The weakening of institutions like NATO may embolden rival powers, leading to increased regional conflicts.
Washington, DC: President Trump’s plan to eviscerate the liberal post-war order is off to a great start. In just five weeks he has managed to seriously damage the trusted relationship America has enjoyed with Canada, Mexico, and the European Union, put the NATO alliance into question, turn completely upside down America’s policy on Russia, risk Ukraine’s sovereignty, and prompt the world’s economists to contemplate global recession as a result of his absurd tariffs. It is not just the American house he wants to burn down—he wants to scorch the status quo of the entire world.
The impact his actions have had on America and the world are already profound. Four years from now, the global economy, its multilateral institutions, and America’s alliances will be unrecognizable. By 2028, the cumulative effects of Trump’s policies are likely to result in an even more multipolar world order, and with it, even less stability and predictability. Traditional US allies are rightly already seeking greater autonomy in defence and economic matters and they will understandably be strengthening their non-American alliances.
The weakening of institutions like NATO may embolden rival powers, leading to increased regional conflicts. Sustained trade tensions and protectionist measures will undoubtedly have hindered global growth, severely disrupted supply chains, and contributed to recurrent market instability. The long-term impact on international cooperation, particularly in addressing global challenges such as climate change and public health, will be significant, necessitating a reassessment of time-tested multilateral strategies.
The self-imposed purging of American leadership in some multilateral institutions will undermine global cooperation on trade, security, and health. The multilateral system will not collapse, but will become more fragmented and unstable. This will open the door for China to pick up the slack—not from a voting rights perspective, but in terms of its behind-the-scenes influence in the multilaterals. Beijing will no doubt seek to play an enhanced role in global finance as a result of a weakened International Monetary Fund and World Trade Organization.
In light of reduced US security commitments, the European Union will be incentivized to pursue greater strategic autonomy. Initiatives to bolster defence capabilities and reduce reliance on external powers are already underway. Nations such as Japan, Turkey, and Poland will probably seek to expand their influence regionally, filling some of the vacuums left behind. Japan’s military modernization, Turkey’s regional assertiveness, and Poland’s leadership in Eastern Europe already exemplify this trend.
The global economy will be lucky to maintain a modest growth rate, but it may prove to be insufficient to foster sustained economic development, particularly in emerging markets and developing economies. The rise in global defence spending in 2024 is expected to continue, with nations enhancing their military capabilities to address evolving security challenges. Investments in defence are likely to spur technological innovation, potentially benefiting civilian sectors. European nations are expected to significantly increase defence spending of up to 3.5% of GDP. While enhancing the continent’s military capabilities, it will also almost certainly result in higher taxes or increased borrowing, presenting a challenge to existing fiscal policies.
While the world will be worse off as a result of many of the changes that will have occurred, some nations and institutions will benefit. European nations may end up better off as a result of the emphasis on self-reliance and increased self-funding. Depending on how peace unfolds in Ukraine, Russia is likely to be the net beneficiary. China will benefit by filling the gaps America leaves behind and opportunistically establishing an enhanced presence in the multilaterals. Developing nations will of course be worse off because of reduced development, anti-poverty, and aid funding. The environment is sure to be a net loser without American support for climate change initiatives, as it was the first time Trump was in office.
The biggest loser will be America itself. During the first Trump term in the Oval Office, there was a chance for the US to regain its dignity and to restore its fractured alliances. That will be much more difficult to achieve the second time around. America’s allies will never again be able to assume that American guarantees are iron clad or be able to rely on American support in times of crisis. The world’s people will have lost faith that America stands for freedom, liberty, and democracy. Instead, America will have become synonymous with authoritarianism and dictatorship.
Trump’s policies are suicidal for America in the long-term and make little sense. Four years from now, it will have become evident that his was the last presidency where America had omnipotent influence in the world. After he has finished, the shifts in alliances, rise of national self-reliance, recession-laden global economy, and permanently altered landscape may make it impossible for America to ever regain its omnipotence, much less its dignity and credibility.
* Daniel Wagner is CEO of country risk solutions and the author of “Tales from Inside: Essays on Zero-Covid, the AIIB, and China’s Influence in Multilateral Institutions”.