The world has been shaken to its core, and the global trade order—painstakingly established through years of negotiation—now stands disrupted by the unilateral imposition of retaliatory tariffs by the United States of America.
Recall the tremendous wealth that was created and distributed globally following the establishment of the WTO and China’s integration into the global economic system at the turn of the century—alongside a record-breaking run in stock markets around the world.
This global economic order propelled oil prices above $100 per barrel and kept them elevated at that level for more than five years.
"Only when the tide goes out do you discover who's been swimming naked."
And many countries have been swimming—and swimming naked—for so long that they’ve practically forgotten that tides do change. A generation of fund managers has grown and aged without ever knowing a depression or a true bear market.
The world is ripe for a liquidity crisis. And when things implode, the fallout will make no distinction between stones and diamonds. For a time, there will be no safe haven—not even gold.
Since the imposition of tariffs last week, Brent crude has declined over 15% and is now at levels last seen in August 2021. The Dow Jones is down 13%, returning to December 2021 levels. Bitcoin hasn’t been spared either—down 13% over the past four days.
More than the tariffs themselves, what has truly shaken confidence in the world’s economic engine is the haphazard, offhand manner in which they were imposed. It’s as if no one bothered to review the list—and in a fit of frustration, everyone was unfairly branded as leeching off the United States.
This “take it or leave it” approach has also shaken another cornerstone of any stable world order: negotiation. The United States is no longer seen as open to reason or engagement—and that, indeed, is serious.