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Commentary By Allison Schrager

More Risk, Less Reward: Welcome to the New World Order

Economics Finance, Tax & Budget

The global economy is entering a new era in which economic relationships are secondary to political considerations.

When you are at Davos — and I was there last week, no apologies, I was just doing my job — it is tempting to read small shifts as profound trends that will upset the world order as we know it. You have to work to resist this temptation. More likely, you’re just hungry and tired.

This year, however, I feel confident in saying that major change is upon us. The world is entering a new regime in which economic relationships are secondary to political considerations. That will bring more financial risk and less economic growth.

President Donald Trump’s threatened and withdrawn tariff on Colombia after it refused to take a plane full of deported migrants is just the latest illustration. Even if the incident is soon forgotten, the implications are significant for financial markets.

Continue reading the entire piece here at Bloomberg Opinion (paywall)

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Allison Schrager is a senior fellow at the Manhattan Institute and a contributing editor of City Journal.

Photo by Yuichiro Chino/Getty Images