We use cookies that are necessary to make our site work as well as analytics cookie and third-party cookies to monitor our traffic and to personalise content and ads.
Please click “Cookies Settings” for details on how to withdraw your consent and how to block cookies. For more detailed information about the cookies we use and of who we work this see our cookies notice
Necessary cookies:
Necessary cookies help make a website usable by enabling basic functions like page navigation and access to secure areas of the website and cannot be switched off in our systems. You can set your browser to block or alert you about these cookies, but some parts of the site will then not work. The website cannot function properly without these cookies.
Optional cookies:
Statistic cookies help website owners to understand how visitors interact with websites by collecting and reporting information
Marketing cookies are used to track visitors across websites. The intention is to display ads that are relevant and engaging for the individual user and thereby more valuable for publishers and third party advertisers. We work with third parties and make use of third party cookies to make advertising messaging more relevant to you both on and off this website.
Rethinking stability: investing in a multipolar world
key takeaways.
The post-Cold War unipolar order is giving way to a multipolar world, with powers like China, India, and the expanded BRICS alliance playing increasingly influential roles in trade, security, and geopolitics
US tariffs on China, India, and even long-time allies the EU illustrate that economic tools are central to strategic influence, forcing countries to diversify trade partners and rethink supply chains
Trump’s threats and an aspirational 5% spending target have exposed cracks in the NATO defence alliance – in response, Europe is accelerating defence spending, industrial integration, and strategic autonomy
In a multipolar world of unpredictable trade policies, geopolitical tensions, and evolving alliances, effective investment strategies require flexibility, diversification, and a big-picture view on emerging opportunities.
The date is 1 January 2000.
Though a new millennium has dawned, little has changed – the world is a place of certainty.
US economic and military might has created a unipolar world. Liberal democracy is advancing. International institutions – such as NATO and the World Trade Organisation – are expanding and strengthening. Globalisation and trade interconnections are also accelerating, making wealthy nations wealthier and lifting millions of the world’s poorest people out of extreme poverty. Though in some parts of the world US involvement is unwelcome at best, there is no doubt that the West is in the ascendancy, and little sign this is about to change.
Today, this world is upside down.
Watch our manifesto video: rethink stability
Globalisation is rapidly on the retreat, as the international community fragments into a new and still-forming ‘bloc logic’. We are shifting towards a multipolar world. Interdependence has gone from strength to vulnerability. US hegemony is in question. And even democracy itself is facing new threats – from reinvigorated autocratic governments and a flood of misinformation amplified by technological advances such as social media networks and artificial intelligence (AI).
We believe that portfolio resilience and long-term growth will come from seeking out the myriad opportunities being created as a new multipolar world takes shape
In times of chaos, we all crave stability – but in today’s economy, it isn’t easy to find. For investors, as the world seems to lose its balance, it’s only natural to slow down and dig in.
At Lombard Odier, however, we find balance through movement. We believe that portfolio resilience and long-term growth will come not from retreat, but from seeking out the myriad opportunities being created as a new multipolar world takes shape.
Sign up for our newsletter
Interdependence – a new vulnerability
Global interconnection was once a hallmark of the unipolar world, creating efficiency and economic growth. In today’s multipolar world, however, its vulnerabilities are increasingly exposed. According to the World Bank, countries that have reduced trade barriers and integrated supply chains have seen multiple benefits,1 but in 2020, as Covid hit and supply chains broke down, governments and consumers discovered that ultra-efficiency is inevitably accompanied by a lack of resilience.
This has since been compounded by war in Ukraine, which disrupted energy flows and caused a spike in the price of commodity foods and fertilisers2; and geopolitical tensions, which have seen major exporting nations restrict exports of key materials and products. In April 2025, for example, China implemented export restrictions on seven rare earth elements needed by carmakers. Though the restrictions applied only to the US, the integrated nature of global supply chains meant that manufacturers in Europe and Japan were also briefly forced to suspend production.3
According to Michael Strobaek, Lombard Odier’s Global CIO, “In this new fragmented world, interdependence is no longer a source of efficiency – it’s a vulnerability. Nations must secure their supply chains, energy, defence, and technology to be prepared for the long haul.”4
In this new fragmented world, interdependence is no longer a source of efficiency – it’s a vulnerability
Trump tariffs – old alliances under threat
US President Donald Trump’s imposition of widespread tariffs reflects the rise of a multipolar world, where nations prioritise domestic resilience over global interdependence. A White House statement accompanying the launch of his 2 April ‘Liberation Day’ tariffs said, “Large and persistent annual US goods trade deficits have led to the hollowing out of our manufacturing base and undermined critical supply chains. […] Made in America is not just a tagline – it’s an economic and national security priority.”5
While the intention behind the tariffs was clear, their erratic implementation has roiled markets and left businesses and investors disoriented. In just a little over two months, China saw tariffs of first 10% then 20%, followed by a tit-for-tat escalation that led to tariffs of 145%, before they fell back to 30% while negotiations took place. At the time of writing, the 30% level remains in place until 10 November 2025, while further negotiations take place.6
Meanwhile, US strategic partner India has been branded a “dead economy” and hit with tariffs that have risen to 50% as punishment for the country’s ongoing purchases of Russian oil.7 (Despite this, India’s exports still rose by almost 7% in August8, and it is pursuing new trade agreements with the EU – all while Trump urges EU members to consider tariffs of up to 100% on both India and China9.)
