The Broken Economic Order 

The next U.S. president will inherit a transformed global economic system, one likely to bear little resemblance to that which preceded Donald Trump’s reelection in 2024. Alliances will be damaged, institutions weakened, strategic dependencies more acute, and the line between economic policy and national security nearly erased. Although the forces that were changing the system before Trump’s return to office are distinct from the much more profound rupture caused by his administration’s actions, it is by analyzing these durable trends—which will outlast the current administration—that reasonable assumptions can be made about a future U.S. strategy.

In 2029, Washington will be tempted to speak the language of restoration. That would be a mistake. The old international economic system is gone. The task ahead is not to seek to recreate what was; it is to build a strategy suited to what is coming. And that requires a detailed understanding of the trends that produced those changes.

Many trends will likely prove durable. There can be no return to economic overdependence. The United States relies disproportionately on China for rare earths and other critical inputs, and China depends on the United States and its partners for advanced semiconductors and equipment. Europe learned, to its own detriment, the risks of overdependence on Russian energy and is confronting similar questions about reliance on U.S. security. All are now pursuing strategies of resilience to decrease those dependencies. That change will be enduring.

Indeed, those dependencies have raised the risks of economic coercion. Such coercion has long been central to economic strategy. Washington and Beijing have embraced the weaponization of economic vulnerability for years. Moscow did the same with its pipelines, and Tehran is doing it through the Strait of Hormuz. Coercive tools to weaponize chokepoints have evolved over decades and will only be more commonly used by governments. These include sanctions; export controls; investment restrictions; tariffs; and now what one might call “coercive investment”—that is, Trump’s leveraging of market access and security ties to shape allies’ investment behavior.

Technology, particularly artificial intelligence (AI), has also transformed the economic landscape. AI’s challenges and opportunities are already becoming key drivers of international economic strategy. At the same time, economic, technological, and military domains are merging into a dual-use landscape. National security no longer sits alongside economic and technological policy; it is embedded within it. That trend, too, will only accelerate.

Those changes have demolished post–Cold War assumptions about the market’s ability to allocate resources. Globalization no longer guarantees resilience. State intervention is no longer viewed as inherently distortive. The global financial crisis, China’s rise, the COVID-19 pandemic, and supply chain shocks accelerated that shift. The state is lender, investor, insurer, industrial planner, and more. The Trump administration could even leave behind something akin to a U.S. sovereign wealth fund, which the Biden administration also contemplated.

Although those changes are fundamental, the institutions of the old order still stand. The International Monetary Fund, World Bank, World Trade Organization, and regional institutions remain, but their centrality has been under strain for years. Great power rivalry, domestic backlash, and frustration among developing economies have reduced confidence in these institutions’ ability to act as and when needed without too much political influence. The U.S. dollar has also survived. Absent a true alternative, its status in the immediate term should be secure.

Some of those changes predate the current administration, but Trump has gone beyond accelerating them and introduced a genuine rupture. The damage is not limited to trade wars or a more nationalist posture: Trump has undermined alliances and called into question whether the United States is bound by the norms and values it has long demanded that others respect. In so doing, Trump has weakened Washington’s claim to be the legitimate anchor of the economic order. The dollar is still central, but the Iran war is a test of necessity as the mother of invention, with U.S. actions practically begging others to find ways to reduce dollar dependency.

That loss of legitimacy could prove more consequential than any individual policy. International order rests not only on material power but also on trust, reliability, and a belief that leadership will be exercised in a way that others can agree is broadly fair, or at least stable. Once that belief is damaged, it is not easily restored by election results or rhetorical resets.

The implications of diminishing trust in Washington are profound. Alliances and security commitments are not separate from the economic order. When the United States casts doubt on NATO, threatens allies, courts their enemies, or signals that security guarantees are conditional and revocable, countries adjust their defense planning, as well as their trade, investment, industrial, and financial strategies. Those responses are rational, but they rupture the web of relationships that has long economically benefitted the United States.

The U.S. economy is and will remain a strong, dynamic, innovative, compelling investment destination. But U.S. partners will nonetheless construct new strategic and defense relationships over the next three years in response to Washington’s behavior. The next administration, then, will need an international economic strategy grounded in realism rather than nostalgia.

First, it should accept that a more state-driven economic era is here to stay. The United States will need to compete in a world where public capital, deep partnership with the private sector, and industrial policy are standard instruments of national policy. The challenge will be to use those tools in ways that are disciplined, transparent, and tied to genuine strategic priorities rather than political patronage or performative economic nationalism, with guardrails that keep markets free but not defenseless.

Second, the next administration should make resilience a core organizing principle. That does not mean complete national self-reliance, nor does it mean producing everything at home. It means identifying critical dependencies, diversifying suppliers, investing in domestic capacity, and coordinating where possible with trusted partners on redundancy and surge capacity.

Third, Washington should treat alliances as critical economic assets. Rebuilding trust will require more than asking partners to forgive and forget. It will require sustained evidence that the United States is again prepared to operate within frameworks, respect commitments, and consult rather than dictate. Cooperation in this new era will be narrower and more issue-specific than in the past, but even selective alignment depends on a basic level of credibility.

Fourth, future administrations should recognize that the old institutional order cannot be restored. The International Monetary Fund, World Bank, and other multilateral institutions still matter, but they are unlikely to regain their once uncontested importance. Washington should strengthen useful institutions while engaging more flexibly elsewhere. The goal should be functional influence, not institutional nostalgia.

And finally, U.S. international economic strategy should pursue reinvention rather than restoration. The United States will still have immense strengths far into the future: its scale, innovation, capital markets, and alliances are not irretrievably damaged, and the country will retain an ability to shape the rules of emerging technologies and strategic industries. But it will have to exercise those strengths in a world that now doubts its reliability.