This week in Geopolitical Concerns, we examine the accelerating disintegration of the postwar global order as President Trump’s sweeping tariffs threaten to unravel decades of economic integration and strain the transatlantic alliance, while scholars warn of a potential dethroning of the U.S. dollar. In Geoeconomics, we explore how financial markets teetered on the brink following the ‘Liberation Day’ tariff shock, raising doubts about the safe-haven status of U.S. Treasuries and exposing deep vulnerabilities in a system once anchored by American stability. Global Junctions analyzes the fragmentation of the global tech ecosystem, from Apple’s trade-war nightmare and Nvidia’s fragile monopoly to Europe’s growing desire to decouple from U.S.-centric digital infrastructure. Finally, in Global Trajectories, we examine how Trump’s tariffs may ironically strengthen China’s long-term position in global trade and innovation, as Beijing adapts with AI investment and strategic outreach while the U.S. retreats from key alliances and influence wanes across the Global South.
Geopolitical Concerns
The Age of Tariffs: Trump Is Launching a Turbulent New Era for the Global Economy
Eswar Prasad, Foreign Affairs
Joseph S. Nye Jr., Project Syndicate
Trump’s aggressive push to roll back globalisation
Sam Fleming and Delphine Strauss, The Financial Times
How Trump Could Dethrone the Dollar
Edward Fishman, Gautam Jain, and Richard Nephew, Foreign Affairs
On April 2, U.S. President Donald Trump announced a series of significant tariffs impacting almost all of the United States’ foreign trading partners, a move that sent immediate shockwaves through global stock markets. This action, following a consistent theme of employing U.S. economic power assertively, raised fears of a new era defined by protectionism rather than the decades-long trend of increasing free trade. Trump’s rationale centered on the belief that the U.S. had been disadvantaged by unfair trading practices, particularly citing trade imbalances with countries like China. However, the sweeping nature of these tariffs, affecting allies such as Japan, South Korea, and the EU alongside adversaries, signaled a fundamental shift in U.S. trade policy and a potential dismantling of established global economic integration. The world responded with a mix of threatened retaliation, with China announcing 34 percent tariffs on U.S. goods shortly after, and hesitant appeasement from others hoping for a softening of the measures. This recalled the historical precedent of the Smoot-Hawley tariffs of the 1930s, which triggered a cascade of international retaliatory measures and are often blamed for deepening the Great Depression. The consensus among many economists and analysts was one of deep concern, viewing Trump’s policies as a reckless gamble with the potential to trigger a global recession and undermine decades of international economic cooperation.
Beyond the immediate trade tensions, these policies pose a significant threat to the U.S. dollar’s long-standing position as the world’s dominant reserve currency. The dollar’s strength has historically relied on its liquidity, widespread use in international transactions, its role as the common unit for pricing global commodities, and its status as a reliable store of value underpinned by large, open financial markets and the rule of law in the United States. However, Trump’s actions are eroding these very foundations. The imposition of broad tariffs and the alienation of key allies are damaging the credibility of the U.S. as a predictable trading partner, potentially reducing the incentive for other nations to rely on dollar-denominated trade. Furthermore, the increased use of sanctions is pushing countries to seek alternatives to the dollar for cross-border transactions, potentially making systems like China’s Cross-Border Interbank Payment System (CIPS) more appealing, especially for trade with the approximately two-thirds of the world’s countries for whom China is the largest trading partner. Threats to the rule of law within the U.S. and the potential for the politicization of the Federal Reserve further undermine the dollar’s perceived safety and reliability. While no immediate, viable alternative currency exists, the cumulative effect of these policies could lead to a gradual erosion of the dollar’s dominance, mirroring the historical decline of the British pound sterling in the 20th century, with significant negative consequences for the U.S. economy and global financial stability.
Geoeconomics
Will the World Keep Buying US Treasuries?
Paola Subacchi and Paul van den Noord, Project Syndicate
Where real danger might lurk in chaotic markets
The Economist
Trump’s approach to geoeconomics carries dark echoes, writes Maurice Obstfeld
The Economist
Sell-Off in U.S. Bonds and Dollar Raises Questions About ‘Safe Haven’ Status
Colby Smith, New York Times
Bond Chaos, Deal Mania and Jamie Dimon: Inside Trump’s Tariff Reversal
Justin Sink, Bloomberg
America’s financial system came close to the brink
The Economist
Just after midnight on April 9, President Trump’s “reciprocal” tariffs took effect, triggering immediate turmoil in financial markets. Senator Lindsey Graham reportedly voiced his concerns directly to Trump, while business leaders like JPMorgan Chase’s Jamie Dimon warned of a looming recession. Even billionaire advisor Elon Musk publicly criticized the tariff move. The chaos nearly pushed the U.S. financial system to the brink, as both equity and bond markets collapsed—ten-year Treasury yields jumped from 3.9% to 4.5%, an extraordinary move that reflected a rare simultaneous loss of confidence in both risky and traditionally safe assets. Relief came only late in the day, when Trump abruptly announced a 90-day delay on most tariff hikes, prompting the S&P 500 to surge by 10%—its biggest single-day gain since 2008. Treasury Secretary Scott Bessent, who had been scheduled to speak on tax legislation, canceled his appearance to return urgently to the White House as the bond market’s instability drove key policy decisions. Despite the rebound, significant stress remains. Swap spreads hit a record 0.6 percentage points, and hedge funds—heavily exposed to $1 trillion in leveraged Treasury-futures trades—remain vulnerable to another market seizure. The announcement excluded a reprieve for China, with a further increase in tariffs on Chinese goods announced (125% baseline tariff on all Chinese goods), which had already retaliated with an 84 percent levy on U.S. goods.
