Shifting Sand Under Global Order: Four Structural Forces Reshaping the Global Order

The global order is undergoing significant transformation due to four structural forces that are reshaping its foundations. These forces, which encompass geopolitical shifts, economic realignments, technological advancements, and environmental challenges, are influencing the dynamics of international relations. As nations navigate this evolving landscape, the implications for global governance and stability become increasingly pronounced. Understanding these forces is essential for comprehending the future trajectory of the global order. Most market moves are noise.  Earnings surprises, central bank policy meetings, monthly inflation prints, Employment numbers, and many others.  These dominate attention because they constantly change and are mostly unforecastable.  We get excited about the recent release, but sometimes we focus on the tree instead of the forest.

Underneath that noise sit a small number of variables that move so slowly they are pretty predictable, and those variables eventually determine what is possible for an economy regardless of who is in office or what the central bank does.

Four of them are worth understanding: how many working-age people a country will have, whether it can feed its own energy demand, how much of its prosperity depends on selling to foreigners, and whether it is a net creditor or a net debtor to the rest of the world.

None of these is a timing tool.  They will not tell you what to own next quarter.  What they do is define the boundaries within which the next two decades of policy has to operate.  Occasionally, they identify a vulnerability so large that it deserves a place in how a long-term portfolio is built.

This note walks through all four, and closes on the one that concerns us most, which is not where most commentary expects to find it.

I) Demography: The Math Already Calculated

Population projections twenty-five years out are unusually reliable, because most of the people involved have already been born.  A country’s 2050 working-age population largely depends on counting today’s children and applying known mortality.  This is the closest thing to a known quantity in macroeconomics.

Between now and 2050, the developed and developing worlds separate sharply:

• India adds roughly 215 million people (1.46B to 1.68B)
• Canada grows ~17%, United States ~10% (347M to 381M)
• Brazil edges higher before peaking in the mid-2040s.

The other direction is steeper:

• China peaked in 2021, projected to fall ~11 percent by 2050 (1.42B to 1.26B)
• Japan declines ~16%, Italy -11%, South Korea -13%, Germany -6%.

But the headline numbers considerably understate the problem.

The number that matters most is the workforce, not the total population.

Aging populations shrink from the middle.  People survive into their seventies and eighties, which holds the headline total up, while the 15-to-64 band empties out underneath it.  The result is that working-age decline runs roughly two to three times the total population decline:

Table 1 Projected Change, 2025-2050.  United Nations World Population Prospects, 2024 Revision, medium-fertility variant.

A 13 percent population decline paired with a 32 percent workforce decline is a leverage problem: the people who fund the system shrink far faster than the people who draw from it.  Every pension system, healthcare system and sovereign debt load in the left-hand column of that table is priced off an assumption that is becoming untrue.

Two outliers worth naming:

South Korea is the extreme case, and it is instructive rather than merely alarming. Median age moves from 45.6 today to 56.7 by 2050.  Korea’s response has been to become the most automated economy on earth, with 1,220 industrial robots per 10,000 manufacturing employees.  This is roughly three times Germany’s figure and four times America’s.  When labor disappears that quickly, automation stops being a productivity choice and becomes a substitution requirement.  Korea is running the experiment everyone else will eventually have to run, and it is worth watching closely for that reason.

China faces the largest absolute workforce contraction in recorded history.  This is the single most cited fact in the bearish case on China.  A shrinking workforce sets a ceiling on growth, but it does not by itself produce a crisis, and it says nothing about whether Chinese companies compete effectively.  Japan’s workforce has been shrinking for three decades without Japan ceasing to be a technologically advanced economy.

The American demographic advantage is real, but it is the only one of these four variables that is a policy choice rather than an arithmetic fact.  Essentially all projected U.S. population growth to 2050 comes from immigration.  Native fertility is below replacement.  A sustained change in immigration policy would move the United States toward the European profile within a generation.

