Investors must prepare for a more combative environment where the emergence of trade barriers and regional alliances will increasingly determine market movements.

Deglobalisation is back at the top of the agenda for global investors. With Donald Trump firmly back in the White House, the president’s aggressive trade policies and economic nationalism are no longer campaign rhetoric but active policy.

The world is now bracing for a new era, where the economic integration that has defined the past four decades is unravelling. The old certainties are giving way to something far less predictable and far more combative.

For decades, globalisation was considered an unstoppable force. Former US president Bill Clinton once likened it to a “force of nature”, something beyond human control. His UK counterpart Tony Blair insisted that debating it was as pointless as questioning the change of seasons.

Protectionist policies

These metaphors haven’t just been challenged; they appear to be collapsing. The past decade has seen the promise of global economic openness eroded by populist uprisings, protectionist policies, and the growing realisation that while globalisation created immense wealth, it did so unevenly.

Now, with Mr Trump back in charge, economic nationalism is ascendant, and the concept of free-flowing trade and capital is in retreat.

Yet, the picture is more complicated than a simple narrative of deglobalisation. Trade volumes remain strong.

According to the World Trade Organization, global merchandise trade was up 3.3 per cent in 2024 compared to the previous year.

In sectors like clean energy, globalisation continues to thrive. China’s state-backed green industries are flooding global markets with affordable electric vehicles, solar panels and batteries.

Meanwhile, Mr Trump’s economic doctrine is cantered on reshoring supply chains, reducing dependence on geopolitical rivals, and using tariffs as a primary weapon in trade disputes. His administration is escalating economic confrontations not just with China but with European automakers, among other foreign competitors.

This push for national economic self-sufficiency comes at a cost. Trade barriers mean higher prices, supply chain inefficiencies and increased volatility. While Mr Trump claims to be protecting US workers, businesses are being forced to reassess their strategies, and the long-term economic effects remain uncertain.

Countries that once relied on the US as a key trading partner are exploring alternatives, strengthening regional trade blocs, and deepening ties with China and other economic powerhouses.

At the same time, economic pragmatism continues to complicate the rhetoric. Even as the US enacts tariffs, American demand for Chinese goods persists. Previous president Joe Biden’s Inflation Reduction Act, which invested $300bn into clean energy initiatives, anticipated strong international demand for climate-related technologies.

And while the nationalist wave has disrupted trade agreements and cross-border investments, it hasn’t eliminated them. Capital still flows, but now through a more fractured and politically sensitive landscape.

Selective engagement

This means that while some aspects of globalisation are receding, others are evolving. The real shift is not a simple retreat from interconnected markets, but rather a world of selective engagement.

Some industries are decoupling; others are doubling down on global supply chains. The challenge for businesses and financial markets is to adapt to this more volatile, politically charged environment.

The World Economic Forum, long a proponent of globalisation, acknowledges this shift. National interest is dominating economic decision-making, yet global co-operation is still essential on issues like cyber security and AI regulation. Policymakers must now navigate a complex environment where the benefits of globalisation remain tangible, but the political consensus supporting it has crumbled.

Mr Trump’s return has accelerated the forces pulling the world apart, but the question is whether deglobalisation itself will face the same reckoning that globalisation did.

Just as public opinion turned against unfettered free trade, the consequences of economic fragmentation — higher costs, supply chain disruptions, and reduced growth — may soon challenge the new status quo. The idea that protectionism can provide long-term economic security is as much a political gamble as globalisation was in the past.

The world is not simply closing itself off. Instead, economic alliances are shifting, trade strategies are adapting and businesses must rethink how to operate, and therefore investors invest, in an era where neither pure globalisation nor outright isolationism is the defining trend.

The old model is gone, but what comes next remains uncertain. Global investors should be prepared for a world where geopolitics dictate economic outcomes as much as market forces themselves have done in the past.

Nigel Green, deVere Group CEO and founder