ary·Tariffs and tradeMarket liberalism is dead — we need a new NATO for tradeBy Danijel ViševićBy Danijel Višević Danijel Višević is a General Partner at World Fund.
Before co-founding World Fund, he was the Director of Communications at ject A Ventures, co-founder of Zetra ject and Krautreporter.U.S.
President Donald Trump and President of the European Commission Ursula von der Leyen shake hands as they announce a US-EU trade deal after a meeting at Trump Turnberry golf on July 27, 2025 in Turnberry, Scotland.
U.S. President Donald Trump is visiting his Trump Turnberry golf course, as well as Trump International Golf Links in Aberdeenshire, during a brief visit to Scotland from July 25 to 29.
Andrew Harnik/Getty ImagesFor eight decades the West, especially European nations, treated as neutral arenas governed by rules—not power. That era is over.
The global economy is now shaped by rivalry, coercion, and control. Trade is no longer just trade in a rules-based order, it has become part of geopolitical strategy.
And this isn’t a temporary disruption. As IMF chief Kristalina Georgieva has warned, the world is fragmenting into competing blocs. The old vision of globalisation has collapsed.
What seemed to be a natural setup to many in Europe was, in fact, a historical anomaly: a system built upon an American-led world order power, enforced through institutions NATO and the Bretton Woods system.
That scaffolding is now shaking. The rules-based global market we took for granted is giving way to a world of weaponised interdependence.
To navigate it, the West needs a new kind of alliance: a NATO for trade.
The end of the 80-year economic illusion After World War II, the US and its allies built an economic system designed to prevent a return to the destabilising chaos of the 1930s.
Institutions the IMF, World Bank, and GATT were established to underpin global capitalism under American leadership. Security was vided by US military power, codified in NATO. Trade flourished.
So did Europe, whose post-war recovery and integration were underwritten by American guarantees. When the Cold War , the illusion that global capitalism could operate independently of geo deepened.
By the 1990s, many believed the market was self-regulating and inherently peace-moting. Today, with the return of great power competition, that illusion has shattered.
Economic liberalism no longer aligns with geopolitical reality. We are entering a war economy mindset—one where national security trumps price efficiency.
This shift has been accelerated by two shocks: Russia’s invasion of Ukraine and China’s economic rise.
For example, Europe’s dependence on cheap Russian gas left it exposed when Russia weaponised its flows in 2022. Germany, in particular, had bet on market logic rather than geopolitical risk.
A 2021 assessment even declared Nord 2 safe just months prior. The result: an energy crisis and a mad scramble for LNG.
Far away, while the West clung to free-market orthodoxy, China has spent decades building a war-ready economy.
Under the “Made in China 2025” and “Military-Civil Fusion” initiatives, it identified key sectors and moved to dominate them, including rare earths, batteries, solar and AI.
Today, China duces over 75% of lithium-ion batteries and nearly all the world’s gallium. It controls the supply chains for the energy transition—and increasingly, the components of military power.
Crucially, China is not afraid to use this market dominance for political ends. In 2010, it cut exports to Japan over a dispute. And its green dominance creates dependence in Europe and beyond.
Recently, China imposed controls on gallium and germanium, crucial for semiconductor development worldwide. In response to this shift, U.S.
National Security Adviser Jake Sullivan has openly argued for a more strategic form of capitalism, rejecting ”oversimplified” free-market models. Trade is no longer neutral.
What matters is not just cost, but control. 80-year illusion over, a new paradigm emerges In summary, we are entering a new, first truly geopolitical-economic paradigm in eight decades.
The comfortable post-Cold War interlude — when seemed paramount and history had supposedly — has given way to a more raw and Hobbesian environment.
But un the 1930s, the West is not destitute or defenceless; we are wealthy and belatedly awakening to the challenge. We must now leverage our strengths in a -eyed way.
The task is to the institutions and mindsets of the 20th-century liberal order to meet the 21st-century’s more fraught reality.
If we succeed, geoeconomics need not lead to catastrophe, but it will require us to subordinate commerce to strategy — intentionally and intelligently — just as our forebears did in the 1940s when they built the system that dered peace and sperity for so long.
The EU-US trade agreement highlights this shift The inequity of the recent EU-US trade deal, which saw the bloc swallow 15% tariffs, is a perfect example of this shift.
It also demonstrates that Europe’s decades-long dependence on the US has become a strategic vulnerability.
This episode reinforces the need for Europe and others to structurally diversify our trade relationships and value chains in a world of escalating economic coercion.
It must drive us to deepen partnerships beyond the transatlantic axis, without relying too heavily on China. This is not the 1930s. Europe remains a wealthy, democratic, and stable region.
But post-war generations have no memory of systemic disruption. We assumed liberalism was permanent.
We believed “it’s the economy, stupid.” Now we’re learning that strategic power, not market price, determines outcomes. Defence is another case in point.
Until recently, most NATO members underspent on their militaries. By 2021, only six met the 2% GDP target. That changed quickly after 2022. But defence industries were caught flat-footed.
A plan to send 1 million shells to Ukraine revealed that the EU’s manufacturing capacity fell far short. For decades, Europe optimised for efficiency, not endurance. The same applies to trade.
Germany’s model of Wandel durch Handel—change through trade—is being rethought. Berlin is now screening Chinese investments and reducing dependence on authoritarian suppliers.
Across Europe, strategic autonomy is the new watchword. But the mindset shift is only beginning. A NATO for trade: the strategic task ahead Market liberalism assumed that trade would bring peace.
But today, trade is a tool of leverage. The new mantra must be resilience—including building domestic capacity, even if it’s more expensive. This is not a temporary adjustment. It is the new normal.
And this new era demands new institutions.
Just as NATO was built to defend d security, the West now needs a strategic alliance to defend d economic sovereignty—a NATO for trade—including nations Japan, South Korea and Australia.
Economic security must become a d goal, not just a national one. The US has already taken steps, with domestic investments in chips and clean , and bans on key exports to China.
Now, the EU is ing suit, with the Chips Act and Critical Raw Materials Act. These are necessary but insufficient measures. We must build an economic coalition of the willing, now.
That means d investments, aligned trade rules, and collective tection of critical supply chains. It means accepting higher costs to safeguard long-term freedom.
Cheap goods are not cheap if they make us dependent on hostile powers and geopolitical power games. The task is not to retreat from global trade, but to rebuild it on strategic terms.
The free market cannot defend itself. peace, it must be tected through alliances. Economic liberalism’s end, strategy’s return Market liberalism is dead.
It died when we stopped believing trade was just price. It died when supply chains became battlegrounds. And it died when autocracies weaponised interdependence while democracies hesitated.
If we want to preserve sperity, we must be willing to defend it—not just with tanks, but with treaties, tariffs, and trusted partners. A NATO for trade is not a metaphor.
It is the next necessary institution in a world where commerce is no longer safe from .
If the West can build it, the collapse of market liberalism need not mean decline; it can be the start of a more resilient and secure economic order.
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