Demography sets the growth ceiling and the fiscal burden.  It does not set asset returns.  Shrinking countries can have excellent equity markets, and growing ones can have terrible ones.  It matters most in the long-dated liabilities of governments and pension systems.

II) Energy: Dependence Is About Routing, Not Percentages

The conventional framing asks what share of a country’s energy is imported.

Net Exporters:

• United States ~112%
• Canada nearly 200%, Brazil is self-sufficient

Heavy Importers:

• Japan imports ~87%, South Korea ~80%, Italy, ~77%, Germany ~66%
• European Union (EU) Aggregate ~57%

These numbers are useful, but 2026 has provided us with clean demonstration of why this is incomplete

What the Strait of Hormuz taught us

Since late February, the Strait of Hormuz has been effectively closed.  Marine insurance for transits became unavailable or prohibitively expensive, crews declined to sail, and Gulf crude exports fell roughly 47%.

No percentage of national import dependence predicted the distribution of pain:

Japan, which scores worst on the import ratio, absorbed the disruption comparatively well.  It holds roughly 240 days of strategic reserves and has spent forty years planning for precisely this.

China, which scores well on overall self-sufficiency at about 84 percent, was among the most exposed, because the portion it does import is concentrated in crude oil arriving through two chokepoints, Hormuz and the Strait of Malacca, neither of which it can secure.

The right question is not what share of your energy is imported.  It is how many different routes it can arrive by, how much you can store, and whether anyone can stop it. Substitutability and routing, not ratios.

The outlier: France

France imports about 44 percent of its energy. This is comfortably the best position in continental Europe, and a very long way from Germany or Italy.  The reason is a decision taken in the 1970s to build out nuclear generation, which now supplies roughly 71 percent of French domestic electricity output.  Half a century later, that single policy choice separates an energy-secure European industrial base from an energy-constrained one.

We highlight it because it runs counter to the fatalism that often accompanies this kind of analysis.  Geography and demography are constraints a country cannot vote its way out of.  Energy position is substantially a policy variable, and the payoff horizon on getting it right is measured in decades rather than election cycles.

The practical investment implication is that energy security has now become a valuation input for industrial businesses rather than purely a commodity trade.  Two otherwise identical manufacturers, one in a jurisdiction with secure and cheap power and one without, no longer deserve the same multiple.

III) Trade: Deglobalization in Policy, Not Yet in Volumes

The dominant narrative since 2018 has been that globalization is unwinding.  In the policy layer this is absolutely true.  Tariff regimes have proliferated, supply chains have been rerouted on national-security grounds, and the share of world trade governed by most-favored-nation terms has fallen to roughly 72%.

The volumes have not cooperated.  Global trade in goods and services reached approximately 34.65 trillion dollars in 2025, up about 7 percent, with trade growth of roughly 4.7 percent comfortably outpacing global GDP growth of 2.9 percent. Merchandise trade volume still grew 3.2 percent year-over-year in the first quarter of 2026 ( through a Middle Eastern war and a closed Hormuz) as AI-related electronics demand offset the disruption.

This matters because positioning has been built on the assumption that trade volumes would contract.  They have not.  Instead, trade has reorganized along political lines, with aggregate volume roughly unchanged.  Those are very different investment conclusions.

Who is actually exposed?

Export dependence varies enormously across large economies:

High exposure: Germany (~43% of GDP), South Korea (~44%)
Medium exposure: France, Italy, UK, Canada (low 30s)
Lower exposure: Japan (~22%), China (~20%), India (~21%), Brazil (18%)
Least exposed: United States (~11%)

Two refinements change how those numbers should be read.

First, Germany’s figure overstates the exposure.

A large share of German exports consists of imported components assembled domestically, so the value actually created in Germany is closer to 29 percent of GDP than 43.  Gross export ratios systematically exaggerate the vulnerability of countries that sit in the middle of supply chains.

Second, Canada’s figure badly understates it.

