The Emergence of a New Global Economic Order

By Ha Hyun-ock
The author is an editorial writer at the JoongAng Ilbo.

A tectonic shift is underway in the global economy. The once stable multilateral trade regime that has governed international commerce since the aftermath of World War II faces unprecedented challenges. Following U.S. President Donald Trump’s tariff measures, the International Monetary Fund (IMF) describes this moment as a systemic reset, indicating the potential for a profound reconfiguration of global trade dynamics.

The End of the WTO System

On August 7, U.S. Trade Representative Jamieson Greer announced the end of the World Trade Organization (WTO) system that has shaped global trade since its establishment in 1995. He introduced the idea of the “Trump Round,” a new framework centered on aggressive tariffs and protective measures designed to dismantle foreign trade barriers. This approach marks a stark departure from the principles of multilateralism that have been a hallmark of the post-war economic order.

A New Coalition Forms Against Tariff Regimes

As Washington maneuvers for economic advantage, a counter-coalition is emerging. Countries most impacted by Trump’s tariffs—including China, India, and Brazil—are beginning to align their interests. For instance, Brazilian President Luiz Inácio Lula da Silva recently communicated with both Indian Prime Minister Narendra Modi and Chinese President Xi Jinping, underscoring the urgency of a united front against U.S. trade policies.

Strengthening Ties Among Global South Nations

Historically at odds, even China and India are finding common ground. Modi’s prospective visit to Tianjin for the Shanghai Cooperation Organization summit marks a significant thaw in relations, while Russia’s Vladimir Putin has been actively reinforcing ties with leaders from these nations.

As these countries continue to purchase Russian crude, even amid Western sanctions related to the Ukraine conflict, they inadvertently challenge the very framework of U.S. trade policy. Washington’s retaliatory measures against India, perceived as punishment for its dealings with Russia, illustrate the increasing complexities of global trade relations.

The Resurgence of the Global South

At the heart of this reshaped geopolitical landscape lies the Global South, an expansive network of around 120 developing nations across Asia, Africa, and Latin America. The term broadly encapsulates countries once categorized during the Cold War as part of the "Third World."

The concept gained prominence with the 1980 “Brandt Report,” shedding light on the widening disparity between the affluent North and the impoverished South. Today, the Global South’s alignment with BRICS—comprised of Brazil, Russia, India, China, and South Africa—is deepening, as countries like Egypt, Indonesia, and the UAE consider joining the grouping.

Economic Weight and Growth Potential

Data indicates that the Global South is now a significant player in the global economy, accounting for 21 percent of nominal global GDP, with projections suggesting this figure could rise to 34 percent when adjusted for purchasing power parity. With its share of global trade standing at 25 percent and its contribution to defense spending and stock market capitalization notable, the bloc’s economic influence is on the rise.

The IMF estimates the Global South will grow at an average annual rate of 6.3 percent between 2023 and 2029, significantly outpacing growth in the Global North, which is projected at 3.9 percent. Additionally, the demographic dividend represented by 63 percent of the world’s working-age population adds another layer of potential for economic expansion.

Resource Abundance: A Double-Edged Sword

The Global South’s resource wealth is staggering. It produces around 41 percent of critical minerals necessary for energy transition and electric vehicle (EV) batteries. Countries like Chile, Indonesia, and the Democratic Republic of Congo stand at the forefront of lithium, nickel, and cobalt production, critical components for future industries.

However, the abundance of natural resources can paradoxically exacerbate existing vulnerabilities. Corruption often proliferates in resource-rich environments, stifling development and perpetuating cycles of poverty and instability.

Shifting Supply Chains and Emerging Economies

The unfolding realities of the Trump Round are hastening shifts in global supply chains. Major corporations, such as Apple, have begun diversifying their production capabilities to countries like India under the “China Plus One” strategy. Meanwhile, China is actively investing in ASEAN nations, Mexico, and Brazil to mitigate U.S. pressures, while also shifting its food import priorities towards South America.

These dynamics raise eyebrows about the long-term viability of a U.S.-centric trade model traditionally characterized by “Made in China, consumed in America.”

Challenges to Dollar Dominance

The cohesion among Global South nations poses an existential challenge to the traditional petrodollar system. As countries like China and India opt to pay for Russian oil in yuan, the dollar’s dominance as the principal currency for energy trades is being put to the test. Saudi Arabia’s potential acceptance of yuan payments would mark a significant rupture in established financial norms.

The Path Forward: Opportunities and Constraints

Despite the encouraging prospects of the Global South, many challenges remain. Uneven education levels, a lack of quality job opportunities, and public debt are substantial impediments to sustainable growth.

The Global South stands at a crossroads, embodying both a significant opportunity and a formidable challenge. Its capacity to reshape the contours of a new global order depends heavily on its ability to unite and resolve internal weaknesses. Whether these diverse nations can emerge as a coherent entity or remain fractured will ultimately determine if they can collectively forge a new economic future in this evolving global landscape.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.