Geopolitical update

Trump’s MAGA policy opens up the world to China’s trade and influence, the rehabilitation of Russia, and a decline of the dollar’s role in international finance. The benefits will be reflected in gold

Introduction

President Trump is keen to stop the USA being the world’s military policeman, except where foreign governments are prepared to pay for the privilege. Instead, his focus is to concentrate US power and influence on North and Central America. The Ukraine war is nearly over, with Russia close to winning it. The only outside area where he is likely to remain fully committed is with Israel and her security.

These are fundamental changes to the world order with important ramifications for nations in the Western alliance which are already in serious economic decline, benefiting the Asian hegemons.

Crudely put, under Trump the Americas are going to be the US’s primary sphere of influence. Asia and the rest of the world will be less so. The complete closure of USAID is the first casualty of this policy. It is a closure which plays into China and Russia’s hands. And it will lead to a decline in everyone’s dependency on the dollar as their medium of international exchange.

As a consequence, US allies are likely to drift away from her political influence, raising questions over global capital flows. Can the US Treasury still rely on foreign demand for US Treasuries to fund its deficit? And will the US retain ultimate control over global capital flows?