Geopolitical radar: Another military conflict erupts

In this month's edition we conclude that while the Trump administration has paused most Liberation Day tariffs, uncertainty, in many ways, remains very high. The US-China trade talks are set to begin, which is positive. Same time, a new military conflict has erupted in Asia, between arch enemies India and Pakistan.

In our editorial, we discuss how the BRICS has become the unexpected defender of the multilateral world order. The expanded BRICS+ soon makes up 40% of global GDP and represents roughlyhalf of the world population. So, it is understandable these countries want a bigger say on global matters. A key objective for the BRICS+ is to challenge the dominance of the US dollar in the financial system. That challenge remains: almost 90% of daily FX transactions globally involve US dollars, app. 50% of payments are made in USD, and close to 60% of central bank reserves are held in dollars. Renminbi's shares in each are 7%, 4% and 2% respectively.

But as the Trump administration makes no distinction in how it punishes enemies and allies, the BRICS+ call for a more multipolar world is as appealing as it gets. Interestingly, attitudes in the West may have shifted as well. A good example is that China is really making an effort to ease tensions with the EU, and the EU seems responsive. BRICS+ has a long way to go and it may never become a credible challenger to the US-dominated financial system, but if there was ever a point in time such a momentum could start to build, this might be it.

In our Ukraine update, we wonder how long Russia can sustain the current high casualty rate, and whether Trump loses patience in the peace talks. In our China section, we outline our base scenario for where the tariffs are likely to land if and when the US and China have reached an agreement. In our Middle East update, we write about how Israel has again expanded its offensives, not just in Gaza but also in Syria. The only positive is that the Trump administration blocked Israeli plans to target Iranian nuclear facilities, and is pursuing a diplomatic path instead.

As always, interesting developments under the radar as well: the India-Pakistani conflict, the UK-India trade deal and the fluid Sudan proxy war.

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