US tariffs and emergence of new world order

The longer-term repercussions, of enabling other countries to fill the spaces the United States is vacating and providing a space for alternative world orders to emerge, outweigh the immediate gains made 

Bold statements, extravagant research reports and media shows appear to be at the core of current US foreign policy. Regardless of its policies and points of view, researchers produce reports through the Congress Research Service (CRS) that contain important advice for the United States. However, over the years, the well-researched expert advice appears to have been ignored. We cannot expect anything different from the incumbent president. 

The impact to national economies from the recent tariffs that US President Donald Trump declared is now the talk of town, creating heated debates and leading to the crash of financial markets across Asia and Europe. Whilst countries scramble to re-do or patch the latest decisions, I want to highlight in this article three key scenarios that are important for us to consider in this race for negotiations and course corrections. 

 Collapse of the international system as we know of it 

A century or so ago the United States championed the creation of the international system as we know it today. In the aftermath of the First World War, President Woodrow Wilson attempted to create a League of Nations, which was not supported by the US Senate. The idea for an international organisation, that would later become the United Nations on 24 October 1945, was initiated at the Quebec Conference in August 1943, when the United States and Great Britain took the initiative to draft a declaration for “a general international organization, based on the principle sovereign equality of all nations.” The United States, through its 32nd President Franklin D. Roosevelt became a founding member of the United Nations. Franklin D. Roosevelt took strides to ensure “US participation in a postwar international organization” and to “convince the public that an international organization was the best means to prevent future wars” (U.S. Office of the Historian, 1945). 

In the wake of US President Donald Trump’s attempt to ‘Make America Great Again’ campaign, he is destabilising the international system that the United States took great pains to create. In doing so, international organisations, international relations and the balance of power are all altering at breakneck speed. Even though these policy changes are meant to keep America at the heart of conversations and change, it appears that they are having the exact opposite reaction. In the near-term countries may attempt to negotiate and find middle ground with the United States, however, the longer-term repercussions, of enabling other countries to fill the spaces the United States is vacating and providing a space for alternative world orders to emerge, outweigh the immediate gains made. 

 Creating vacuums and the rise of China 

Two years ago, in an article titled “US Relations with Sri Lanka: A Case of Impulsiveness, Missed Opportunities and Strategic Competition” for the The Routledge Handbook of US Foreign Policy in the Indo-Pacific, I argued that US policies have been impulsive leading to missed opportunities in the region (Senaratne, 2023). Policies that were implemented due to divergence of interests in the world’s regions and orientation led to the United States creating a vacuum in the Indian Ocean and South Asian regions in the late 2000s that enabled countries such as China to fill.  

Once again, I see a repetition of history, with the United States creating a vacuum for China and others to fill. In its attempt to be great, the United States is withdrawing from its position of supporting and leading the international system. Despite US President Trump’s attempts to maintain the United States’ leadership, it is only a matter of time that the unipolar system we know of today, will lose its power and credence. For many years, China has been developing its policies under President Xi Jinping’s leadership in preparation for a situation like this. It has been leading conversations on international governance, taking leadership in development aid and financing, something that has not been America’s strength in the recent past. 

More recently, the United States’ dominance started to decline with their aggressive anti-United Nations rhetoric, their closure of USAID programs and the Department of Government Efficiency’s (DOGE) activities to limit financing early in the year. It has also treated allies and friends such as Canada and the European Union, in the same way as a State would treat an adversary. This has opened the space for other countries such as China and India to engage more deeply with developing countries. To juxtapose, the US policies to reduce funding contrasts with the financing the People’s Republic of China (PRC) offers through the Belt and Road Initiative (BRI), the Asian Infrastructure Investment Bank (AIIB) and bilateral lending. 

 The emergence of a new world order 

President Trump’s actions are driving countries to regroup, and course correct. It has also offered a chance for countries to engage with each other on areas related to trade and pushed countries to continue to build alternatives for international governance. This can, perhaps be considered a good omen, as countries are now offered a chance to rethink existing international norms that are Western-centric and develop and champion values that are closer to the Global South. It also provides a space for countries to be attentive to the needs of emerging markets and developing countries and provides agency to ‘other voices’, disregarding the more dominant voices. Therefore, these moves have created the space to decolonise conversations, interactions and teaching on international relations as we know it. 

Consisting of 10 countries that largely constitute the Global South, the BRICS now stands a chance to make an impactful contribution to establishing a new international order. Despite its internal differences, as an intergovernmental organisation that has been expanding its membership and thought, the BRICS can provide a counter voice to the changes the member states have been championing over the past two decades. The New Development Bank (NDB, n.d.) too stands a chance to blossom as it “mobilise[es] resources for infrastructure and sustainable development projects in emerging markets and developing countries.” The international system will witness changes in the financing opportunities that are available between the offerings of the Asian Development Bank (ADB), the AIIB and the NDB. 

This is also an opportune moment to ease the dependence on the US dollar (de-dollarisation) and to facilitate greater cooperation and trade through other currencies such as the Chinese Yuan and the Indian Rupee to name a few. The United States’ actions have also promoted greater dialogue and the promise of cooperation between the East Asian countries – China, Japan, and South Korea. Despite their territorial and historical disputes, these three states have agreed to negotiate a free trade agreement that would facilitate greater cooperation among them. If anything, the United States’ actions are pushing for global change. The cogs in the wheel started to turn a few years ago, however, the speed has now accelerated with the changes that we have seen over the past few months. 

 

(The writer is Director of Education at the Bandaranaike Centre for International Studies (BCIS). She is also Research Collaborator at New York University Shanghai, China. Previously, she was Postdoctoral Fellow of Global Asia New York University Shanghai, China. She received her PhD from the University of Colombo. Her research intersects Foreign Policy Analysis, Maritime Security, Ocean Politics, and Strategic Communications. The views expressed in this article are her own.)