However, this temporary reprieve will not fully quell broader geoeconomic anxieties. Even traditional safe-haven assets like gold and Treasury bonds saw price declines prior to April 9th, suggesting a “dash for cash” and potential fire sales as investors scrambled to meet margin calls. This raised serious questions about the long-standing “safe haven” status of U.S. assets. Analysts like Priya Misra of J.P. Morgan Asset Management noted that the global safe-haven status was in question. The willingness of the world to continue buying U.S. Treasuries is increasingly uncertain due to the trade tensions and the perception of policy incoherence from the United States. Some countries may become hesitant to maintain overweight positions in U.S. assets. The wild market swings themselves pose a danger, potentially leading to a self-fulfilling cycle of forced sales and further volatility, as seen in past episodes like the 2020 Treasury market breakdown. All to say, Trump’s geoeconomic approach marks a significant departure from the traditional post-World War II Western stance of multilateral cooperation and institution-building aimed at fostering global trade and prosperity. His administration continues to prioritize a transactional approach, leveraging economic pressure and questioning long-standing alliances, reflecting a “zero-sum mindset” that sees international trade as a source of American weakness rather than mutual benefit. This shift will likely continue to foster considerable uncertainty and risks to the global economic order.
Global Junctions
Apple gets caught in a trade-war nightmare
The Economist
How the AI Boom Created the Most Valuable Monopolies in History
Mark Bergen, Bloomberg
The Brewing Transatlantic Tech War
Henry Farrell and Abraham Newman, Foreign Affairs
The geopolitical tech landscape is rapidly fragmenting under the weight of renewed U.S.-China tensions and a growing transatlantic rift. Apple, once a symbol of globalization, has been rocked by Trump’s April 3rd tariffs and China’s swift retaliation, losing over $300 billion in market value in just days. With Chinese assembly now subject to as much as 60% in tariffs, and India and Vietnam facing steep levies of their own, Apple’s global supply chain is under threat. Meanwhile, Nvidia dominates the AI chip market, powering nearly all leading chatbots, but its reliance on a fragile, near-monopolistic supply chain—TSMC, SK Hynix, and ASML—exposes critical vulnerabilities. Though major tech firms like Microsoft and Meta are investing in homegrown chips, past precedent suggests entrenched monopolies like Nvidia’s are hard to dislodge without major disruption.
At the same time, U.S. tech’s cozying up to Washington is straining relations with Europe. Firms like Meta and OpenAI, now closely tied to the Trump administration, risk alienating key European allies already wary of digital dependence. Europe, once hopeful that U.S. tech would liberalize and integrate markets, is now openly considering decoupling—from platforms like Starlink to core infrastructure. This shift comes amid rising antitrust scrutiny, fears of strategic vulnerability, and leaked hostility from senior U.S. officials like Vice President JD Vance. With Apple navigating crisis in China, Nvidia’s dominance raising alarms, and Europe eyeing digital independence, the era of a unified global tech order may be nearing its end.
Global Trajectories
How America could end up making China great again
The Economist
‘The Tsunami Is Coming’: China’s Global Exports Are Just Getting Started
Keith Bradsher, The New York Times
Sweeping tariffs threaten ‘Factory Asia’
FT reporters, Financial Times
The ongoing trade war between the U.S. and China, fueled by President Trump’s sweeping tariffs, is having far-reaching impacts on global supply chains, particularly in Asia. Trump’s tariffs have raised duties on Chinese imports to over 60%, and many Southeast Asian countries, including Vietnam, now face substantial penalties as high as 46%. This shift threatens to undo the “China plus one” strategy, which sought to diversify manufacturing in countries like Vietnam. Amidst this uncertainty, India is positioning itself as a potential winner, with major manufacturers, such as Samsung, expanding operations there. At the same time, China continues to dominate global manufacturing, controlling 32% of the market and investing heavily in automation and AI to maintain its competitive edge, despite facing its own economic struggles, such as deflation and a housing crisis.
Trump’s protectionist policies may ultimately strengthen China’s position in the global economy, inadvertently creating opportunities for President Xi Jinping’s government to thrive. The trade war has forced China to focus on self-sufficiency and technological innovation, particularly in sectors like electric vehicles and AI. Despite the challenges, China is adapting, with increased investments and a growing tolerance for entrepreneurship. Meanwhile, Trump’s disengagement from NATO and vague stance on Taiwan have opened a geopolitical vacuum that China is poised to fill, expanding its influence, particularly in the global south. This shift underscores the unintended consequences of Trump’s policies, as China now stands to benefit from the very disruptions caused by U.S. tariffs, positioning itself as a leader in the coming age of global change.
