Trump risking it all as allies, world economy move back towards China

The geopolitical tectonic plates are on the move again, and the early tremors are already visible across the global landscape with significant consequences for traditional alliances, global markets, and national power realignment. 

What we are seeing unfold during the first quarter of 2026 increasingly feels like one of those historical earthquake moments, not because of any single headline associated with President Donald Trump, or a single moment like Canadian Prime Minister Mark Carney’s “rupture” in the world order speech at Davos, or any one bilateral meeting or state visit. But taken together, along with the cumulative weight of high-level diplomatic gambits to Beijing now underway — and many more on the horizon — something structural is happening that requires attention. 

For markets and policymakers alike, the diplomatic foot traffic tells a striking story: the world is returning to China. 

This is not without precedent. In the years following China’s accession to the World Trade Organization in 2001, global leaders and corporate executives made annual pilgrimages to Beijing, much like those made by eager statesmen and traders during the Qing Dynasty, drawn by the promise of market access, manufacturing skill, production scale and scope, and the sheer velocity of Chinese GDP growth at the time. That gravitational pull extended through much of Xi Jinping’s first five-year term, when China still projected the promise of profits and opportunity more than political constraint and economic contraction. 

The momentum shifted dramatically in the years leading up to, and especially after, the pandemic. Supply chain shocks, coercive trade practices, intellectual property theft, data restrictions, human rights focus, and intensifying geopolitical rivalry hardened Western posture toward Beijing. The language of “de-risking” and “decoupling” migrated from policy circles in Washington into boardrooms in the U.S. and Europe. Diplomatic traffic did not cease, but it slowed markedly as governments and firms recalibrated exposure to what was increasingly viewed as both geopolitical rival and economic competitor. 

What makes the current moment so striking is that the drift now appears to be reversing, cautiously and without the overexuberance that defined the post-WTO era. The catalyst for this shift is not a transformation in Chinese governance or economic structure, political systemic change, or how Beijing itself views the West. As difficult as it is for many in Washington to admit, it is a growing perception of volatility emanating from Washington itself, an uncomfortable realization for the U.S. national security establishment, and an even harder one for allies to process. 

The realignment became particularly visible at Davos, where Trump openly mocked French President Emmanuel Macron, criticized Canada for insufficient gratitude, and dismissed NATO as a money pit. His incorrect assertion that NATO allies had not served on Afghanistan’s front lines, later walked back, reinforced a broader perception that times and realities had shifted. But the contempt for Europe did not begin there. It has been building since Vice President JD Vance’s blistering address at last year’s Munich Security Conference, where European partners were publicly castigated. Since then, the tone shift has reverberated across European capitals. 

Public opinion data suggests this paradigm shift is not being received lightly. In Germany, recent polling indicates that 71% of respondents now view the United States as an adversary, while continent-wide surveys show only 16% still describe the U.S. as an ally. These figures signal more than frustration; they represent a recalibration of allied risk perception. Risk is one of the most consequential currencies in geopolitics, and Washington has spent years constructing an elaborate risk architecture around China. Now that architecture appears to be turned on its head. 

European leaders and the ‘middle power’ imperative

Beijing did not engineer this paradigm shift, but if it plays its cards right, it is positioned to benefit from it. Over the past year, a steady procession of allied leaders has made its way to China. Each visit has been grounded in national economic self-interest, and while trust in China may be limited, reliance on Washington now feels less certain — more to the point, riskier. 

French President Macron’s courtship of Beijing reflects his call for European “strategic autonomy.” Spain’s King Felipe VI set the tone for China-European visits heavy in “partnership” symbolism. Britain’s Prime Minister Keir Starmer visited Beijing and reopened strategic level dialogues and deepened financial cooperation, including expanded renminbi-clearing infrastructure in London, commitments to promote cross-listings through mechanisms such as the China-UK Stock Connect scheme, and institutional plumbing that shapes global capital flows while strengthening China’s global financial influence. 

Ireland’s leadership traveled as well, while Australia sought stabilization after years of intense trade frictions, recriminations, and retaliation. India and Beijing had summit-level engagement despite enduring border tensions along the Himalayan frontier. Next up is Germany’s Chancellor Friedrich Merz, whose visit carries particular weight given Germany’s central role in Europe’s industrial supply chains with an automobile industry hanging on by a thread and losing global market share to Chinese rivals. 

