On August 30, Prime Minister Narendra Modi of India travelled to Tianjin, a city in eastern China, for the Shanghai Cooperation Organization (SCO) summit. His presence there, after five years of simmering India–China tensions, was widely read as signaling the possibility of a global geopolitical realignment. Modi’s visit came in the wake of the United States imposing 25% tariffs on India, along with additional punitive duties linked to India’s continued purchase of Russian oil. China, for its part, played up the SCO as a display of geopolitical confidence and an alternative pole of attraction.
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A rival spectacle unfolded in Washington. Over the past several months, a procession of world leaders has made the pilgrimage to placate President Donald Trump in the hope of securing favorable trade deals. Trump, in turn, has announced a flurry of agreements and investment promises with Vietnam, Malaysia, Japan, and others. The spectacles in Tianjin and Washington dramatize a world in which major powers increasingly rely on public theatre, transactional bargains, and the symbolism of court-like diplomacy to project hierarchy and distribute favor. The tariff war Trump has unleashed has certainly produced a frenzy of activity.
But does it amount to a deeper geopolitical realignment?
President Trump’s tariffs have certainly induced a different diplomatic orientation. States are behaving more opportunistically—bargaining issue by issue, extracting short-term relief, and avoiding long-term entanglements. If part of geopolitics once involved the creation and maintenance of global institutions, that ambition has all but vanished. The world now appears far more fluid.
As tariffs, export controls, and investment screening become normalized instruments of statecraft, countries are reordering their economic exposure: diversifying supply chains, seeking new export markets, relocating manufacturing, emphasizing self-reliance, and introducing currency-swap arrangements to make themselves less vulnerable to the fallout of an economic war between the United States and China. Modi’s Tianjin outreach and the processions to Trump’s court in Washington reflect this broader recalibration. States are seeking room to maneuver in a system where economic bargaining, rather than ideology or shared aspiration, shapes behavior.
Yet none of this amounts to a fundamental geopolitical realignment. Much of the drama is still best understood as crisis management within an existing hierarchical order. The choreography of hedging between Washington and Beijing, while simultaneously adjusting to American pressure, masks a deeper continuity. That continuity is anchored in two forces: the domestic constraints that limit the strategic choices of states, and the pre-existing security architectures that still bind them more tightly to the United States than to any emerging alternative.
Maintaining American dominance
A restructuring of the international trade order was inevitable. The liberal international order could be sustained only under two conditions: that it generated domestic economic outcomes that shored up the political legitimacy of global integration within major economies, and that the trading system produced broadly shared gains without fundamentally threatening American hegemony.
Both these conditions had been slowly eroding. The United States has worried about the loss of manufacturing and inequality since the 1990s. The causes of these phenomena are complex. In 2016, the economists David H. Autor, David Dorn, and Gordon H. Hanson popularized the phrase, “China Shock,” attributing a loss of about two million jobs to trade with China. Trade, rather than automation or other factors, became the major culprit.
This coincided with the recognition that under the existing system, American hegemony could be threatened. China had become a genuine competitor challenging American interests. The technology gap between America and China was narrowing, China was flexing power in the Asia-Pacific, and challenging America in international institutions. The liberal international order was no longer serving the purpose of American hegemony. Maintaining global American dominance needed new foundations.
The first Trump Administration began the process of repivoting the world order, and the Biden Administration continued in that direction. In October 2022, the Biden Administration unveiled the most expansive export control regime aimed at limiting China’s access to advanced semiconductors. As Jake Sullivan, the National Security Advisor to President Joe Biden, put it, “we previously maintained a sliding scale approach that said we need to stay only a couple of generations ahead. This is not the strategic environment in which we are today. Given the foundational nature of certain technologies, such as advanced logic and memory chips, we must maintain as large of a lead as possible.”
In theory, that American edge could be preserved by tightly focused restrictions on a small number of critical technologies (“small yards and high fences”) and close cooperation with allies. But it was already beginning to be uncertain what the scope and severity of those restrictions would be, and which allies would be considered useful. Therefore, Trump’s tariffs were not some bizarre break from past policy but an inflection point in American approach to economic and technological competition.
Reorganizing global hierarchies to serve American power requires a new mix of instruments: trade as a tool to discipline adversaries and pressure allies; tariffs to protect industries, retain a technological edge, raise revenue, and secure critical resources; and sanctions to achieve political aims. The puzzle of why Washington punishes allies, or even potentially friendly states such as India or Brazil, is thus easily explained.
This is not a simple shift from free trade to mercantilism. It is a neo-imperial mercantilism that retains the fundamental aspiration of empire: ordering a hierarchy around American power. The emerging tariff regime represents the consolidation of a doctrine in which the weaponization of interdependence becomes the central technique of imperial management; the distinction between friends and adversaries matters less than their willingness to be folded into American objectives.
