This week in Geopolitical Concerns, we explore the unraveling of the postwar order, including the deepening rift between the U.S. and its European allies, Trump’s aggressive trade policies, and escalating political turmoil in France and Israel. In Geoeconomics, we analyze the fallout from Trump’s sweeping tariffs, their impact on global markets, the weakening U.S. dollar, and the mounting struggles of small businesses amid economic uncertainty. Global Junctions examines the turmoil at the FDA following mass firings, Turkey’s accelerating authoritarian shift after the arrest of Istanbul’s mayor, and the growing debate over AI-powered military drones versus manned fighter jets. Finally, in Global Trajectories, we assess the rapid expansion of solar mini-grids transforming Africa’s rural economies, Brazil’s strategic gains in the global trade war, and China’s rising dominance in AI and semiconductors as the U.S. grapples with economic and technological shifts.
Geopolitical Concerns
Fintan O’Toole, The New York Review of Books
Donald Trump’s beautiful trade war
Edward Luce, The Financial Times
Asia Is Getting Dangerously Unbalanced
Stephen M. Walt, Foreign Policy
Barring Marine Le Pen is a political thunderbolt for France
The Economist
Netanyahu Takes Desperate Measures
Gershom Gorenberg, The Atlantic
The postwar order has undergone a significant erosion, particularly evident in the fracturing relationship between the United States and its traditional European allies. This shift became increasingly pronounced in early March 2025, highlighted by an incident involving Polish Foreign Minister Radosław Sikorski’s March 9th social media post regarding a potential threat by Elon Musk to cut off Ukraine’s Starlink satellite access, a system partly funded by Poland at an annual cost of approximately $50 million. The ensuing public exchange between US Secretary of State Marco Rubio and Musk revealed a departure from established diplomatic norms. Further underscoring this changing dynamic was a leaked March 14th message from US Defense Secretary Pete Hegseth, expressing strong negative sentiments towards European allies. This occurred despite Poland’s consistently high favorability ratings towards the United States, reaching 86 percent in a recent survey, and its substantial defense spending, which already surpasses NATO’s 2 percent of GDP target and approaches the 5 percent proposed by Donald Trump. This contrasted sharply with Trump’s earlier, more positive rhetoric, such as his July 2017 address in Warsaw.
Meanwhile, the initiation of Donald Trump’s “beautiful trade war” on April 2, 2025, marked by the imposition of substantial tariffs, further exacerbated geopolitical tensions and contributed to the shredding of the postwar order. This action placed significant economic pressure on key US allies in Asia, such as Japan and South Korea, potentially pushing them towards closer economic cooperation with China. Simultaneously, concerns have mounted regarding a dangerous imbalance in Asia, where the US’s ability to effectively counter China’s growing influence was complicated by its unpredictable trade policies. In Europe, on March 31, 2025, Marine Le Pen was barred from running for elected office for five years, including the 2027 French presidential election, by the Paris criminal court. This followed her conviction for the misuse of €4.1 million in European Parliament funds between 2004 and 2016 to benefit her National Rally (RN) party, a ruling that significantly reshaped the French political landscape. Concurrently, in the Middle East, beginning around March 26, 2025, Israeli Prime Minister Benjamin Netanyahu initiated a series of “desperate measures” amidst renewed conflict in Gaza and an impending March 31st budget deadline. These actions included the dismissal of Shin Bet chief Ronen Bar and Attorney General Gali Baharav-Miara, coinciding with the intensification of the “Qatargate” investigation into alleged financial ties between Netanyahu’s aides, Yonatan Urich and Eli Feldstein, and Qatar, with interrogations taking place regarding suspected bribery and money laundering.
Geoeconomics
Donald Trump escalates global trade war with sweeping tariff blitz
The Financial Times
Once an Economy Switches from Rules to Deals, It’s Hard to Go Back
Filipe Campante and Ray Fisman, Bloomberg
EU Eyes Emergency Plans to Shield Economy From Trump Tariffs
Alberto Nardelli and Jorge Valero, Bloomberg
Small Businesses Are Stalling, New Report Shows. It Could Be a Warning for the Economy.
Megan Leonhardt, Barron’s
As Trump Sinks Dollar, Once-Unthinkable Worry Grips Markets
Filipe Campante and Ray Fisman, Bloomberg
On April 2, 2025, Donald Trump escalated his global trade war, a move he termed “Liberation Day,” by announcing sweeping tariffs on US imports, set to take effect around April 5th. These measures, including a 10 percent levy on nearly all US imports and higher “reciprocal” duties targeting major trading partners like China, the EU, and Japan, sent immediate shockwaves through global financial markets. The Stoxx Europe 600 index fell by 1.6 percent, and US stock futures also dropped sharply, with S&P 500 index futures down by 2.8 percent. Simultaneously, gold prices surged to a record high of $3,150 a troy ounce, and investors sought the safety of government bonds. This market turmoil reflected growing fears that Trump’s aggressive trade policies would slow economic growth and reignite inflation. Fund managers, like John Sidawi at Federated Hermes, have also noted an unusual phenomenon: the US dollar, typically a safe haven during market sell-offs, was also sinking, with Bloomberg’s dollar index down nearly 3 percent in the first three months of the year. This erosion of confidence in the dollar’s safe-haven status was attributed to Trump’s policies, which were seen as a move away from a rules-based global trade order towards a more unpredictable, deal-making approach.
