One week short of his full year in office President Trump’s economic policies (prohibitive tariffs as well as sanctions) and international relations pertaining to not only rivals/competitors but also traditional allies (Europe) barring Israel, has fuelled a level of global uncertainty that has no historical precedence.
A recap of US actions over the past year is critical to understand the scale and depth of the uncertainty, the key driver of a global dampening of economic activity, including developing economies like Pakistan. Four major observations are in order.
First, the levy of prohibitive tariffs on all trading partners (19 percent tariffs on Pakistan – a decline from 29 percent that were imposed earlier by the Trump administration, though higher than the average 10.7 percent tariffs imposed by the US in previous years).
China not only began to import farm products from countries other than the US but also successfully leveraged its monopoly over rare earths supply chain (accounting for between 90 and 92 percent of global refined rare earths supply) – elements critical for the manufacture of smartphones, electric vehicles, wind turbines, Artificial Intelligence, data centres, advanced electronics as well as fighter jets, submarines, radars, sonars, and missile guidance systems.
In contrast, the European Union (EU) capitulated by agreeing to eliminate tariffs on all US industrial goods, provide preferential access to a wide range of US seafood and agricultural products while the US would apply an all-inclusive tariff of 15 percent on most EU imports except for unavailable natural resources, aircraft, and parts and generic pharmaceuticals.
EU President Ursula von der Leyen bafflingly also agreed to purchase 750 billion-dollar worth of oil, LNG and nuclear energy products (at much higher rates than previously available from Russia), 40 billion dollars in AI chips as well as invest 600 billion dollars in the US by 2028.
READ MORE: Drugmakers brace for Europe pricing fight after Trump’s US price-cut deals
Second, sanctions were increasingly weaponised by the US and its Western allies, including imposing penalties against offending companies and countries consisting of asset freeze, trade restrictions, and disallowing the use of SWIFT (Society for Worldwide Interbank Financial Communication) – measures that have strengthened a global desire for an alternate to the dollar as the primary reserve and trade currency (trade in other currencies particularly the Chinese Yuan has begun though it is about 20 percent of total world trade today) and an alternate to the SWIFT system (in 2015 China introduced Cross Border Interbank Payment System that is more tuned to the digital age).
Be that as it may, sanctions imposed on Russia in 2022 have clearly failed as Russia successfully explored alternate markets (mainly China) and began producing military hardware, accounting for a growth rate higher than in the US and its Western allies.
The International Monetary Fund has projected Russia’s growth rate at 3.2 percent this year, significantly more than UK, France and Germany and pointed out that Russian exports have held steady, and the government spending was high contributing to growth.
Third, US military has engaged in several parts of the world however while President Trump’s critics claim that his actions violate his election campaign promise of not engaging in “forever” wars yet the military engagement so far has been of limited scope and duration and therefore does not lend credence to the allegation that President Trump is following the neo-conservative agenda – an agenda supportive of social engineering that has failed time and again as nationalism surfaced when US boots were on the ground. The US military engagement during the past year has been in four countries: (i) after a month of bombardment on the Houthi stronghold in Yemen President Trump declared victory though the Houthi attacks on ships in the Red Sea in retaliation to the ongoing Israeli genocide in Gaza continue to this day with the Israeli port of Eilat continuing to face major disruptions; (ii) the attack on Iranian nuclear facilities was a one-off with the President claiming that he had obliterated the Iranian nuclear capability – a claim that many dispute; (iii) the attack in Nigeria linked to the Islamic State in Nigeria; and (iv) the operation in Venezuela that ended with the capture of Maduro and his wife with reports suggesting that it was a coup as the Venezuelan air defence system was never activated.
There are no US boots on the ground, though the US is blockading the sale of Venezuelan oil to any other country. Nationalism has surfaced on the streets of Venezuela, and supportive statements have been made by members of the Maduro government.
Recent seizure of a tanker flying the Russian flag in the Atlantic near Iceland prompted the Russian Ministry of Transport to put out the following statement: “in accordance with the 1982 U.N. Convention on the Law of the Sea, freedom of navigation applies in the high seas, and no state has the right to use force against vessels duly registered in the jurisdictions of other states.”
China had secured oil deals with Venezuela and would now be forced to either seek oil from elsewhere (at a higher price) or use its rare earths leverage with the US or, as some fear, take Taiwan.
It is therefore unclear whether the US engagement in Venezuela would turn out differently from the previous three.
And fourth is the implicit threat of tacit or overt military action in two other regions of the world. One is Iran, with reports suggesting that Israeli Prime Minister Netanyahu during his recent visit to Mar-a-Lago got the green signal from Trump to attack Iran. Coincidentally, reports of Iranian domestic unrest surfaced a day later, a region where coincidence fuels conspiracy theories.
The US has reportedly been supplying arms to Israel for an attack on Iran, though it is unclear whether the US would become involved. In case the US is unwilling or unable to be directly involved (perhaps due to an engagement elsewhere) then many fear that Israel may consider the nuclear option, especially given Iran’s proven capacity to launch ballistic missiles effectively against Israel. In that case, the entire region would be impacted, including Pakistan.
And two; President Trump’s insistence that he wants control over Greenland, an autonomous Danish territory, has elicited concerns collectively from the Europeans, however few believe that the EU will engage in any military action against the US.
The Danish Prime Minister has rather ingenuously said that if the US takes over Greenland NATO will be dead – an organization that is mainly financed by the US (in 2024 the US contributed more than 900 billion dollars with the remaining 31 member countries contributing a total of 507 billion dollars). There is talk of a buy-out of Greenland by the US, and Denmark has sought talks with the US. Marco Rubio, the Secretary of State has stated that talks will be held with the Danes this week.
These two conflicts are further fuelling uncertainty in the global oil market with the prospect of lower growth than what has been projected globally.
The preferred way to resolve any conflict is through diplomacy yet that does not appear to be on the cards - the US-led West continues to support Israel against the wishes of a growing number of their own people as well as the rest of the world while the Europeans have shown an unwillingness to engage directly with Russia and have snowballed all peace proposals by the Trump administration, thereby allowing Ukraine to lose more territory each day.
China and Russia, on the other hand, have indicated their willingness to engage in diplomacy but insist that an agreement can be reached only between those qualified to negotiate and draft complex deals.
To conclude, one can only hope that better sense prevails and the three key nuclear power players - US, China and Russia - engage in a dialogue with the objective of ensuring that a third world war with the possibility of nuclear Armageddon is averted and the quality of life of the citizens of the world, including their own, is not compromised for decades to come. That however seems a pipedream at present.
Copyright Business Recorder, 2026
Comments
Comments are closed for this article.