The United States isn’t the only actor reshaping the global trading order. China, on the face of it, had every incentive to preserve the existing system: no country benefitted more from it. The multilateral trading framework also conveniently obscured China’s own hegemonic ambitions under the procedural neutrality of its rules. China used the World Trade Organization to its advantage to gain access to world markets. But at the same time, its model of subsidies, forced technology transfers, developing country status and currency policies often gave it an advantage.
For the rest of the world, meanwhile, the system was a mixed bag: exports to China provided engines of growth; China became a major source of infrastructure finance; and the scale of its manufacturing base helped drive down the global costs of the energy transition. But the rest of the world also experienced its own version of the “China Shock” as Beijing’s dominance in exports often came at the cost of other developing countries. This is in, part explains, why there has been little collective action to defend the old order.
Beijing reads the American turn toward imperial neo-mercantilism as a geopolitical gambit to contain China’s rise. And Beijing is responding with clear geopolitical signaling: using tariffs for political purposes, weaponizing chokepoints in supply chains, whether rare earth minerals or critical manufacturing inputs, and granting or withdrawing market access. The premise that China would remain a status-quo power anchored in the old trading order is no longer tenable.
An age of uncertainty
China seems to be following a mixed strategy: a desire to signal resolve against the United States, preserve those parts of the order that continue to serve its interests, and reshape the rest through industrial policy, state-directed capital, supply-chain dominance, and economic partnerships to reflect its own preferences. China can be generous when it is costless, as with offering zero-tariff access to African exporters. But it also makes clear that it is fully capable of wielding tariffs, market access, and interdependence as instruments of political influence.
Is this new form of neo-imperial mercantilist competition likely to produce geopolitical realignment? Unless trade disputes in this time of economic nationalism spill over into outright war and hostility, a realignment is still a distant prospect for four reasons.
First, the extent to which global trade will actually be restructured remains uncertain. The tariff wars were driven partly by the perception that globalization had lost domestic legitimacy. Yet those very domestic constraints now limit how far states can shift toward neo-mercantilism. In the United States, concerns about inflation have already placed limits on how aggressively policymakers can wield tariffs as a weapon.
China faces its own dilemma: its economy depends on exports, access to markets and customers. China already dominates manufacturing across the board—from cheap textiles to advanced electronics. But, as economists Arvind Subramanian and Shoumitro Chatterjee point out, the challenges for other developing countries could intensify if China tries to compensate for slower domestic growth by increasing exports. So while developing countries welcome China, they are also wary of what Chinese overproduction might mean for them.
For most countries, the dominant strategy is not to realign or choose sides between the United States and China, but to treat both as indispensable economic poles, to extract concessions, and avoid the wrath of the two superpowers.
Second, geopolitical alignment continues to be driven by security and hard power. Even where countries desire greater autonomy, they remain constrained by existing security arrangements. States formally allied with the United States, or dependent on it for security guarantees, from Saudi Arabia to Japan, have far less room for maneuver than their diplomatic gestures imply. Their sovereign capacity to realign is circumscribed by the very architectures that protect them.
Europe is the classic case: reliant on the United States for security, yet dependent on China for trade and technology. Even India, which zealously guards its sovereignty, has moderated its Russian oil imports in response to Washington’s demands. But it will also remain more preoccupied with its security concerns over what the United States does over Pakistan.
Third, domestic political economies severely limit dramatic repositioning. Countries are deeply embedded in production networks, supply chains, financial systems, and technological ecosystems that cannot be reconfigured at will. Domestic coalitions, business interests, labor, commodity exporters, and technology sectors pull governments in contradictory directions. Leaders must respond to anxieties about vulnerability while preserving access to both China and the United States. The result is a characteristic ambivalence in much of the world: rhetorical assertions of realignment paired with limited room for meaningful action.
Fourth, no alternative structure exists that could absorb the geopolitical weight of a realignment. The United States may no longer be trusted. The prestige of its domestic institutions, once a pillar of American hegemony, has diminished. Yet China, for all its economic might, has not built a security architecture or normative order that other states trust. Its partnerships remain bilateral and transactional; its political and financial systems opaque; its ambitions ambiguous. Few states are willing to place their futures within a Chinese-led system. But this is also not a moment where the Global South can exercise collective leverage over either China or the United States.
The stubborn truth of this moment is this: Trump’s tariff wars are generating uncertainty, pockets of economic dislocation, an erosion of trust in the United States, and a more difficult environment for the provision of global public goods. They are also amplifying the risks inherent in China–U.S. competition. States might feel more resentful but they continue to operate within a security and economic order they cannot meaningfully escape. This paradoxically makes the world more dangerous, since Trump thinks he can engage in price discovery without risking major geopolitical alignment.
Trump’s confidence that no country or coalition of countries is in a position to significantly push back, at least in the short run, is making him more overtly imperial in other domains as well. Far from being isolationist or sticking to a sphere of influence, America is now firmly on an imperial trajectory: extracting a head of state from Venezuela, launching military operations in Syria and Nigeria, threatening Iran, and demanding Greenland. Chaos and uncertainty lie ahead. Major geopolitical realignment does not.
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