This week in Geopolitical Concerns, we examine the unraveling of America’s traditional expertise-based foreign policy as political loyalists reshape global engagement, while a revived “concert of powers” vision signals a shift toward great-power accommodation and spheres of influence. In Geoeconomics, we explore how erratic U.S. trade policy, fiscal gridlock, and leveraged hedge fund strategies are shaking investor confidence, raising alarms over the dollar’s reserve status and deepening fears of a financial spiral. Global Junctions turns to the pivotal Vatican conclave following Pope Francis’s death, Erdoğan’s regional provocations, and France’s push for Palestinian recognition—events that underscore a broader contest over moral authority and regional power in an unstable world. Finally, in Global Trajectories, we trace how a collapsing freight market, carbon levies on ships, and a U.S.-China tariff war are reshaping global commerce and diplomacy, revealing the chaotic birth of a fragmented, multipolar order.
Geopolitical Concerns
The Rise and Fall of Great-Power Competition
Stacie E. Goddard, Foreign Affairs
The Age of American Unilateralism
Michael Beckley, Foreign Affairs
How Generations of Experts Built U.S. Power
Jeremi Suri, Foreign Policy
Expertise has long been central to American power. Institutions like the U.S. Military Academy at West Point (1802) and the U.S. Naval War College (1884) were early investments in cultivating skilled military leaders. After World War II, the National Security Act of 1947 established key institutions—the Department of Defense, CIA, and Atomic Energy Commission—and created the National Security Council (NSC) to bring expert guidance to the president. Robert Cutler, the first National Security Advisor in 1952, formalized the role of managing strategic decisions and alliance coordination. For over 70 years, this expert-led system, supported by universities and think tanks like RAND and Brookings, maintained global stability, prevented nuclear war, and advanced U.S. interests. Today, that model is eroding. A wave of political loyalists with limited relevant experience—such as Mike Waltz as National Security Advisor and Pete Hegseth as Defense Secretary—has replaced seasoned professionals. Blunders like the unintentional leak of military plans in March 2025 underscore the consequences. Skilled officials, including NSA/Cyber Command head Timothy Haugh and deputy Wendy Noble, were dismissed for disloyalty, not performance. This shift from expertise marks the rise of an “age of American unilateralism”—a shift rooted in structural changes and frustration with global leadership. The U.S. wields unmatched economic and military clout: its consumer market rivals China and the eurozone combined, the dollar features in nearly 90% of global transactions, and exports are only 11% of GDP. Militarily, it alone can project force globally, and 70 nations depend on its security. This power enables disengagement—manifesting in historic tariff hikes, foreign aid cuts, ally snubs, and proposals to seize territories like Greenland and the Panama Canal. With automation and demographic decline elsewhere (e.g., China’s prime-age workforce may shrink 74% by 2100), America grows more self-reliant, reinforcing a fortress mentality.
Since the mid-2010s, U.S. foreign policy has been defined by “great-power competition.” Trump’s 2017 National Security Strategy and 2018 National Defense Strategy prioritized rivalry with China and Russia, a stance echoed by Biden’s 2022 strategy, which aimed to “out-compete” authoritarian adversaries. This framing cast U.S. leadership as embattled but righteous—confronting aggression in Ukraine, military expansion in the South China Sea, and threats to the global order. But in early 2025, Trump’s second term upended that consensus. Instead of confronting rivals, he signaled collaboration—proposing deals with Xi Jinping and Vladimir Putin that once seemed unimaginable. His new approach resembles a 19th-century “concert of powers,” like the Congress of Vienna (1814–1815)—a world order coordinated by strongmen. He’s called for ending the Ukraine war with concessions to Russia and for a sweeping settlement with China on trade, investment, and arms control. After talks with Xi and Putin in January and February, Trump praised them as smart and tough—equal partners in stabilizing global disorder. This “concert” vision favors spheres of influence: allowing Russia to claim Ukrainian land, China to control Taiwan, while the U.S. moves freely in areas like Canada, Greenland, or the Panama Canal, expecting reciprocal neutrality. Smaller states, as in 1818 when Spain was excluded from talks about Latin America, are sidelined. While advocates say such arrangements could bring order, history suggests they invite conflict. Post-Yalta (1945) tensions and ideological rifts—like those between Austria and Britain in the original Concert—show how unstable these deals can be. As of March 2025, polling reflects U.S. public concern: 47% disapproved of Trump’s Ukraine policy and 49% of his foreign policy overall.
Geoeconomics
Will Policy Chaos Trigger a Flight From the Dollar?
The Editorial Board, Bloomberg
US Profit Outlook Rarely This Sour, Morgan Stanley’s Wilson Says
Farah Elbahrawy, Bloomberg
The trades threatening the Treasury market
Robin Wigglesworth, The Financial Times
U.S. trade policy has recently become highly erratic, most visibly in the abrupt imposition and pausing of punitive tariffs around “Liberation Day” on April 2, 2025. This volatility jolted financial markets—initially pushing stocks down and bonds up, before the tariff pause triggered a dramatic reversal: stocks, bonds, and the dollar all fell, with the bond market experiencing its sharpest slump since 2019. Demand for dollar-denominated assets plunged, and the trade-weighted dollar fell to a six-month low, even as targeted currencies like the euro, yen, and Swiss franc, as well as gold, gained strength. For the first time in five years, a major dollar-strength gauge turned negative. Investors began questioning the safety of U.S. Treasuries in the $28.6 trillion bond market, with fears of stagflation driving expectations of aggressive Fed rate cuts. The dollar’s reserve currency status is now under scrutiny, particularly as officials hint at favoring a weaker dollar and even suggest taxing foreign Treasury holders. Meanwhile, Congress’s fiscal gridlock is seen as deepening America’s unsustainable debt path, further shaking confidence. This mix of policy inconsistency and fiscal deterioration points to an emerging crisis of confidence, with fears of capital flight, possible default, and broader economic fallout. At the same time, the U.S. corporate outlook is darkening. Analysts like Michael Wilson of Morgan Stanley cite tariff-driven uncertainty and slowing growth as reasons why S&P 500 earnings estimates have dropped from 11.4% to 6.9%—even as the index is already down 10%, lagging the MSCI World Index, up over 6%.
