The newest conventional wisdom among the commentariat is to lament the passing of our “rules-based international order”—especially in the aftermath of Donald Trump’s plundering raid through Davos, Switzerland, when the U.S. president nearly upended NATO in pursuit of what he called a “piece of ice,” or Greenland.
But there’s a larger lesson to be found in the extraordinary spectacle of the usually fractious Europeans standing united against the man whom many now see as the mad king of Washington—and in the sudden revolt of global markets against Trump’s behavior. The markets have since stabilized, but “Sell America” sentiment persists, an ever-present threat hovering over Trump’s “A+++++” economy.
The lesson is that an awful lot of people—not just the Europeans but also the international economic system and all its key players, even arguably many leading Chinese—don’t want to see the breakdown of this system and are absolutely terrified of what could ensue.
Why? Anyone marginally acquainted with human history knows what such an outcome would likely mean: the decimation of international trade, a reversion to impoverishment through anarchy and isolation, and an unstable balance of power marked by the ever-present threat of war. And the risks would be vastly greater in the 21st century in a hair-trigger environment of high-tech (possibly nuclear) war and the unleashing of global threats, from cyberattacks to climate change to unrestrained artificial intelligence to future pandemics—all without any international cooperation to govern them.
It’s fair to say that few people want to risk a descent into that potential abyss, except possibly for Trump and his minions, such as Stephen Miller, the senior White House aide who dismisses international norms as “niceties”; Russian President Vladimir Putin and his fellow neoimperialists in the Kremlin; some factions of Chinese hard-liners, and an assortment of third-world autocrats scattered in their already-isolated palaces around the globe.
Even Europe’s far-right parties, once seen as reliable Trump acolytes, are lining up against him over his attempted grab of Greenland. And there is good reason for that.
In Europe, more than most regions, the legacy of a world where might alone makes right—the only true Trump doctrine, if one does exist—is still too vivid a memory, just eight decades old. These leaders have their issues with the European Union—but in recent years, to improve their viability at the polls, they’ve had to move away from planning to exit the EU to saying they will “reform” it from within. As Mattias Karlsson, the former leader of the right-wing, nationalist Sweden Democrats, put it on X: “Trump increasingly resembles a reverse King Midas. Everything he touches turns to shit.”
In other words, though Trump and his team are working hard to destroy the rules-based international order, it may prove stronger than they—or anyone else—realizes.
Protesters carry a banner during a demonstration by unemployed people in Berlin circa 1930. Hulton Archive/Getty Images
Unfortunately, pundits have tended to defend and describe this postwar global system in the abstract—or in broad strokes—without specifying where and when it actually made a difference between war and peace; prosperity versus depression; and perhaps even, in one instance, between survival versus apocalypse.
There are plenty of concrete examples over the past 80 years since the end of World War II. Here’s just one. Compare the outcome of two major stock market crashes: one that occurred before the creation of this postwar international system, in 1929, and one that occurred after, in 2008. Following Black Tuesday in October 1929, a global depression led to fascism; the success of Nazism; and ultimately the worst war in history, leaving some 60 million dead.
To be sure, part of this was due to mistakes made by U.S. policymakers, but most historians agree that this chain of events was accelerated by a false sense of international autarky and a lack of policy response. With no institutions in place for international cooperation, world trade fell by about two-thirds between 1929 and 1934. With no effective coordination among central banks, gold hoarding led to global deflation.
The crash of 2008 turned out so differently in large part because a stable international system and deep communication between countries existed, permitting coordinated action not only by the U.S. Federal Reserve and Treasury but also central banks in other major economies. They collaborated on dollar swap lines to prevent a massive banking collapse by providing U.S. dollars to foreign financial institutions—something that never could have happened in the 1930s. Trade dropped precipitously but did not break down. In many ways, what was most critical was the fairly stable relationship and communication between the two largest economies—China and the United States—something that is only possible in an integrated global economy.
- A custodian is seen from above as they use a sweeper to clean the floor of the stock exchange room, filled with screens and desks.
- Two people stand behind a low white wall, separated in white-walled cubicle-like spaces by a thin divider as they fill out forms.
Left: A custodian cleans on the floor of the New York Stock Exchange on Sept. 15, 2008, during the financial crisis. Spencer Platt/Getty Images Right: Job seekers record recruitment information at a job fair in Xian, China, on Feb. 28, 2009, amid a bleak a employment situation in as the global financial crisis impacts on the country’s economy. China Photos/Getty Images
After the Lehman collapse, Beijing and other major U.S. debt-holders continued to invest in the United States and coordinate macroeconomic policy through the Group of 20 as well as supporting expansion of International Monetary Fund (IMF) resources. China also launched a huge stimulus that was actually much larger relative to its GDP than the U.S. or European response. Nations did not devalue aggressively or impose sweeping trade barriers, as in the 1930s. There was no significant surge of protectionism or virulent nationalism (at least, until Trump came along).
