Understanding Global Power Struggles and Economic Rivalries

Global economic and political dynamics have undergone significant transformations over the past decades. While some argue that globalization and neoliberal economic policies have created stability, others contend that intense rivalries among powerful states continue to shape international relations. Recent foreign policy and trade policy developments have brought to the fore shifting global power structures, such as the decline of U.S. dominance, the rise of China as a competitor, ongoing conflicts in various regions, and the broader implications for global stability.

The Nature of Global Competition

The modern international system is not just about territorial control but is deeply rooted in economic and strategic competition. Capitalist economies, driven by competitive accumulation, foster rivalries among states seeking to expand their influence. The neoliberal globalization project, which gained traction after the Cold War, was expected to usher in an era of peace and economic prosperity. However, rather than eliminating conflicts, globalization has intensified economic and political tensions, leading to military interventions, financial crises, and widespread instability.

The Decline of U.S. Global Influence

The post-Cold War period saw the United States solidifying its global dominance through financial institutions such as the International Monetary Fund (IMF) and military alliances like NATO. However, the U.S. has experienced a relative economic decline, particularly in comparison to China. The 2007–2009 global financial crisis exposed vulnerabilities in the U.S. economy, while military setbacks in various regions weakened its global influence. The rise of nationalist movements and the election of leaders prioritizing domestic economic protectionism signaled a shift from interventionist policies to a more insular approach.

The expansion of alliances into Eastern Europe and U.S. strategies to counter emerging powers have led to renewed tensions. The conflict in Ukraine exemplifies this, as Western powers have used the situation to challenge other actors, creating long-term geopolitical shifts. However, rather than isolating certain states, these policies have led to the formation of new partnerships, strengthening alternative global alliances.

The Rise of China and the Challenge to Western Dominance

China’s rapid industrialization and technological advancements pose a direct challenge to traditional economic and military dominance. Under its current leadership, China has positioned itself as a major global competitor, with initiatives such as the Belt and Road Initiative (BRI) expanding its economic influence across multiple continents. China’s advancements in key industries, including artificial intelligence, renewable energy, and electric vehicles, have challenged the dominance of established Western corporations.

The U.S. has responded with economic measures such as tariffs, restrictions on advanced technology exports, and strengthened military alliances in the Asia-Pacific region. Agreements between key Western nations to enhance military cooperation indicate the growing tensions in this rivalry. Taiwan remains a potential flashpoint, with Western policymakers increasingly viewing China as a competitor in reshaping global governance structures.

Conflicts and Geopolitical Implications

The Global Risks Report 2025 ranks state-based armed conflict as the #1 global risk for 2025, reflecting increasing geopolitical instability and the inability of multilateral institutions to mediate conflicts effectively. The risk of state-based armed conflict is now at its highest point in decades. With geopolitical tensions deepening, economic rivalries worsening, and diplomacy failing, the world is heading into a period of prolonged instability. Without significant diplomatic breakthroughs, conflicts in Ukraine, the Middle East, and Sudan could escalate further, with potential spillover into other regions.

The war in Ukraine is framed as part of a broader geopolitical struggle, where Western powers have significantly armed and funded the country to challenge other actors. However, the anticipated economic consequences for opposing states have not materialized as expected. Instead, alternative economic partnerships have provided new opportunities, reducing reliance on Western financial systems. This conflict has reinforced geopolitical fragmentation, with many countries outside traditional alliances refusing to fully align with dominant global actors.

The conflict has also deepened divisions within the West itself. While the E.U. continues to push for military escalation, the U.S., wary of prolonged instability, has sought alternative diplomatic approaches. Europe's economic dependence on external energy sources and increasing reliance on foreign suppliers illustrate the contradictions within global economic partnerships.

Strategic Interests in the Middle East

Another crucial aspect of contemporary global politics is the role of key regional actors in shaping economic and security policies. The actions of states in this region are often influenced by larger geopolitical strategies. Certain countries have been positioned as essential strategic allies, receiving extensive military and financial support. However, recent conflicts have sparked mass movements worldwide, particularly among younger activists who view such policies as emblematic of broader economic and political double standards.

These developments have contributed to the erosion of credibility in international governance structures, making it more difficult for global powers to secure broad-based support for their geopolitical agendas. The alignment of various countries with alternative economic models demonstrates the shifting nature of global influence.

Geoeconomic Confrontation: A Rising Risk for the Next Two Years

The Global Risks Report 2025 also ranks geoeconomic confrontation—defined as the use of trade restrictions, sanctions, tariffs, investment controls, and economic coercion—as one of the top risks. This reflects growing economic tensions between major global powers, particularly the U.S., China, EU, and Russia, and the increasing fragmentation of global trade.

On March 4, 2025, the United States implemented sweeping new tariffs on imports from Canada and Mexico, imposing a 25% tariff on most goods and a 10% tariff specifically on Canadian energy products. These measures, enacted under the International Emergency Economic Powers Act (IEEPA), were justified by the U.S. government as necessary to address national security concerns. However, the economic and diplomatic fallout from these tariffs could have lasting effects on North American trade relations.

