“There are decades when nothing happens, and weeks when decades happen.” The opening weeks of 2026 fit that description with unsettling precision. In just a short span of time, a series of political, economic and financial shocks have begun to dismantle assumptions that have underpinned the global order for decades.
For years, international relations rested on a few broad beliefs: that shared democratic values would permanently bind the United States to Europe, that global supply chains made economic interdependence unavoidable, and that world finance would remain stable thanks to an independent US Federal Reserve and a surplus of Asian savings. January 2026 has shaken all three, said a WSJ report.
America and Europe Drift Apart
President Donald Trump’s declaration at the World Economic Forum in Davos that the United States must acquire Greenland may one day be remembered as a historic rupture. Much like the fall of the Berlin Wall symbolised the triumph of Western unity, the Greenland episode could come to represent its unraveling.
In the days leading up to Davos, Trump threatened a trade war with Europe unless Denmark surrendered Greenland — a NATO ally and sovereign territory. His administration even refused to rule out the use of force. Though the threats were later softened, the underlying ambition was not disavowed.
For global leaders, the message was stark: the United States is now willing to challenge its closest allies in pursuit of territorial and strategic goals. A forced takeover of Greenland would effectively hollow out NATO. Even the willingness to contemplate such a move has injected deep anxiety into global markets and diplomatic circles.
At the heart of this rupture lies a widening philosophical divide. Europe still sees democracy, human rights and rule of law as the glue holding the West together. Trump’s worldview, by contrast, prioritises culture, demography and history. While Europe fears Russia most, Trump frames mass immigration and declining birth rates as the true existential threats.
NATO survives — for now. Trade peace still holds. But market volatility earlier this month, when stocks fell while bond yields and gold surged, offered a preview of the instability that may follow as Western institutions weaken.
A Resource-Driven Monroe Doctrine
Trump’s foreign policy has also revived echoes of the 19th-century Monroe Doctrine — this time built around resources rather than ideology. China’s expanding influence across Latin America has increasingly alarmed Washington. Trump’s move to sideline Venezuela’s Nicolás Maduro was less about restoring democracy and more about securing access to the country’s vast oil reserves.
Unlike past US interventions that sought regime change, Trump’s approach prioritised control over energy resources while leaving political structures largely intact. The objective was not moral leadership, but strategic leverage — and denying China a foothold close to home.
China’s Unexpected Opening
Ironically, Trump’s return has also complicated Western efforts to present a united front against China. While earlier years saw growing consensus that China was a strategic rival rather than a benign partner, Trump showed little interest in strengthening alliances to counter Beijing.
Canada offers a telling example. After aligning with US policy by imposing steep tariffs on Chinese electric vehicles, Ottawa recalibrated once Trump imposed tariffs on Canada and floated annexation rhetoric. Prime Minister Mark Carney struck a limited trade deal with China, reducing EV tariffs in exchange for concessions on agricultural exports.
The deal was small but symbolic. It signaled how middle powers may increasingly hedge between Washington and Beijing, even if uneasily. Geography still ties Canada to the US, but Trump’s actions are forcing allies to diversify — at a cost.
America Pushes for Tech Independence
One area where Trump has made tangible gains is technology. A major agreement with Taiwan Semiconductor Manufacturing Company will see billions of dollars invested in advanced chip plants in Arizona. These facilities will produce cutting-edge semiconductors critical for artificial intelligence, smartphones and communications — sectors long dominated by East Asia.
The deal marks a significant step toward US technological self-reliance. Just as shale oil reduced America’s dependence on Middle Eastern energy, domestic chip manufacturing reduces its strategic vulnerability around Taiwan. But this autonomy comes with a geopolitical trade-off: a US less dependent on Taiwan may also feel less compelled to defend it.
Trump Versus the Federal Reserve
Perhaps the most consequential battle is unfolding at home. Trump’s long-running attacks on the Federal Reserve escalated this month when the Justice Department opened a criminal investigation into Fed Chair Jerome Powell, ostensibly over congressional testimony related to building renovations.
Powell responded forcefully, warning that the probe threatened the independence of the central bank. While the Supreme Court has signaled resistance to efforts to purge Fed officials without due process, the damage may already be done. Investors worldwide have long trusted the Fed to act independently in the interest of economic stability. That assumption is now under strain.
Even if institutional safeguards hold, future Fed leaders may operate under constant political threat — altering how monetary policy is made.
Japan Signals the End of Easy Money
Meanwhile, Japan — long the anchor of ultra-loose global monetary policy — is shifting course. Inflation has returned, interest rates are rising, and government bond yields are climbing sharply. Political promises of tax cuts have heightened fears over the sustainability of Japan’s enormous public debt.
This matters far beyond Japan. As one of the world’s largest creditors and a major holder of US Treasury bonds, Japan’s changing financial dynamics could push borrowing costs higher worldwide. Rising Japanese rates may force heavily indebted countries — especially the US — to pay more to attract capital.
A World in Flux
These developments are not isolated. Federalism in the US is under pressure as immigration enforcement clashes with state governments. Trump has already suspended funds to Minnesota and floated the use of the Insurrection Act.
Any one of these shifts would be historic on its own. Together, they signal a profound transformation in global politics and economics — one whose full consequences remain unclear.
And it’s only January.