Against this backdrop of escalating trade tensions, a report released on March 27, 2025, highlighted that the pandemic recovery momentum for the majority of US small businesses had stalled. The Federal Reserve’s latest small business credit survey revealed that in 2024, 41 percent of small businesses reported revenue decreases, exceeding the 38 percent that saw an increase, a reversal from previous trends. Rising costs of goods, services, and labor were identified as key financial challenges, exacerbated by the uncertainty surrounding shifting federal policies on tariffs and immigration. This depressed sentiment among small business owners, who employ nearly half the nation and contribute over 43 percent of economic growth, raised concerns about future job creation and innovation. In response to Trump’s “Liberation Day” tariffs, the European Union began preparing a package of potential emergency measures aiming to support sectors of its economy most vulnerable to the new levies. While the exact details of the US tariffs were still emerging, the EU anticipated rates between 10 and 25 percent and was formulating short-term economic support proposals alongside longer-term strategies to enhance competitiveness within the bloc’s single market.
Global Junctions
FDA Is ‘Finished’ Amid HHS Firings. Drug Stocks are Dropping
Josh Nathan-Kazis, Barron’s
Authoritarianism Is Turkey’s Biggest Economic Risk by Şebnem Kalemli-Özcan
Şebnem Kalemli-Özcan, Project Syndicate
Fighter Jets Vs. Elon Musk: What U.S. Military Drones Mean For Defense Stocks
Harrison Miller, Investor’s Business Daily
The Trump administration has initiated sweeping layoffs at U.S. public health agencies, with the FDA hit particularly hard as top leaders, including Dr. Peter Stein, were forced out. Former FDA Commissioner Robert Califf declared the agency “finished,” warning of long-term damage due to the loss of experienced personnel. The pharmaceutical industry, once supportive of Trump’s leadership, now faces uncertainty, causing a decline in drug and biotech stocks. The Department of Health and Human Services (HHS) plans to eliminate 10,000 more jobs, including 3,500 at the FDA, despite claims that drug reviewers will remain unaffected. Meanwhile, Dr. Peter Marks resigned over disputes regarding vaccine safety and the growing influence of RFK Jr. as health secretary, prompting calls for Kennedy’s removal. Analysts argue that these actions threaten regulatory stability and public health, leaving drug companies unable to negotiate with the administration.
In Turkey, the arrest of Istanbul Mayor Ekrem İmamoğlu, a key opposition figure, has triggered nationwide protests and heightened concerns over President Recep Tayyip Erdoğan’s authoritarian grip. Investor confidence has plummeted, the lira has depreciated sharply, and Turkey’s risk premium continues to rise. The protests, broader and more diverse than the 2013 Gezi Park demonstrations, highlight the link between political repression and economic instability. Critics warn that Turkey is approaching a point of no return as state institutions are weaponized against dissent, deepening inequality and eroding democratic norms. Meanwhile, the U.S. military’s investment in AI-powered drones has sparked debate over the future of manned fighter jets. While Elon Musk argues that drones will render piloted jets obsolete, experts emphasize the need for a hybrid approach, combining human pilots with unmanned systems. Defense giants like Boeing, Lockheed Martin, and Northrop Grumman are adapting to this shift, while new players such as Palantir and Anduril compete to shape the future of aerial warfare.
Global Trajectories
From Zambia To Nigeria, the Mission to Electrify Africa Is Under Way
Antony Sguazzin and Taonga Mitimingi, Bloomberg
Trade War Winner? Brazil Sees Opportunity as Tariff Tensions Escalate
Samantha Pearson, Wall Street Journal
A World Turned Inside Out by Stephen S. Roach
Stephen S. Roach, Project Syndicate
I Just Saw the Future. It Was Not in America.
Thomas L. Friedman, New York Times
The expansion of solar-powered mini-grids in Africa is transforming rural economies, as seen in Chitandika, Zambia, where Damaseke Mwale leveraged electricity to start a store and other businesses. Mini-grids, which provide power to off-grid communities, are growing rapidly due to falling solar panel costs, improved regulations, and rising international investment. The World Bank’s Mission 300 aims to connect 300 million people by 2030, potentially drawing over $85 billion in funding. Success depends on governments implementing effective policies, sustainable tariffs, and incentives for private investment. While countries like Nigeria have benefited from favorable policies, past missteps in places like Tanzania have deterred investment. Despite these challenges, solar initiatives are providing much-needed access to electricity, which is crucial for economic growth, education, and job creation across the continent.
In other global developments, Brazil is capitalizing on the global trade war by increasing exports to China as the country reduces U.S. imports. With over $70 billion in Chinese investment in Brazilian infrastructure, agriculture, and manufacturing, Brazil’s economy is benefitting. Sectors like soybeans, beef, and footwear are poised for growth despite potential U.S. tariffs. Stephen S. Roach warns that Trump’s return to the White House has triggered economic instability, particularly in trade relationships with China and Europe, pushing the global economy toward stagflation. Meanwhile, in technology, Thomas L. Friedman highlights China’s growing leadership in AI and semiconductors. He argues that while the U.S. is focused on tariffs and political division, China is advancing in critical technological areas, and the U.S. risks losing its competitive edge if it does not prioritize innovation and cooperation over protectionism.