Historical Context: The imposition of tariffs is not a new development in U.S. trade policy. Throughout history, the United States has employed protectionist measures, particularly during economic downturns and geopolitical conflicts. The Smoot-Hawley Tariff Act of 1930, for example, contributed to global trade wars during the Great Depression. More recently, the U.S.-China trade war under the Trump administration saw escalating tariffs and countermeasures that disrupted global supply chains. The North American trade relationship has also experienced its share of tensions. In the 1990s, the North American Free Trade Agreement (NAFTA) was both praised for promoting economic integration and criticized for leading to job losses in certain industries. The renegotiation of NAFTA into the United States-Mexico-Canada Agreement (USMCA) in 2020 was intended to modernize trade relations, but periodic trade disputes have persisted. The latest tariffs suggest a return to a more protectionist approach, potentially unraveling decades of economic integration.

Economic and Diplomatic Repercussions: The latest tariffs mark a significant shift in U.S. trade policy, potentially disrupting the deeply integrated supply chains that have defined economic relations between the three North American partners. Critics argue that these policies could lead to higher consumer prices, job losses, and increased tensions at a time when global trade remains fragile. Canada and Mexico have not hesitated to respond. Ottawa swiftly imposed retaliatory tariffs of 25% on $30 billion worth of U.S. goods, with further measures targeting an additional $125 billion in the coming weeks. Mexico, too, has signaled plans to unveil countermeasures by March 9. These escalating economic measures threaten to destabilize long-standing trade partnerships and increase the risk of prolonged economic uncertainty.

Possible Future Scenarios: The U.S., Canada, and Mexico are engaged in what can be viewed as a strategic interaction where each country must decide whether to escalate tariffs, negotiate a resolution, or pursue alternative trade relationships.

If Canada and Mexico continue to impose retaliatory tariffs, the trade war could escalate further. This mirrors a classic “Prisoner’s Dilemma” scenario, where all parties would benefit from cooperation but fear unilateral disadvantage, leading to mutual economic harm. Historically, prolonged trade wars tend to damage economic growth for all participants.

A potential de-escalation could occur if all three countries recognize the economic damage and seek a compromise. This could involve targeted tariff rollbacks, industry-specific exemptions, or new trade agreements addressing U.S. concerns.

If the tariffs persist, Canada and Mexico may seek alternative trade partners, reducing reliance on the U.S. The rise of trade agreements such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) could offer Mexico and Canada more flexibility.

If tariffs remain in place, political pressures may force a policy reversal. Economic hardships—such as higher inflation and job losses—could push policymakers toward de-escalation. Voter backlash against rising costs could alter trade policy through legislative or executive action.

The ripple effects of these tariffs extend beyond North America. As the U.S. tightens trade policies, other economic blocs such as the European Union and BRICS may take steps to counterbalance these actions. A shift toward economic fragmentation could weaken the global economy and lead to new trade alliances that bypass traditional power structures. At a broader level, these developments highlight the growing tensions in international trade, where nations increasingly prioritize national interests over cooperative agreements.

Whether the U.S. will maintain this protectionist stance or seek diplomatic solutions remains an open question, but the current trajectory suggests an era of heightened trade tensions and economic uncertainty.

The U.S. tariffs against Canada and Mexico mark a turning point in North American trade relations. While the U.S. government aims to protect domestic interests, these measures risk straining partnerships with two of its closest allies and creating economic turbulence at home and abroad.

The Emergence of a Multipolar World

The global landscape is undergoing significant transformations, as new alliances such as BRICS (Brazil, Russia, India, China, and South Africa) expand their influence. While these coalitions are not monolithic, their growing economic and political influence signals a shift in global power dynamics. Increased trade in non-traditional currencies and resistance to unilateral economic sanctions are reshaping international finance.

Furthermore, the inability of traditional global powers to isolate emerging actors has demonstrated that dominance in global affairs is no longer uncontested. Latin America, Africa, and parts of Asia are increasingly aligning with alternative economic and political models, challenging the long-standing monopoly of Western-led institutions.

The Need for Global Cooperation

To navigate this shifting global order, there is a need for a more balanced approach that moves beyond rigid alliances and confrontational policies. Economic, environmental, and security challenges require international collaboration rather than intensified rivalries. Strengthening diplomatic efforts and fostering inclusive global institutions will be essential in addressing pressing global challenges.

Mass movements advocating for economic equity, social justice, and sustainable development can play a crucial role in shaping future policies. The potential for economic struggles arising from inflation, wage stagnation, and climate change-induced crises may further drive demand for more equitable global governance structures.

Conclusion

Global competition remains an enduring and evolving feature of the international system, manifesting through economic rivalries, military conflicts, and ideological struggles. The decline of U.S. global influence, the rise of China, regional conflicts, and shifting alliances all contribute to the transformation of the global order. The path to long-term stability does not lie in rigid geopolitical blocs but in fostering cooperation, equitable economic policies, and inclusive governance structures that address the needs of all nations.