Most observers would likely agree that broad systemic shifts have been building up, both in the United States and around the world. Large swaths of the electorate in the West seemingly want such shifts—at home and abroad—indicating we might be standing on the cusp of major historical change. When an old era is waning, but a new one has yet to be shaped, we face an important question: Will this upcoming period of transition lead to a more positive, cooperative world order—or a more fractured one?

The Roots of Populism

For Americans, industrial and manufacturing foundations, that once sustained entire communities and enabled a middle-class lifestyle, have eroded under the pressures on global supply chains, lower labor costs abroad, and the never-ending pursuit of efficiency. While these trends did, in fact, lower consumer prices and offer economic advantages, many felt and continue to feel left behind. Stagnant wages, job losses, and the decline of local industries drove a visceral dissatisfaction toward the broader rules of globalization, and toward those in power both in Washington as well as in European capitals.

This dissatisfaction led to a corrective force in politics—often labeled “populism,” but more accurately understood as a public demand for redressing inequities. Many Americans perceive ballooning global commitments abroad as diminishing returns at home. As the United States redefines its global role, tensions between maintaining a strong international footprint and pursuing domestic prosperity, are likely to become more pronounced. Balancing trade protection, currency strength, and leadership in global institutions will require navigating these deep contradictions.

Populism is frequently described as a backlash against elites, but, at its core, lies a collapse in trust—particularly trust in democratic institutions. Studies reveal that people who lose faith in government, the judiciary, and mainstream political parties, are more inclined to support populist leaders. The question, then, is: Why has this faith eroded so broadly across Western democracies?

Several factors come to mind. Firstly, large-scale, unorganized immigration has fueled perceptions of lawlessness and cultural change that many communities find unsettling. Secondly, the transformation from production-based to service-based economies has left rural and industrial regions struggling. Thirdly, the so-called “American Dream”—the belief that each generation would be wealthier and more secure than the last—feels increasingly out of reach for many. Finally, technology continues to reshape the job market at a blistering pace and, potentially, displacing a large portion of white-collar workers.

Great power competition has reemerged, shifting global dynamics and challenging the foundations of international cooperation.

Geopolitical Flash Points

Where the United States stands today does not, of course, exist in a vacuum. Among others, great power competition has reemerged, especially between the United States and China.  After the Cold War, American supremacy was unquestioned in areas like technology, military force, and cultural influence. Today, China has risen not just as a military competitor, but also as an economic powerhouse. This change has unsettled the foreign-policy community in Washington, leading to a tidal wave of strategy documents on how to “win” this competition vs. a focus on peaceful coexistence. 

Despite a “steady state” approach under the previous administration—balancing, sanctioning, and negotiating with Beijing—the hawkish tendency in Washington persists. A move from “de-risking” to “de-coupling” seems likely, which raises the specter of an all-out economic war that could include tariffs, sanctions, and controls on strategic exports—ultimately hitting the pocketbooks of all Americans.

A key challenge is that the United States and China operate under different economic systems, which are now increasingly at odds: Western democracies are pulling back toward protectionism to safeguard their middle classes. China, however, continues to expand its exports and invest in green technologies globally. With G7 nations now representing only around 40% of global GDP, a more protectionist stance is likely to place Western economies at a distinct disadvantage, as the rest of the world forges ahead on its own trade and investment paths.

Global Challenges in Flux

Existing international institutions, such as the United Nations and other multilateral bodies, were largely shaped in the post-World War II era. As such, they do not reflect today’s distribution of power. Chinese officials often note that, although China occupies a seat at the top table, the “casino” is still owned by those who designed the game decades ago. As Beijing becomes more influential, it seeks to create parallel institutions or reshape existing ones. A reformed global governance system—one that includes all key stakeholders and manages competition responsibly—remains essential to preventing conflict.

All nations face growing impacts of climate change, which is no longer a distant threat. Recent years have been the hottest on record, surpassing 1.5 degrees Celsius above pre-industrial levels. While the planet has experienced warmer phases in the distant past, our modern infrastructure and population distribution along coastal areas amplify the risks. As storms intensify, droughts lengthen, and floods devastate entire regions, societies will need to adapt quickly to avert catastrophe. It’s unclear how global governance of climate change risks can rise to the challenge, when short-term economic interests often dominate.

Disinformation and the rapid evolution of technology poses another global risk, as the lines between fact and fiction become more blurred. Americans (and global citizens), increasingly operate in siloed media ecosystems, where “alternative facts” gain traction, and social media algorithms reward outrage. Advances in artificial intelligence, plus the use of deep-fake videos and audio, may soon become indistinguishable from reality, which may undermine social cohesion and our shared concept of truth. There are many seeking to harness technology for good, but they are facing more malicious actors—a race that is only likely to intensify.

Regional Instability

Keeping regional flashpoints in mind remains critical to broader systemic stability. The Middle East, for example, has undergone seismic shifts—from the collapse of the Assad regime in Syria, to the evolving Israeli-Arab normalization efforts. Iran faces internal pressures, and new fault lines could erupt into more dangerous conflicts. Using traditional foreign policy tools, such as putting maximum pressure on Iran, may only fan the flames of conflict. 

A potential end to the grinding war in Ukraine looms, but it comes with high stakes.  Domestic opposition to continued support is growing in the United States, which might push both Kyiv and Moscow to the negotiating table. Yet, the risk remains that Ukraine could be pressed into territorial concessions. Alternatively, if no ceasefire is reached and the conflict escalates, Europe would be left to shoulder the burden.

More broadly, three billion people live in states that spend more on debt servicing than on health and education. Climate change-induced disasters and higher global interest rates could worsen this debt crisis. Fragile states, like Nigeria and Pakistan (both pivotal middle powers), face precarious futures, as does the potential collapse of a nuclear-armed Pakistan.

Conclusion

America and Americans are part of a larger system, a system under strain and that faces a number of existential challenges and risks, the solutions to which will require much stronger levels of international cooperation. It is thus crucial that U.S. policymakers seize this moment of uncertainty and shape a future that is more just, equitable, and sustainable. The world may be as it is, but it is also critical to work toward what it can become. By supporting organizations like The Stimson Center, that champion informed policy and multilateral solutions, we may still be able to transform this interregnum into a new era of cooperation and progress–an era that will take us to sustainable peace and prosperity.*

*This article is based on a speech given by the author at Davos Lodge, during the World Economic Forum’s 2025 annual meeting.