As Americans head to the polls on Tuesday, November 3, 2024, they do so amidst a rapidly shifting global economic landscape. The long-standing dominance of the West is being challenged by emerging markets in unprecedented ways, and whoever wins the White House – whether it be Donald Trump or Kamala Harris – will need to navigate this new reality.
The Unraveling of the US-Led World Order
Rewind to November 1992. The US was at the zenith of its power, having emerged victorious from the Cold War. Communism had collapsed, the Berlin Wall was rubble, and Russia was being used as a testing ground for free-market shock therapy. China’s economic liberalization presented tantalizing opportunities for US multinationals to outsource production. An era of American-led globalization seemed inevitable.
Fast forward 32 years, and the picture looks very different. While the US remains the world’s largest economy and preeminent military superpower, its supremacy is no longer unchallenged. The unipolar “new world order” heralded by George H.W. Bush after the first Gulf War has unraveled.
The Neoliberal Dream Deferred
In the heady days of the 1990s, there was much talk of a borderless world where capital, goods, and people would flow freely. Independent central banks would set interest rates, the World Trade Organization would tear down trade barriers, and the spread of liberal democracy seemed unstoppable.
But this neoliberal utopia never materialized. Unfettered capital flows and lax regulation fueled a series of financial crises, culminating in the global meltdown of 2008. China’s economic ascent far exceeded US expectations. The WTO proved unable to broker new trade deals as protectionist sentiment grew. Voters, angry at stagnant wages, deindustrialization, and mass migration, began to rebel.
The Resurgence of the Nation-State
The dream of a state-free world has given way to a resurgence of economic nationalism. The Covid-19 pandemic exposed the fragility of global supply chains, prompting a push to re-shore production. Industrial policy and trade barriers are back in vogue. As a senior US official recently noted, any notion of the world marching in lockstep to America’s tune evaporated long ago.
The Rise of the Brics and Global South
Last month’s Brics summit in Kazan, hosted by Vladimir Putin, underscored the shifting tides. The club of major emerging economies, which began as a loose grouping of Brazil, Russia, India, China, and South Africa, welcomed four new members: Egypt, Ethiopia, Iran, and the UAE. Dozens more, from Saudi Arabia to Indonesia, are keen to join.
For Putin, an expanded Brics sends a clear message: despite tightening Western sanctions since Russia’s invasion of Ukraine in 2022, Moscow is far from isolated. Major economies like China and India continue to buy Russian oil, while Putin’s own economy has proven surprisingly resilient.
More broadly, Kazan highlighted the unwillingness of big emerging markets to bow to Western pressure, especially when it comes to Russia and China. If Trump wins on Tuesday, he has vowed to slap a punishing 60% tariff on all Chinese imports. While less hawkish, Harris would likely continue Biden’s robust approach of investment bans and tech sanctions.
An Assertive Global South
Perhaps most significantly, the Brics summit showcased the growing clout and restlessness of the Global South. Developing countries now account for the majority of the world’s population and an ever-larger slice of global GDP. The combined economic output of the G7 nations has plunged from 67% in 1994 to just 44% today, while China’s share has quadrupled to 20% over the same period.
The West’s dominance is being challenged as it hasn’t been for the past 500 years.
– Larry Elliott, Economics Editor, The Guardian
Yet the institutions of global economic governance—from the IMF to the World Bank—remain dominated by the US and its allies, even as their relative power diminishes. Increasingly impatient with a Western-led order seen as failing to deliver broad-based prosperity, the Global South is demanding a greater say.
Navigating a Multipolar Economic Order
As American voters cast their ballots, they do so in a world where US economic leadership faces unprecedented challenges. Neither Trump’s belligerent unilateralism nor Harris’s cautious engagement offers easy answers.
Regardless of who prevails, the next occupant of the White House will confront a global economy in flux, shaped by the rising power of emerging markets, the stubborn persistence of economic nationalism, and an increasingly vocal Global South. Managing these cross-cutting forces while advancing US interests will require deft diplomacy, strategic vision, and a hefty dose of pragmatism.
The era of unchallenged American economic dominance is over. What remains to be seen is whether the US can successfully adapt to a messier, more multipolar world, or if it will cling to outdated notions of supremacy, breeding resentment and hastening its own decline. How the next president navigates this pivotal moment may well define America’s place in the 21st century global economy.