Canada’s roughly 34 percent looks moderate until you note that approximately three-quarters of it goes to a single customer.  Concentration is the risk variable, not the level.  Canada has the most concentrated trade dependency in the developed world, and it depends on one government’s trade policy.

The United States is the least exposed large economy to trade disruption, and is therefore the most willing to cause it.  That is not a political observation; it is arithmetic.  An economy where trade is 11 percent of output has structurally more leverage in any negotiation than one where it is 43%.

This asymmetry is, in our view, the most durable source of American negotiating power, and it is likely to be used more, not less, over the next decade regardless of which party holds office.

IV) The External Balance Sheet and Why America’s Weakness Is Everyone’s Weakness

The fourth variable receives the least attention and is the most consequential.  A country’s net international investment position measures what it owns abroad minus what foreigners own of it.

It answers a simple question: is a country a net debtor or net creditor to the world?

The answer inverts almost everything the first three sections implied.

Net international investment position as a share of GDP. U.S. figure per Bureau of Economic Analysis, Q3 2025; Japan per Ministry of Finance, year-end 2025; Germany, Italy and France per Eurostat, September 2025. Others estimated from IMF and national sources.

Japan, Germany and Korea are the three economies the demographic and energy lenses condemn most harshly, but they are all substantial net creditors to the rest of the world.  Japan carries perhaps the heaviest debt burden of any developed nation and is simultaneously the world’s largest net creditor.  The United States scores well on the rest of the metrics, but here it is the world’s largest net debtor.

The U.S. net international investment position stood at negative 27.6 trillion dollars as of the third quarter of 2025, approximately -90 percent of GDP.  In both absolute and relative terms, this is the largest net external liability any nation has ever accumulated.

It does not mean the United States is about to face a funding crisis. It does mean that a substantial and growing share of American equities, Treasuries, real estate, and corporate credit is owned by people who live elsewhere, and whose willingness to keep owning them is guaranteed by nothing other than the arrangement’s continued attractiveness.

Here is the part the part that most people miss, and why I am closing on this point.

America’s external deficit and the world’s export surpluses are the same transaction viewed from opposite ends.  Germany’s positive 79 percent and America’s negative 90 percent are not independent facts about two countries.  They are accounting counterparts.  An economy cannot run an export-led growth model unless somewhere else runs the corresponding deficit and absorbs the goods.  For forty years, the United States has been that somewhere else.

This has three implications that follow directly.

The position cannot correct in isolation.  A meaningful reduction in the American external deficit requires the surplus economies either to find another buyer at comparable scale or to stop producing the surplus.  There is no other buyer at that scale, which is exactly what the trade section showed.  The United States is the least trade-dependent large economy because it is the consumer of last resort, not despite it.  A narrowing of the U.S. deficit is, by construction, a demand shock to Germany, Japan, Korea, China and every economy downstream of them.

The dollar is the plumbing, not merely a holding.  Reserve currency status is not principally about central bank reserve allocations.  It is about the currency in which cross-border trade is invoiced, in which commodities are priced, and in which the world’s short-term credit is extended.  A disorderly repricing of American external liabilities would transmit through the settlement system that clears everybody’s trade, not just America’s.  This is why the dollar has repeatedly strengthened during crises that originated in the United States.  The plumbing and the asset are the same instrument.

The adjustment is therefore more likely to be slow and planned than fast and disorderly.  Think of this as leading to another Bretton Woods agreement between nations.  The constraint is real, but the mechanism is mutual dependence rather than a run.  The more probable path is not foreign investors deciding to stop funding the United States; it is a gradual repricing expressed through the exchange rate and the term premium demanded on long-dated US Treasury yields.

Positioning for that does not require predicting a rupture.  It requires recognizing that currency exposure, real asset exposure, and duration positioning are each extremely important decisions in this shifting sand.  We are happy to discuss how this is reflected in individual portfolios.  Now is not the time to default to a simple 60/40 portfolio.