This financial fragility is compounded by the unwinding of highly leveraged hedge fund strategies, particularly in the Treasury market. Though some are labeled “plain-vanilla,” leverage levels of 50–100 times capital make them risky. One long-standing tactic, the basis trade, involves selling Treasury futures while buying the underlying bonds, now with hedge funds holding a net short futures position near $800 billion. As volatility spikes, margin calls force asset sales, triggering a “doom loop” of price declines and further calls—reminiscent of March 2020, when the Fed intervened with $1 trillion to restore stability. Another risky strategy is the off-the-run trade, where hedge funds short newer, more liquid bonds and go long on slightly older ones, profiting from spread convergence. These spreads have recently widened to nearly 9 basis points, increasing risk. The swap spread trade, now seen as a major stressor, hinges on differences between fixed-rate swaps and Treasury yields, a spread shaped by post-crisis regulations limiting bank balance sheets. Hopes of regulatory rollback earlier in 2025 prompted massive leveraged bets on spread narrowing. But tariff-fueled volatility drove up margin requirements, forcing unwinds that pushed swap spreads further negative, deepening the cycle. Experts like Robin Wigglesworth warn that while such trades offer liquidity, their leverage leaves the Treasury market vulnerable to disorderly sell-offs, potentially requiring another round of Federal Reserve intervention.
Global Junctions
A Conclave to Test Pope Francis’s Legacy
Howard Chua-Eoan, Bloomberg
Erdoğan Sets His Sights on Israel
Reuel Marc Gerecht, The Atlantic
Macron announces potential recognition of Palestinian state in June
Philippe Ricard, Le Monde
Following the death of Pope Francis on April 21st, the Catholic Church enters a decisive conclave that will determine whether the late pontiff’s progressive legacy endures. During his 12-year reign, Francis overhauled Vatican governance, appointed a dominant share of cardinal-electors, and pursued a more inclusive stance toward divorced and LGBTQ Catholics—moves met with resistance from conservative figures like Cardinals Raymond Burke and Georg Gänswein. With factions coalescing among European traditionalists, U.S. culture warriors, and African prelates, the College of Cardinals now faces a defining choice: uphold Francis’s vision or reverse course in what could be the most ideologically contentious papal election in decades.
Meanwhile, Europe and the Middle East are witnessing major geopolitical shifts. In Turkey, President Erdoğan has jailed his political rival Ekrem İmamoğlu and aligned more openly with Hamas, stoking tensions with Israel and NATO allies while bolstering militant groups across the region. Simultaneously, French President Emmanuel Macron announced France may recognize a Palestinian state in June, hoping to revive a two-state solution amid renewed violence in Gaza. Macron’s initiative, backed by discussions with Trump, Netanyahu, and MBS, underscores Europe’s attempt to reclaim diplomatic leadership as U.S. influence wavers and regional authoritarianism hardens.
Global Trajectories
Trade war fallout: Cancellations of Chinese freight ships begin as bookings plummet
Lori Ann LaRocco, CNBC
Container Shipping Rates Crash
Steven Grey, LinkedIn
UN passes landmark carbon levy on ships, defying US threats
Oliver Telling and Kenza Bryan, The Financial Times
Map Shows How Trump, Putin and Xi Could Carve Up the Globe
Brendan Cole and John Feng, Newsweek
Amid rising global tensions, President Donald Trump’s recent diplomatic efforts have sparked comparisons to mid-20th century realignment moments like Yalta and Munich. In an attempt to negotiate an end to the Ukraine war, Trump held a March call with Vladimir Putin and backed U.S.-led talks in Saudi Arabia that produced a 30-day ceasefire. While this move marks a potential shift in great-power diplomacy, it’s also raising concerns in Europe. EU officials have criticized what they see as a retreat from Eastern Europe, as Russian influence deepens in Moldova and beyond. Simultaneously, China is expanding its pressure campaign across Central Asia and the South China Sea, with military exercises near Taiwan. With steep tariffs now imposed on Chinese goods and fears of a new “sphere of influence” global order emerging, experts warn that the geopolitical landscape could be entering a volatile new chapter.
In parallel, the maritime and trade sectors are feeling the weight of these political shifts. The UN’s International Maritime Organization (IMO) has approved a controversial carbon levy on ships, charging $100 per tonne of excess CO₂ emissions—potentially rising to $380 for worst offenders. While hailed by some as a climate victory, the U.S. rejected the deal, citing disproportionate costs and objecting to its bias toward developing nations. At the same time, escalating U.S.-China tensions and Trump’s 145% tariffs have triggered a collapse in Chinese ocean freight exports. Over 80 sailings have been canceled, with ripple effects hitting global supply chains. Vietnam, meanwhile, is emerging as a trade alternative, with rates surging on key routes. As both environmental and geopolitical realignments intensify, global commerce is being reshaped by a volatile mix of diplomacy, regulation, and retaliation.
