As US retreats, Asian powers can reshape world order to meet their needs
The global order that once promised free trade, open borders and shared prosperity has cracked. The so-called liberal international order, constructed after the second world war and turbocharged after the Cold War, is dissolving. Its collapse is being brought about by the very country that built it: the United States.
Under the Trump 2.0 administration, the US is decidedly stepping back from open markets and liberal values. Its immediate predecessor, Joe Biden’s administration, continued many of Trump 1.0’s economic policies – on trade protection and reshoring of supply chains.
There is now a bipartisan consensus in America that globalisation, at least in its past form, no longer serves US interests. Washington is no longer selling the dream of a borderless, liberal world. It is selling security, industrial policy and “Made in America” – so America will be great again. In this frame, even long-standing allies are foes.
To understand this shift, it helps to revisit Harvard economist Dani Rodrik’s trilemma, which explains why countries can’t simultaneously have full national sovereignty, deep economic globalisation and democratic politics – at best, they can have two. Much of the world, however, thought all three could coexist.
Faced with rising inequality, the hollowing out of its manufacturing base and a restless electorate, the US has chosen populist democracy and sovereignty over globalisation. The original champion of open markets is rewriting the rules to protect its industries. Free-market rhetoric is giving way to strategic competition, especially against a China that has become the world’s major industrial economy.
But as the US steps back, others are stepping forward on their own terms. The Brics bloc, once dismissed as a loose coalition of developing economies including Brazil, Russia, India and China, is evolving into something far more ambitious.
With more members on board, Brics is building alternative institutions to bypass Western dominance – its trade in local currencies, development bank and cross-border payment initiative are challenging the supremacy of the US dollar and the institutions that uphold it.
This is more than a technical adjustment; it is a geopolitical realignment. Countries in the Global South are tired of being on the receiving end of globalisation’s promises while bearing its costs.
Many of their governments are less constrained by liberal democratic norms and more focused on sovereignty and development. They are embracing Rodrik’s second option: sovereignty and globalisation but not Western-style democracy. This is globalisation by different rules, shaped by different development priorities.
Middle powers like Canada, Japan, South Korea and Asean are rethinking their place in the world too. Countries once considered model beneficiaries of the liberal order are hedging their bets. As the US-China rivalry deepens and Washington grows less predictable, regional powers are recalibrating.
Can these nations continue to trade freely while maintaining their strategic autonomy? Or will they be forced to choose, especially as the Trump 2.0 administration pressures industrial economies with the high tariffs it announced on April 2, such as Japan with 24 per cent and South Korea with 25 per cent, to shift production to America? Even the Europe Union faces a 20 per cent tariff and is undergoing a strategic rethink.
Before Trump announced a 90-day pause on the high reciprocal tariffs, Vietnam was braced for its exports to the US to face a tax of 46 per cent, while Indonesia face 32 per cent and Bangladesh 37 per cent. While many found these high tariffs surprising, they align with the US strategy to deter investment in these countries as alternatives to China, thereby pressurising companies to invest directly in the US instead.
This fragmentation signals a global reset. This new era has stimulated a new vocabulary – “minilateral” deals, “selective” alliances and so on. The global economy is being reshaped not by universal rules, but by shifting power dynamics and national priorities.
Rodrik warned this day would come. The trilemma has never been about ideology; it presents a structural constraint. The liberal international order only worked when globalisation delivered rising living standards for enough people to sustain democratic consent. Once that bargain frayed, the backlash was inevitable.
What makes this moment different is that multiple powers are asserting their visions of the global economy. The US is trying to rebuild domestic industries. China is pursuing self-reliance under its “dual circulation” strategy, and retaliating with tariffs on the US. Brics is crafting a post-Western trade and financial system. The result is a world of competing rules and fractured integration.
For citizens across the globe, this means their governments are rethinking what they must deliver. It is no longer just about gross domestic product growth. Governments must deliver tangible results: secure jobs, reliable infrastructure, affordable energy and national dignity. And that shift has implications not only for global trade, but also for how governments engage with neighbours and allies.
Asia is the epicentre of this recalibration. As China asserts itself, Japan and South Korea face hard strategic choices. The Association of Southeast Asian Nations, once touted as a model of market-led integration, is navigating the turbulence by deepening intraregional ties while staying open to partners. Each must now ask: what kind of globalisation serves us?
There was never a one-size-fits-all formula. The myth that countries can simultaneously pursue full sovereignty, democracy and deep global integration is collapsing under its own contradictions.
We are all in the front row, watching the old order give way. It’s an unsettling time.
Contributed by Prof. Christine Loh. The article was published on SCMP: