The IEEPA tariff journey did not end well. It turned out to be an illegal tax based on flawed economic principles, was reluctantly revoked under belated legal pressure, and compensated those who were said to be the object of "punishment." The insistence on seeking punishment through other legal means risks extending the fiasco, keeping uncertainty high along the way.
The U.S.–China technological rivalry has become a central axis of global economic and geopolitical competition. While the United States continues to lead in frontier innovation—most notably in advanced semiconductors and artificial intelligence (AI)—China has consolidated strengths in large-scale implementation, manufacturing capacity, and control over critical segments of global supply chains. These advantages are especially visible in clean energy technologies and in the processing and refinement of critical minerals and rare earths. The rivalry now unfolds across multiple frontlines, extending beyond innovation itself to encompass infrastructure, energy availability, and technology deployment across the New South. Its outcome will depend less on breakthrough inventions alone than on each country’s capacity to integrate technology, industrial policy, and energy systems into cohesive national strategies.
This article examines the quiet but profound implications of the erosion of U.S.-led hegemony for small and vulnerable states of the New South. While the post-1945 international order was never egalitarian, it offered predictability: power was organized through law, and sovereignty for weaker states rested less on justice than on procedural stability. Davos 2026 marked a turning point in the public acknowledgment of that system’s unraveling. Statements by leading Western figures revealed not a revolt against American power, but a growing recognition that the United States is increasingly retreating from the obligations that once distinguished hegemony from dominance. As rules give way to discretion, and institutions to transactional bargaining, the capacity of states to navigate global disorder is becoming sharply unequal. The article argues that this shift is existential for small states—particularly in the Middle East and North Africa—whose sovereignty depends almost entirely on international law and multilateral institutions. Unlike middle powers, they lack buffers, leverage, and visibility; their vulnerability rarely translates into voice. Climate change, debt distress, and security dependence deepen this asymmetry, making legal obligation—not power—their primary shield. Far from idealism, international law functions for these states as the infrastructure of survival. The weakening or bypassing of multilateral rules thus constitutes a systemic stress test: not of global morality, but of global stability. If the last line of international law collapses, the resulting order will not be more realistic—it will be more coercive, exclusionary, and ultimately less durable.
The most likely scenario is the continuity of the combination of an AI bubble and underperformance at the bottom of the pyramid.
Trade war between the United States and China has a truce, but the use of reciprocal "choke points" will remain possible.
Global economic growth has been more resilient than expected, as the artificial intelligence-led growth seems to be compensating for the negative impacts of trade conflicts. Overstretched asset values and slowing jobs growth may be signaling that the balanced crossing of those two paths will be challenged.
The Trump tariff saga hasn't reached its climax yet, but a shift in import sources is evident. Regarding the trade balance, everything will depend on the continuation of the boom driven by high-tech investment. The harmful effects of tariffs on the rest of the economy will take time to unfold.
However politically convenient narratives about the United States "abandoning" manufacturing may be, the reality is more complex and less gloomy than many assume. In fact, US manufacturing has not disappeared, but it did internationalize as American companies pursued higher-value opportunities at home.
The international monetary system has been dominated by the U.S. dollar since the Second World War. The hegemony of the greenback cut across the end of the dollar exchange standard established by the Bretton Woods Agreement, and came out from the global financial crisis—and the euro crisis—even stronger than before. The euro area and China are taking steps to strengthen the international role of their currencies, but surmounting the inner strength of the dollar-based monetary system cannot be taken for granted. This is visible in two aspects of the rising profiles of competitors to the dollar-based system: the growing use of local currencies in cross-border payments between China and other countries—particularly the BRICS—and the role played by the euro and the renminbi in cross-country financial safety nets.
This article assesses the economic performance of the original BRICS economies, relative to the growth and currency appreciation projections presented in the papers that introduced the acronym, prior to the grouping becoming a diplomatic, political, and economic reality. It also discusses the BRICS agenda in the current challenging geopolitical context, in which economic fragmentation tends to raise costs for the global economy and presents considerable obstacles for emerging and developing economies.
President Donald Trump's "Reciprocal Tariff" policy, announced on April 2, 2025 (dubbed "Liberation Day"), represents one of the most significant shifts in U.S. trade policy in nearly a century. Trump’s policy imposes a baseline 10% tariff on all imports and additional country-specific tariffs that range from 10% to 50% for countries designated as having "non-reciprocal trading practices" with the U.S. These specific tariffs are determined based on each country’s bilateral trade balance with the U.S. Postponements and bilateral trade negotiations started after April 9, 2025. This paper develops a two-country general equilibrium model to analyze the economic implications of the originally announced “Reciprocal Tariff” policy, with particular emphasis on developing countries. Initially characterized by a trade deficit in the U.S. and asymmetric tariff structures, the model explores the effects of the U.S. unilaterally raising its tariffs to match those of its trading partners. We incorporate comparative advantage (CA), sectoral heterogeneity, and the interaction of tariff policy with monetary policy. The results suggest that while tariff equalization can reduce trade imbalances and improve U.S. terms of trade, it generates efficiency losses and results in ambiguous welfare outcomes. A calibrated policy mix is required to balance trade, inflation, growth, and equity objectives. While the administration framed these tariff reciprocal measures as essential for addressing trade imbalances and strengthening American manufacturing, our analysis identifies significant economic repercussions for developing economies. Key findings include the disproportionate impact on developing nations with export-oriented growth strategies, disruption of global value chains, potential reversal of development gains, and acute vulnerability for many African and Asian nations that face some of the highest tariff rates. The policy would likely trigger structural economic changes in the global trading system, with implications that extend well beyond the immediate tariff impacts.
Within an ever-evolving system of multilateral development banks (MDB) currently reshaped by four structural geo-economic trends, the emergence of new MDBs like the Asian Infrastructure Investment Bank (AIIB) and the New Development Bank (NDB) carries great geopolitical significance. Yet the new MDBs, attuned to institutional and operational realities, have not upended the MDB system. Their relationship with long-established MDBs such as the World Bank currently resembles not a fork in the road, but a braided path–marked by both convergence and divergence, cooperation and manageable competition.
- The costs are greater the deeper the trade fragmentation. - Reduced knowledge diffusion due to technological decoupling is a powerful negative amplifier of the trade channel. - Emerging markets and low-income countries are most at risk from trade and technology fragmentation. - Transition costs can be considerable, in some cases even exceeding the final trading impact. - The estimates provided are not the upper bound. The G20 might not address issues of national security directly, but there's much they can do, especially regarding the trade-offs between resilience and efficiency, designing policies to avoid resorting to the least discretionary breadth.
As the US-China rivalry intensifies, both powers are courting mineral-rich African countries in an effort to secure critical raw materials. Translating Africa's vast natural-resource wealth into lasting development requires an infrastructure-led strategy that delivers long-term value for local communities.
The IMF has reviewed the global growth downward, highlighting the impacts of Trump's tariff war and warning about financial and economic risks. Although the negative effects of tariffs have already been “somewhat priced in,” according to Tobias Adrian (IMF), equity and bond prices could “certainly” fall further if negotiations fail. So, it’s either successful negotiations or further stress and downgrades.