Taken individually, these trips are pragmatic exercises in economic statecraft. Viewed collectively, they reflect the growing agency of what Carney has described as the “middle powers” imperative to rebalance by those states large enough to shape global outcomes and unwilling to be trapped within the great-power volatility. The promise of this hedging strategy lies in diversification, diplomatic optionality, and insulation from tariff shocks. Its peril lies in global fragmentation, weakened alliances, and a China that pockets newfound influence without offering openness or magnanimity in return. 

Mistrust of China and a pivotal Munich meeting

As the Munich Security Conference begins, there are signs of tension involving both the U.S. and China. German Chancellor Merz said in his remarks on the first day of the conference on Friday that “the international order based on rights and rules is currently being destroyed,” but speaking in English he also said that the U.S. could not “go it alone” and described Americans as “friends.”

History does offer caution about an international realignment towards China. In 2017, Xi Jinping traveled to Davos and delivered a speech as feted and celebrated as Mark Carney’s, a robust defense of free trade and globalization in the face of a protectionist Trump 1.0 agenda. China was briefly cast as the alternative and a safe haven, yet Beijing failed to live up to that promise; instead it ushered in the era of wolf warrior diplomacy. It is entirely possible China could squander this moment as well. 

Signs of friction with China are already visible. Reporting ahead of this year’s Munich Security Conference highlighted the strained institutional relations between Brussels (EU institutions) and Beijing, including restricted diplomatic access, unresolved disputes over industrial overcapacity, and recriminations over China’s alignment with Russia. While 2026 has seen engagement at the bilateral level expanding, EU institutional mistrust of China persists. 

Munich therefore assumes outsized significance. Both Washington and Beijing will need to reassure bruised Europeans. Secretary of State Marco Rubio will lead the official U.S. delegation and be under heavy scrutiny after Vance’s performance last year, while China must do more than offer rhetorical warmth from the podium if it hopes to sustain the 2026 momentum. 

Hovering over all of this is President Trump’s anticipated visit to Beijing in early April, the jewel in the diplomatic visits’ crown for China. After hosting America’s allies, Xi Jinping will host the American president, reinforcing China’s narrative that global diplomacy still converges on Beijing. In Beijing’s telling, the Middle Kingdom is back. 

Substance, however, will matter more than symbolism. Chinese officials have already signaled pressure on Taiwan arms sales. In prior administrations, including during my time in the Obama administration, such leverage ran into statutory guardrails under the Taiwan Relations Act, which obligates the United States to provide Taiwan defensive capabilities. Trump’s more discretionary approach complicates that dynamic. 

If Beijing is articulating its asks, Washington should articulate its own, from clemency for Jimmy Lai to substantive and measurable cooperation on Ukraine. Engagement absent reciprocity risks signaling that pressure yields access at minimal cost. 

All of this underscores why the geopolitical rebalancing now underway extends far beyond diplomacy. The global system is not realigning wholesale toward China, but it is recalibrating as allies hedge and middle powers assert agency and the U.S. pressure allies more than adversaries. History shows that the world has gone to China before, drawn by growth and a belief in endless opportunity, and then rapidly pulled back amid geopolitical tensions and shocks. Now it appears businesses are drifting back once more, cautiously, and pragmatically, compelled less by trust in China’s goodwill than by limited options and strategic necessity.

As that drift gathers momentum, it is reshaping the terrain in which global business must operate, influencing how firms re-enter China while hedging against overexposure, how they engage middle powers pursuing strategic optionality, and how they compete in third markets against Chinese companies now going global at scale. It is altering capital allocation across geopolitical spheres, forcing compliance recalibration, prompting yet another redesign of supply-chain architecture, and introducing a more complex form of dual-state risk exposure spanning both the U.S. and China. Businesses cannot afford to misread or misplay this inflection point or dismiss it as a temporary Trumpian phenomenon. True, he set this course in motion, but the geopolitical fault lines are likely to continue to shift and if fully materialized, this will be the big one.

—By Dewardric McNeal, managing director and senior policy analyst at Longview Global, and a CNBC contributor