“The contrast with the interwar period could not have been greater,” Liaquat Ahamed, the author of the Pulitzer Prize-winning Lords of Finance: The Bankers Who Broke the World, said in an interview. “When the gold standard collapsed in the early 1931 and was replaced by a system of floating exchange rates without rules, it led to the competitive devaluations and currency and trade wars of the 1930s. The spiral into protectionism and trade autarchy probably deepened the Great Depression and certainly distorted the recovery.”
Trump and Miller, his deputy chief of staff, like to say that the “iron law” of human history is that only power and the use of force matter.
But there’s another “iron law” that’s ruled for the past 80 years or so. It is an unbreakable rule that says no nation, not even China, can afford to withdraw from the international system—and its norms—if that nation hopes to be prosperous, powerful, or influential. That is why a quasi-isolated Russia under Putin, despite his posturing, has an economy that is only the size of Italy’s—and would be much smaller if Russia didn’t have vast natural resources to sell. It is why other countries that have been cut off from this international system, such as Iran and North Korea, are so poor and desperate.
Has China broken these trade rules very often? Of course, with flagrant currency manipulation, government subsidization, intellectual property theft, repudiation of maritime rulings by the World Trade Organization (WTO) in the South China Sea, and so on.
U.S. Treasury Secretary Henry Paulson (center left) and Chinese Vice Premier Wang Qishan (center right) applaud as members of their trade delegations exchange agreements during the U.S.-China Strategic Economic Dialogue in Beijing on Dec. 4, 2008. Elizabeth Dalziel/Getty Images
China still generally brings itself into compliance with international law and WTO rulings, however, and despite Trump’s tariff war, neither the United States nor the Chinese want a hard decoupling—meaning a disintegration of the globalized economic system. Trump made that clear in recent months when he backed off punitive tariffs in the face of Chinese moves to shut down supplies of critical minerals to U.S. defense and tech companies, and then authorized the sale of advanced AI chips to China.
Is Beijing trying to build itself up as a rival superpower? Without a doubt. Throughout recorded history, the rise of dominant or hegemonic powers has inspired alliance-building against them. But Beijing also has no alternative to a peaceful global trading system that is critical to its wealth and power. Commentators such as David French of the New York Times oversimplify when they write that China, like Russia, is restrained only “by deterrence, or, when deterrence fails, raw military force.”
The Triangle of Power: Rebalancing the New World Order, Alexander Stubb, Columbia Global Reports, 216 pp., $18, January 2026
As Finnish President Alexander Stubb points out in his new book, The Triangle of Power: Rebalancing the New World Order, it was none other than Chinese leader Xi Jinping—in his first and only in-person appearance at Davos, in 2017—who declared: “It is true that economic globalization has created new problems. But this is no justification to write off economic globalization altogether.”
“Xi gave the speech days before the first inauguration of Donald Trump,” Stubb noted. “The message rang loud and clear: If the West steps down from leadership, China is ready to step in.”
Today, as in the 1930s, destructive nationalist policies threaten to worsen any future recession; the WTO is rapidly becoming defunct; and major economies are following Trump’s lead in using tariffs, export controls, and subsidies as strategic tools.
That does not bode well for a future financial meltdown, which is sure to come at some point.
“The current strains mean that there would be enormous difficulties in tackling a new financial crisis—say, after AI bubble collapses,” said Harold James, a prominent financial historian at Princeton University. It is no surprise that gold prices have reached all-time highs in the past 12 months, with investors retreating to the ultimate store of value in the face of global chaos.
The open and aggressive way that the Trump administration (which Carney did not name) has “begun using economic integration as weapons, tariffs as leverage, financial infrastructure as coercion, supply chains as vulnerabilities to be exploited” means that medium-sized powers such as Canada have to develop far more strategic autonomy. The United States can never be trusted as hegemon again.
“You cannot live within the lie of mutual benefit through integration, when integration becomes the source of your subordination,” Carney said.
As a solution, Carney endorsed the policy of “value-based realism” laid out by Stubb in his new book. “The rules-based world order that the West established after World War II is in tatters,” Stubb wrote, reflecting the new conventional wisdom. “This is our generation’s equivalent of 1918, 1945, or 1989. The next few years will decide the dynamics of the new international order for the rest of the century, or at least for decades to come.”
As Stubb explained it, “The ideological battle of the post-Cold War era was between Francis Fukuyama’s end of history (values) and Samuel Huntington’s clash of civilizations (realism). Perhaps the paradigm shift we are witnessing is toward a bit of both: values and interests.”
