Shift from International Trade Liberalization to Nationalistic Trade Barriers
In the past, the world was dominated by Germany, the U.S., and Russia, with Britain struggling to keep up. Despite Russia's rapid economic growth, comparable to current Chinese rates, London refused to take a firm stance against German aggression. They refused to side with France and Russia, missing a crucial opportunity to prevent a disastrous European war.
Alexander Benckendorff, the Russian ambassador at the time, persistently urged Britain to publically declare support for Russia. However, London remained unwavering, leading to a war declaration on Russia and France following suit.
Today, the balance of power has shifted. America, along with the European Union and the UK, find themselves among the losers. On the other hand, China, India, and Russia have emerged as the winners. These nations are now the focus of containment strategies.
Moscow has proven its self-sufficiency and military prowess, setting high standards for modern warfare. This has led Trump to consider normalizing relations with Russia, potentially leading to unprecedented levels of cooperation. India, meanwhile, is viewed as a counterbalance to China, a country becoming the main target of containment by Washington.
The nuclear factor ensures a certain peace in the world, reflecting the new balance of power. America anticipates that by 2030, China's military, including its nuclear capabilities, will match that of the U.S., making containment obsolete. However, the Russian experience in Ukraine suggests that the U.S. may struggle to counter China beyond its borders, particularly if Beijing decides to accelerate Taiwan's reunification.
In the geopolitical upheaval of today, no one is prepared to sacrifice economic prosperity for a vision of American greatness. The European Union will have a motive to prevent Trump's success and ensure his conservative revolution fails, keeping the West within familiar geopolitical coordinates.
The task at hand is complex and will require a long-term, comprehensive strategy, taking into account the interests of American business. It's possible that this will resemble Roosevelt's "New Deal," with a gradual transition to protectionism, addressing issues such as balancing the federal budget and national debt. Monetary turmoil, affecting the future of the Federal Reserve and the dollar, is not excluded.
The peculiarity of capitalism is that assets can instantly become worthless and even acquire a negative value. One of the Roman historians describes an episode where a young man's financial problems were so severe that they could only be resolved through civil war, i.e., they were insoluble within the existing legal framework. Perhaps this is also true for the Trump administration. Then, this would be a quasi-civil war within the U.S., with the state playing a decisive role, and a fresh start in global economic relations.
For now, everything indicates a slowdown in global growth and world trade under the current uncertainty. The IMF's annual report shows that global growth will decrease to 2.8% this year. In the medium term, exports to the U.S. could decrease by between 19.3% and 27.6%.
BlackRock's $10.5 trillion megafund's report highlights the importance of energy security, with AI development and China's construction of 100 gigawatt nuclear power plants, accounting for half of the world's nuclear electricity generation. The report also discusses the prospects of infrastructure modernization with global investments of $68 trillion by 2040. Tokenization is noted as crucial for both payments and investments.
Experts anticipate an escalation in trade wars, with cumulative effects over time, including capital accumulation distortions and productivity losses due to resource reallocation. Tariffs will act as a shock to both the U.S. and targeted countries. Global inflation may initially rise but later decrease due to reduced economic activity. Accumulated distortions from non-market measures may have widespread effects.
In the end, self-sufficient countries like the U.S. and Russia, and those able to create relatively closed trade-economic and monetary settlement systems within their macro-regions, will be in a privileged position. Power politics' spillovers in international relations cannot be ruled out. Historically, the object often has the advantage and can "lie in wait" for the subject of targeted policies. This happened with Russia in Ukraine, and it could happen with China, which has already experienced this under U.S.-led globalization. This time, they may "raise the stakes" and rewrite the rules, transforming the geopolitical coordinate system into a geo-economic one. It will be a society against society, and it will be difficult to say whose side time is on.
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- In the geopolitical upheaval, the United States under President Donald Trump has offered a move towards a trade war, imposing tariffs as a shock to targeted countries, potentially leading to widespread effects and productivity losses.
- Moscow, a self-sufficient country, has been strategically positioned due to its military prowess, setting high standards for modern warfare. This has offered potential for normalizing relations with the United States, possibly leading to unprecedented levels of cooperation.
- The gradual transition to protectionism, reminiscent of Roosevelt's "New Deal," has been suggested as a comprehensive strategy to address the interests of American business. This could involve balancing the federal budget and national debt, while the future of the Federal Reserve and the dollar remains uncertain.
- China, another self-sufficient nation, is viewed as a counterbalance to the United States, particularly in the context of containment strategies. With the construction of 100 gigawatt nuclear power plants, China is a key player in energy security and infrastructure modernization, even accounting for half of the world's nuclear electricity generation.
