THE age of frictionless globalisation has run its course. For three decades, nations built prosperity on the idea that markets, not politics, would guide the world’s future. That illusion has faded. What’s taking shape now is a far more complicated order — one defined not by efficiency or shared gain but by leverage, competition, and strategic restraint. Beneath it all lies a deepening rivalry between the United States and China, a contest that stretches from factory floors to cyberspace and from finance to infrastructure.
This isn’t a clean replay of the Cold War. Power today doesn’t divide neatly between two camps; it seeps through trade routes, data networks, and technology supply chains. Economic interdependence, once celebrated as the great stabiliser of peace, has turned into something far sharper. What connects countries can just as easily be used to constrain them.
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End of easy globalisation
IN THE early 1990s, as the Berlin Wall’s dust settled, strategists like Edward Luttwak predicted that global competition would shift from military confrontation to economic manoeuvring. He called it ‘geoeconomics’, imagining that nations might battle through commerce instead of combat. Three decades later, that vision has hardened. Tariffs, sanctions, export bans, and technology restrictions have replaced tanks and treaties as the instruments of choice.
But the terrain is different now. The United States and China are not ideological strangers sealed behind opposing walls; their economies are deeply enmeshed. America still buys vast volumes of Chinese goods, while Chinese firms depend on American technology for chips, design software, and high-end tools. This mutual dependency — once hailed as proof that conflict was outdated — has become the stage for a new kind of confrontation.
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Trade war’s unintended legacy
WHEN Washington began slapping tariffs on Chinese imports in 2018, officials framed it as a correction for an uneven trade balance. In reality, it was an opening salvo against Beijing’s ambitions to dominate advanced manufacturing and green technologies. The numbers ballooned quickly. By the mid-2025, the average US tariff on Chinese goods had soared past 51.1 per cent, with Beijing retaliating in kind.
The effects went beyond the balance sheets. Global corporations — once blind to borders — suddenly began counting political risk alongside shipping costs. Supply chains that took decades to perfect are being rebuilt to hedge against sanctions and export controls. Vietnam, Mexico, and India are among the biggest beneficiaries, yet they also carry the pressure of balancing between two rival superpowers.
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Chips, power, and paradox
IF THERE’S one battlefield that captures the essence of this era, it’s semiconductors. These tiny components run everything from cars to missile systems, and whoever controls them controls the 21st century’s nervous system. China has poured enormous resources into closing the technology gap, aiming for self-sufficiency in chipmaking. The US, meanwhile, has tightened export restrictions and invested billions through the CHIPS and Science Act to revive domestic production.
But strategy has its side effects. The more Washington limits China’s access to advanced equipment, the more determined Chinese firms become to innovate around those limits. Smic, China’s top chipmaker, has already made progress without key Western tools. The US may succeed in slowing Beijing’s ascent, but it also pushes it to build alternatives faster. In a sense, both sides are locked in a feedback loop — each action meant to weaken the other also strengthens its resolve.
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Competing economic blueprints
THE rivalry doesn’t stop at technology. It’s also about the architecture of global influence. China’s Belt and Road Initiative has become its signature project for exporting infrastructure, capital, and political weight. Through railways, ports, and digital corridors, Beijing is binding parts of Asia, Africa, and Latin America into its orbit. The United States and its partners, by contrast, are championing a network of ‘trusted’ supply chains, investment partnerships, and collective financing efforts such as the G7’s Global Infrastructure Partnership.
These competing models aren’t just about who builds what; they represent opposing ideas of how globalisation should work — one driven by state-backed connectivity, the other by alliances and private capital. Every trade deal or port contract now doubles as a statement of allegiance.
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Fragmentation, not retreat
DESPITE all the talk of deglobalisation, trade hasn’t collapsed. What’s changed is direction. Flows of goods and capital are being rerouted along political lines. Since the late 2010s, China’s share of US imports has dropped, while Mexico and Southeast Asia’s roles have expanded. In many ways, globalisation isn’t dying — it’s realigning into clusters of trust and access.
This shift carries a price. The IMF warns that prolonged fragmentation could carve several points off global GDP. Companies that once optimised for speed and scale now prioritise redundancy. Efficiency, the hallmark of the old order, is giving way to resilience. The adjustment is expensive and inflationary, but most policymakers seem to accept it as the cost of strategic stability.
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Rest of the world adjusts
FOR Europe, this transition is uneasy. The continent depends on US defence but trades heavily with China. To navigate that tension, Brussels has embraced what it calls ‘Open Strategic Autonomy’ — a careful mix of defensive and proactive policies. The EU’s Anti-Coercion Instrument, investment screening measures, and its own version of the Chips Act reflect a growing desire to shield European industries without severing ties. Yet the internal debate remains fierce, especially in export-heavy economies like Germany.
Japan’s trajectory has been more decisive. Once committed to economic pragmatism, Tokyo has redefined national security to include supply-chain control and technology protection. India has taken a different route — balancing engagement with the West through the Quad while keeping pragmatic economic links with both China and Russia. It’s a delicate dance, but one that reflects the instincts of a country unwilling to be boxed into anyone’s orbit.
For much of the Global South, the choices are starker. Chinese loans often arrive faster and with fewer political strings, but the long-term risks — debt dependency, strategic leverage — are real. Western offers of alternative funding tend to be slower and tangled in oversight and conditionality. Many governments are trying to play both sides, extracting benefits while avoiding entrapment. It’s not cynicism; it’s survival.
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Strain on global governance
MEANWHILE, the institutions built for a more cooperative age are showing strain. The WTO’s dispute system is stalled, the IMF’s reform talks have gone nowhere, and a growing number of regional initiatives — BRICS, the Asian Infrastructure Investment Bank, and Indo-Pacific economic frameworks — are filling the vacuum. Global governance is fragmenting into overlapping clubs, each with its own rules and loyalties.
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What comes next
THREE futures seem plausible. One is outright bifurcation — two rival systems led by Washington and Beijing, divided in technology, currency, and ideology. Another is a looser multipolar arrangement, with Europe and the Global South forming semi-independent blocs. But the most likely scenario is what some call ‘contested interdependence’: a world still connected but full of guarded borders and conditional cooperation.
Whatever the shape, the easy era of globalisation — built on cost-cutting and open markets — is over. The new calculus prizes redundancy, control, and resilience. Growth will slow. Prices will rise. And strategy, once an afterthought in economics, is now the main event.
For policymakers and executives alike, the task ahead isn’t to wish away this fragmentation but to learn to navigate it. Economics has become an instrument of statecraft, and statecraft an extension of economics. The next phase of globalisation will not be defined by who trades most freely, but by who adapts fastest to a world where interdependence itself is the ultimate source of power.
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ÌýMd Ibrahim Khalilullah serves as general secretary of the Bangladesh Law Alliance.