His more recent trade dispute with Mexico, by contrast, will be far easier to solve, she said.

Despite her overall pessimism on trade, Foley said other factors point in favor of emerging markets. That includes a growth differential versus developed world counterparts, more sustainable debt levels than past crises, relatively stable inflation figures and attractive valuations. Meantime, the U.S. dollar will ultimately weaken, making local currency debt more interesting, she said.

Foley said she recently lowered her Argentine debt exposure to a slight underweight from an overweight because of the risk that October elections produce a less market-friendly candidate. Her largest overweight is in Brazil, where she expects Jair Bolsonaro’s administration to succeed with its pension overhaul. TCW is also overweight Indonesian debt and recently increased its exposure to bonds from the Middle East, while it trimmed allocations to corporate notes that might be at greater risk from further U.S.-China flareups.