Ian Bremmer's Quick Take: A Quick Take to kick off your week, and what an extraordinary geopolitical environment we all find ourselves in right now.
The big macro lens is that the United States, my country, has become the principal driver of geopolitical uncertainty on the global stage. The most powerful country in the world, the biggest economy in the world, the home of the global reserve currency. And yet, at the same time, by far the most dysfunctional and kleptocratic and unfree political system of the advanced industrial democracies, so the G7 plus, compared to Japan or Germany or France or the UK or Canada, Australia, New Zealand, South Korea. That's what we're looking at right now. And of course, that's a really challenging thing for pretty much everybody to navigate.
It is playing out the most dramatically in global trade with massive tariffs coming from the United States. And it's unclear who is going to get hit the worst, but it is clear that everyone is going to take a hit. This isn't a good environment for anybody. You want to talk about winners? There's not really any winners when you're undoing globalization. It's painful for pretty much everyone inside the United States. It's painful for multinational corporations, it's painful for consumers, it's painful for friends and adversaries of the United States all over the world. Whether it's China, it's Europe, Japan, Global South, you name it, everyone is taking a hit, everyone's economy will do worse, global growth will do worse. We will all feel it in the pocketbook, in the portfolio. Uncertainty, a massive amount of uncertainty being driven and driven continuously by the most powerful country in the world is hard for everybody to navigate and creates more cost.
Now, the markets are clearly glad that there has been rollback from the United States, from Trump, in particular the over 10% tariffs on most countries coming off for some 90 days, the electronics and iPhone exception, at least for now, on China, et cetera. But it's certainly unclear how long those exemptions are going to last and what happens after that. And even where we are right now, with 10% additional tariffs on everybody and significant essentially trade embargo on most goods between the United States and China, the two most powerful countries in the world, that already brings us squarely back to the 1930s in terms of the global tariff environment, and also at a time that things are moving much faster, that efficiencies are much greater, that global interconnectedness and supply chains so much more important.
So that's a real problem. That is not going to get managed anytime soon because no one is going to suddenly believe, oh, okay, I now have a deal with the United States, and that isn't going to be upset in a week or in a month or in a year. So the amount of hedging that you have to do economically is going to be structural and great. Now, countries around the world do want to cut deals with the United States because it's very costly not to do so, and I think that Secretary Treasury Bessent, and as well as President Trump, absolutely right about that. And we see that in particular you've got the Japanese delegation coming this week, plenty of things they want to do to ensure that the US and Japan have a more functional trading relationship going forward. Countries around the world are going to be looking to make deals relatively quickly, especially smaller, poorer countries.
But also, an even more structural change is that everyone is going to try to hedge. For decades now, we've been talking and increasingly about the dangers of having too much exposure to China. And increasingly, in the last five plus years, this idea of de-risking your investments, your exposures, away from China. That's now shifting to conversations about de-risking the United States, which is extremely hard to do, and nonetheless, increasingly urgent. And so, we see this happening all over the world right now. The EU and Latin America are looking to speed up and make much more likely their trade deal, EU-Mercosur, than it would've been before the United States slapped all of these tariffs because it creates alternatives for increased trade.
We see India now moving to fast track their trade relations and improve them with the United Kingdom, with Australia, with the EU, with many other countries as well. We see China, Xi Jinping, making a snap trip to Southeast Asia and wanting to ensure that they can expand their trade and ease the regulatory and the constraints around that. Xi Jinping first in Vietnam and signing 45 new agreements for economic cooperation with them. And they'll do a lot more. They'll try to do that with the Europeans, with the Global South. More broadly, Canada, trying to engage much more closely with the Europeans, et cetera, et cetera, et cetera.
How is the United States winning here? And the answer is I don't see it, and I don't see it not only because I think it's going to be very hard to convince countries that they need to stop hedging away from the US and just work on getting a better deal with the United States, but also because the US isn't only picking this fight. The US is picking all sorts of fights simultaneously. The US is at the same time hitting other countries on trade, it's also trying to make itself less attractive for tourists to come to the United States, make them worry more that they are going to be treated as they might in an emerging market when they come over. Their smartphones are going to be combed through and they might get detained, they might even get arrested. A lot of people are worried about that. You go on Reddit threads, all of my friends outside the United States coming to the US, they're increasingly concerned about that.
You've got fights with the United States on issues of democracy and the export of algorithms and disinformation that undermines democracies around the world. You see the US picking fights with other countries on territoriality, whether it's with Greenland and Denmark or it's Panama or it's Canada. You see the Americans looking to work with the Russians over the heads of their closest allies in the G7. So they're not just picking one fight, they're picking lots of simultaneous fights, and they're also picking fights domestically at home. The United States trying to undo checks and balances on the executive, on the president that undermines rule of law and makes the US a less attractive place long-term to do business, to live, to educate, you name it.
So for all of those reasons, this to me, and I hope I'm wrong, looks like the most extraordinary act of geopolitical self-harm that I've witnessed. It's Brexit, but on a global scale. And my friends, all I can tell you is buckle up and we'll be watching this going forward. That's it, and I'll talk to you all real soon.