While they continue to flatter Trump, politicians and businesses are also pursuing new deals and trading partners, diversifying supply chains and exploring ways to reduce dependence on the US
Europe’s political and business elite arrived at the World Economic Forum in Davos this year with nerves already frayed after a bruising first year of US President Donald Trump’s second term. That period was defined by the imposition of a protectionist tariff strategy to gain economic and geopolitical leverage, an often combative approach to the war in Ukraine and renewed doubts over Nato security guarantees.
In the run-up to Davos, the White House threatened eight European countries – including the UK, Germany and Denmark – with tariffs of 10 to 25 per cent unless they supported the administration’s ambitions to control Greenland. The move turned a grinding war, a long-running trade dispute and a revived Arctic land grab into a single, combustible test of transatlantic economic and security solidarity.
At the outset, US Secretary of Commerce Howard Lutnick outlined the Trump administration’s position and the reason for attending Davos. He claimed that years of globalisation had failed, leaving American workers behind. Lutnick challenged Europe’s net zero ambitions, arguing that they would increase dependence on China. He also said that any economic dependence should be limited to close allies. That message, however, sat uneasily alongside the administration’s increasingly combative treatment of strategic partners and allies.
It is apparent that Trump is not merely challenging elements of the post-Cold War order – he is actively reshaping it. His transactional approach is contingent on political alignment and loyalty rather than on embedded rules. The effect is a dramatic shift from a system anchored in institutions to one organised around leverage, personal authority and bilateral deals, one with which many nations are struggling to come to terms.
However, the event that defined the World Economic Forum was Canadian Prime Minister Mark Carney’s address. He delivered what could be the most consequential address by a Western leader in years, outlining the end of the post-Cold War rules-based order and what might replace it.
The former governor of the Bank of England and the Bank of Canada noted that the world has entered a distinct new phase, one in which trade, finance and supply chains are openly deployed as instruments of power and coercion. In this phase, international rules are applied much less consistently than before.
He argued that the so-called middle powers – including Canada, France, Germany and Australia – must respond and move beyond symbolic assertions of sovereignty, instead focusing on developing genuine strategic independence through deeper cooperation among themselves.
In Canada, this reflects a significant shift away from a strained relationship towards pursuing new trade agreements. It will undoubtedly further strain relations with the Trump administration, which already views some allies as potential conduits for Chinese exports seeking to bypass US trade barriers.
We are seeing a similar situation unfold in Westminster as criticism mounts from China hawks who argue that British Prime Minister Keir Starmer’s meetings in Beijing risk sliding into appeasement. Recent UK polling suggests the Labour government’s support has nearly halved since 2024, with the ruling party trailing Reform UK and facing pressure from both the Conservatives and the Green Party.
Meanwhile, many political and business leaders continued to flatter Trump at Davos, presumably thinking they had more to lose from open confrontation. However, many were likely also pursuing new deals and trading partners, diversifying supply chains and exploring ways to reduce dependence on the world’s largest economy as threats of tariffs and coercion have become the new norm.
Trump used Davos as a stage to unveil his new “Board of Peace”, a self-branded conflict resolution body he chairs, casting it as a more decisive alternative to the UN. A cluster of states, along with business figures, gravitated towards it for access to Washington, while most European democracies and Canada kept their distance.
Critics in European capitals, international law circles and civil society say it is less of a neutral peace initiative than an attempt to build a Trump-centric parallel world order, risking further erosion of multilateral norms.
Meanwhile, amid a shift away from the established rules-based world order, Hong Kong’s value proposition was quietly recast in Davos as a unique and predictable conduit to mainland China, Belt and Road Initiative markets and Southeast Asia, where capital, technology and infrastructure investment intersect.
In an era where pressure replaces persuasion, predictability and connectivity matter more than ever. As we witness traditional rules and values breaking down and alliances once taken for granted being strained to the limit, the question is no longer whether the old order can be restored. It is who can continue to function credibly in what comes next.
