Why global markets won’t collapse under Trump’s trade wars

[WORLD] The world has watched nervously as U.S. President Donald Trump disrupts global trade with aggressive tariffs, protectionist moves, and unpredictable rhetoric. Yet veteran economist Dr. Khor Hoe Ee, who has observed financial shocks from Latin America to Asia for over four decades, remains measured. He believes the global system has the capacity to absorb such shocks and even adjust over time. While Trump’s actions may eventually tip the U.S. into recession, Khor suggests that global trade flows will recalibrate, and the world’s dependence on the U.S. dollar will gradually decline—signaling not collapse, but transformation.

The Global System Has Absorbed Worse Before

Dr. Khor’s long view spans crises far more destabilizing than tariffs: the Latin American debt blow-up in the 1980s, Asia’s currency crashes in the late 1990s, and the near-meltdown of 2008. Each time, the global economy stumbled, recalibrated, and found a new balance. He points out that while trade tensions are painful, they are not system-threatening in the same way as banking collapses or sovereign defaults. Current global supply chains, regional trade agreements, and emerging market resilience offer built-in shock absorbers. Markets today are less reliant on single nodes like the U.S. and more diversified, offering buffers against sudden shifts.

Trump’s Tariffs May Boomerang Back on the U.S.

While Trump’s “America First” tariffs aim to pressure China and other trading partners, Dr. Khor suggests they may ultimately undercut the U.S. itself. Tariffs raise costs for American businesses and consumers, strain corporate supply chains, and disrupt investment planning. Data already show some U.S. manufacturing sectors feeling the squeeze, and global investors are hedging against American exposure. Khor forecasts that these pressures could force the Trump administration to reverse or soften its trade measures under political and economic strain—especially if recession signals start flashing red. In this sense, the shock may become self-correcting.

The U.S. Dollar’s Role Is Already Evolving

Perhaps the most consequential shift Khor sees is the slow erosion of the U.S. dollar’s global dominance. While not directly caused by Trump’s tariffs, the broader pattern of de-dollarization—seen in rising euro, renminbi, and even gold holdings by central banks—has been accelerated by America’s unilateralism. Markets dislike uncertainty, and the weaponization of tariffs and sanctions pushes other economies to diversify their reserves and trade settlements. Over time, Khor argues, this will gradually reduce the dollar’s privileged status. While this won’t happen overnight, it signals a longer-term structural shift in global finance that Trump’s policies are hastening.

What We Think

Dr. Khor’s insights offer a rare blend of calm realism in an era of breathless headlines. While Trump’s trade policies introduce real risks, they are unlikely to unravel the global system. More likely, we will see a series of painful but necessary adjustments—both for the U.S. and the world. The bigger story is the slow pivot away from dollar dependence, which could reshape financial power over the next decade. For policymakers, businesses, and investors, the lesson is clear: prepare for turbulence, but don’t bet on collapse. As past crises have shown, resilience often outlasts the shock.