Investors are used to dealing with risk – such as inflation and recession risks – but this is real uncertainty
Even staunch allies the EU – which Trump had accused of treating America “very unfairly”10 – have been forced to accept 15% tariffs as part of a deal that includes EU purchases of USD 750 billion of US energy in the coming years.11 Switzerland has been struck harder still, with the surprise imposition of 39% tariffs, the highest of any Western nation.12
The change has been so quick and unpredictable, and the threats to established political alliances so grave that, according to Michael Strobaek, “The settled order of security and economics is being shredded and written anew almost daily. Investors are used to dealing with risk – such as inflation and recession risks – but this is real uncertainty.”
Even NATO, the defence alliance that for so long appeared inviolable and a symbol of unipolar stability, is now under threat in today’s multipolar world. Having long complained that America’s fellow NATO members had failed to meet their defence spending commitment of 2% of GDP, in March 2025 President Trump renewed his warning: “If they don’t pay, I’m not going to defend them,”13 he said.
With war in Ukraine continuing, the comments sent shockwaves through an EU bloc feeling under renewed threat from Russia. The response was swift and potentially seismic – at the June 2025 NATO summit in The Hague, leaders agreed in principle to a massive increase in defence spending, to 5% of GDP. While presented as a historic show of unity against Russia, the pledge is widely seen as aspirational rather than binding, with uneven enthusiasm, and an indication from Spain that it will stick to pre-existing commitments14. Furthermore, the decision masked the cracks that have formed between the US and Europe – later that same day French President Emmanuel Macron cautioned, “We can’t say to each other, among allies, we need to spend more [on defence]...and wage trade war against one another, it makes no sense.”15
In a sign that Europe is now determined to build defence at home, President Macron has since called for France to increase its defence spending by EUR 3.5 billion in 2026, and a further EUR 3 billion in 202716; Germany has made the historic decision to exempt defence spending from its strict debt brake and create an EUR 500 billion fund for defence and infrastructure investment17, though constitutional and political questions remain about the fund’s final structure18; while the EU’s dedicated ReArm Europe plan will enable EUR 800 billion of spending to boost member states’ defence capabilities19.
Investing to secure strategic industries
These huge spending plans are a clear sign that today’s uncertainties need not mean reduced investment opportunities. In addition to defence, some of the world’s biggest economies are making major efforts to boost security across a number of strategic industries, including energy, technology and infrastructure.
In India, for example, Prime Minister Modi has announced an ambitious plan to achieve energy self-reliance by 2047, with nuclear capacity to increase 10-fold and a circa USD 340 billion investment in renewables.20 Similarly, in Europe, the REPowerEU strategy will mobilise around USD 300 billion to end energy imports from Russia21 – which just four years ago was supplying the majority of the bloc’s oil and gas22 – and boost the rollout of domestic renewables.
In the US, Taiwan Semi-Conducting has announced a USD 100 billion investment to boost America’s semi-conducting manufacturing capability23, aligning with the vast public-private USD 500 billion Stargate artificial intelligence (AI) project24 which will build data centres and other AI infrastructure across the country.
Meanwhile, Japan’s Economic Security Promotion Act is a sweeping effort to reduce vulnerability to geopolitical shocks or supply chain coercion, by offering billions of dollars’ worth of subsidies to domestic of subsidies to domestic suppliers in numerous critical sectors, including semi-conductor computer chips, batteries, and fertiliser production.25
Old certainties are disappearing so quickly it can feel as if what was up is now down, what was backwards is forwards
Balance in an unstable world
As President Trump’s tariffs have hit, the value of the dollar has plunged, seeing its worst H1 for more than 50 years.26 There has since been a sharp fall in foreign investor demand for US long-dated Treasuries, traditionally seen as the safest of safe havens.27
At the same time, China continues to flex its geopolitical muscles. September’s huge military parade – in which an array of innovative new weapons was displayed – was seen as a direct message to the US and its allies. In a sign that US hegemony is at an end, President Xi, who was joined by more than 20 world leaders, including Russia’s President Putin and North Korea’s Kim Jong Un, declared, “We should continue to unequivocally oppose hegemonism […] and stand as a pillar in promoting a multipolar world.”28
With China’s rise as an economic and military power, the expansion of the BRICS economic alliance such that it now covers half the global population and more than 41% of the global economy29, and the signing of a mutual defence pact between Saudi Arabia and nuclear-armed Pakistan30, it’s clear that the unipolar world order is over. We are entering a new, still-forming multi-polar age.
At Lombard Odier, we understand that these are unsettled times. Old certainties are disappearing so quickly it can feel as if what was up is now down, what was backwards is forwards. Across more than two centuries, we’ve seen the economic and geopolitical landscape realign many times before – including today’s multipolar world. Through it all, our approach is to rethink the world around us, understanding that change is inevitable and need not be feared.
We believe that in today’s multipolar world, long-term growth and portfolio resilience will be achieved not by digging in and waiting for the world to evolve around us, but by taking an active approach – searching out and seizing the opportunities created as governments re-invest in their domestic security.
Because we know that in times of chaos, stability is not static – it is constantly created.
This is a marketing communication issued by Bank Lombard Odier & Co Ltd (hereinafter “Lombard Odier”).
It is not intended for distribution, publication, or use in any jurisdiction where such distribution, publication, or use would be unlawful, nor is it aimed at any person or entity to whom it would be unlawful to address such a marketing communication.
share.