Protesters wave Greenlandic flags in opposition to Trump’s takeover threats during a demonstration at City Hall Square in Copenhagen, Denmark, on Jan. 17. Kristian Tuxen Ladegaard Berg/NurPhoto via Getty Images
Between Stubb’s book and Carney’s now-iconic speech, we can hear a new consensus emerging: The “medium” powers of the world realize they can no longer trust any hegemon, starting with the United States, and they demand a seat at the table so that, as Carney put it, they’re not “on the menu.” And that, in turn, means a complex balancing act, or what Carney calls “variable geometry—in other words, different coalitions for different issues based on common values and interests.”
So the EU and China and Canada will pursue strategic partnerships while still parting ways over the question of defending democracy in Ukraine. Ironically, Trump may have given Europe the motivation that it has needed to finally become a geopolitical force in its own right—allowing it to play a balancing role. One indication a new era was underway came this week when the European Union and India—which Trump has treated cavalierly after painstaking efforts by his predecessors in the White House to develop a strategic partnership—swiftly concluded a long-negotiated free-trade pact.
While Trump might find a way to scupper such deals, and the global economy still can’t get along without U.S. financial markets, an ever-more complex web of relationships appears to be emerging. The system can survive.
As Amitav Acharya and other commentators have pointed out, in many ways, the postwar international system has handily survived U.S. hostility to many of its institutions, such as the United Nations (though these were created by Washington in 1944-45). This was especially true during the Cold War, when the U.N. Security Council—the main arbiter of international law—was often paralyzed, as it is today, with Washington and Moscow at loggerheads.
Yet even at the height of the Cold War, when U.S.-Soviet tensions were at their worst, the existence of international norms made a big difference in important ways. The Cuban missile crisis—perhaps the closest the world ever came to apocalypse—was resolved through a complex process of negotiation, as detailed by Graham Allison and Philip Zelikow, along with other scholars. But legitimacy in the eyes of the world—in other words, adherence to certain norms—was a critical factor during the famous 13-day standoff between Washington and Moscow.
Post-Cold War archival evidence shows that then-Soviet leader Nikita Khrushchev was acutely concerned about appearing reckless to nonaligned states and losing moral standing that would isolate the Soviet Union. U.S. President John F. Kennedy, meanwhile, worried that an airstrike or invasion would fracture NATO and alienate world opinion.
As then-Attorney General Robert F. Kennedy, the president’s closest advisor, later wrote in his 1967 memoir, Thirteen Days, a key reason why JFK did not order a surprise attack or other precipitous military action was fear of losing the moral battle in the eyes of the world. “We spent more time on this moral question in the first five days than on any other single matter,” RFK wrote. All this came to a head at the U.N. Security Council—“the court of world opinion,” as U.S. Ambassador Adlai Stevenson put it—when Stevenson confronted Soviet Ambassador Valerian Zorin with photographic evidence of missiles in Cuba.
The “court of world opinion” endures. And if it is no longer the U.N. Security Council, then perhaps it dwells at the moment in Davos, where Trump met his comeuppance over Greenland.
Delegates including Christine Lagarde, the president of the European Central Bank (foreground) watch as Trump speaks at the World Economic Forum in Davos on Jan. 21. Chip Somodevilla/Getty Images
We don’t know, in other words, what future form the international community will take. But it is real, even if it must mainly be defined in a more or less negative way—by the relative absence of anarchy in the international system. In recent decades, financial markets collapsed several times, and the global economy remained intact. Terror struck down the World Trade Center and Putin invaded Ukraine, and yet a clash of civilizations has not ensued (except, perhaps, in the minds of the Kremlin, some of those Chinese hard-liners, and what remains of al Qaeda and the Islamic State).
“It is easy to point to all the disappointments of our international institutions today,” Stubb concluded. “The WHO [World Health Organization] failed on vaccine provision, the WTO is paralyzed on trade negotiations, the IMF and World Bank cannot mitigate the debt distress of the least-developed countries, and most of all, the UN Security Council is unable to preserve peace.”
But all these institutions are reformable and salvageable, Stubb says. The danger now is that the leading powers, beginning with Washington, will overreact and completely abandon multilateralism for a crude multipolarity, as Stubb describes it: “A multilateral world makes the common good a self-interest. A multipolar world runs simply on self-interest.”
It was the ruthless pursuit of self-interest that all but destroyed the world many times over in the past, most recently in the 1930s. Most people who know a little history still remember that, even if Donald Trump does not.
Michael Hirsh is a columnist for Foreign Policy. He is the author of two books: Capital Offense: How Washington’s Wise Men Turned America’s Future Over to Wall Street and At War With Ourselves: Why America Is Squandering Its Chance to Build a Better World. X: @michaelphirsh