The World Has Changed, Four Years On: A Scorecard

In March 2022, three weeks into the war in Ukraine, I wrote in this space that the world had changed¹. The postwar institutional order that had delivered the greatest stretch of peace and prosperity in human history was, I argued, giving way to something older and more familiar to any student of history, in which strength and power supersede norms and rules. I flagged three concerns for business leaders: deglobalization, unreliable access to energy, and a risk to the dominance of the US dollar.

I spent the intervening years in the dean’s suite, where one’s predictions are mercifully unminuted. Having returned to the Kenan Institute, I owe readers a grade on the one set that was preserved. Academics, of course, are far more accustomed to assigning grades than to receiving them.

Deglobalization: Right on Direction, Wrong on the Noun

The 2022 claim was that economic activity would fragment along spheres of influence, that political risk would become first order, that resilience would prove costly, and that a reversal of the multidecade decline in tariffs would leave households paying more for lower-quality products.

The direction was right. The average US tariff rate, even after this year’s legal detours, sits near 11%, roughly four times the level that prevailed when I wrote.^2,3 US imports from China fell sharply in 2025, some of it genuine and some of it relabeled in Hanoi.⁴ The World Trade Organization expects merchandise trade volumes to grow only modestly this year, as last year’s frontloading unwinds.⁵ Resilience has proved costly in exactly the way I expected. Every executive I meet now contemplates a second sourcing plan and a line item for it that did not exist in 2019.

The noun, however, was wrong, because I expected blocs. I assumed the sorting would be done in Beijing and Moscow, with a coherent democratic bloc on the other side. What emerged instead is a hub that taxes its own spokes, and supply chains that treat a tariff as a routing problem rather than a border. The value of world goods trade rose about 6% in 2025, and both US imports and Chinese exports reached record levels; the goods simply took a longer route.⁶ The right noun was repricing, not fragmentation: the network did not break into pieces, its hub began charging tolls, and the traffic found its way around them. To be clear, a costlier and more political trading system is precisely what I forecast, and it arrived. I simply chose the wrong word and, more embarrassingly, the wrong architect. Grade: B-minus.

Energy: Right, Though It Took Four Years To Be Right

I argued that commodity markets would become less reliable, that energy prices would be both higher and more volatile, and that policy needed two prongs: push alternative technologies while leaning into the American production advantage that sidelines disruptive actors.

Events have been generous to this one. The Strait of Hormuz, through which a fifth of the world’s oil ordinarily passes⁷, has been closed or badly constricted for all but a few weeks since the first strikes on Iran in late February.⁸ Brent crude, the global benchmark for oil, has traded roughly a fifth above where it stood the week before those strikes, with daily swings that make a hedging program look either brilliant or foolish depending on the week.⁹ American crude and product exports set records this spring,¹⁰ and the difference between this shock and 1973 owes more to that fact than to anything else. The marginal barrel is now Texan. The two-pronged prescription also looks better with age. The countries that spent the decade choosing between energy security and energy transition, rather than pursuing both, are now paying the most.

Honesty requires a deduction. For three of the four years since I wrote, oil was lower and calmer than in early 2022.¹¹ The forecast was right only because 2026 arrived; I did not foresee a conflict of this scale. I will take credit for the framework and none for the timing (my students will recognize the arrangement). Grade: B-plus.

The Dollar: Right on the Reason, Wrong on the Beneficiary

The 2022 concern was the most speculative of the three. I noted that dollar dominance and the institutional order are intertwined and that weaponizing the dollar system through sanctions, however justified, would elevate the incentives for sidelined players to seek alternatives. I wondered whether cryptocurrency or China’s RMB might be the beneficiary.

On the headline, the answer is not yet. The dollar still accounts for roughly 57% of allocated global reserves on the International Monetary Fund’s latest count.¹² Neither crypto nor the RMB has come close to displacing it in cross-border commerce, and the Eurodollar system remains the plumbing of world finance.

The composition of the adjustment is more interesting than the headline. Official-sector gold purchases exceeded 1,000 metric tons in each of 2022, 2023 and 2024 and came in near 860 metric tons last year at record prices, a sustained pace without precedent since the Bretton Woods era.¹³ Valued at market, gold has overtaken the euro as the second-largest reserve asset in the world, though much of that, in fairness, reflects the price of gold rather than simply purchases.¹⁴ When central banks are asked why, they cite gold’s performance in a crisis, diversification and protection against geopolitical risk, which is a polite way of saying they want an asset that carries no national flag and cannot be frozen.¹⁵ This is precisely the mechanism I described in 2022, though I had the buyers wrong. I expected Moscow and Tehran; the largest single buyer for two years running has been Warsaw (an historically staunch NATO ally).¹⁶ Grade: C-plus.

The Harder Question

One part of the scorecard carries no letter grade, because the exam is still underway.

In 2022, I framed the risk to the dollar as coming from adversaries seeking a way around sanctions. The risk I did not anticipate is that the diversification impulse would come disproportionately from friends. The reserve currency, the treaty network, the open trading system, and the deep Treasury market are best understood as one arrangement viewed from different angles, and it is underwritten by alliances and credibility.

Let me be fair to the current American approach, because the case for it is serious. The postwar arrangement was underpriced. Allies spent below their defense commitments for decades, the trading system tolerated Chinese practices no one would have accepted from a smaller country, and a tariff is, among other things, a way to reopen a negotiation. Allied rearmament is the stated goal rather than an unintended cost. The distinction I would draw is between burden-sharing inside the arrangement, which was overdue, and burden-shifting out of it, which is what the evidence now describes.

That evidence accumulates without much drama. Canada has left its order for F-35 fighter jets under review for more than a year and has struck tariff deals with Beijing.¹⁷ The European Union has signed an agreement with the South American trade bloc Mercosur and concluded one with India, each stalled for decades and neither yet ratified.¹⁸ Applicants line up for a trans-Pacific trade pact the United States abandoned, whose members now account for about 15% of world output.¹⁹ Reserve managers report, on net, a modest intention to trim dollar exposure over the coming decade; the figure is in the single digits, but the sign has flipped.²⁰ Taken together, these decisions describe partners who have not left the house but now keep a bag packed by the door.

Of course, insurance is far easier to purchase than to cancel. Each of these decisions involves sunk costs — a newly qualified supplier, a ratified treaty text — and sunk costs are what turn a policy quarrel into something close to irreversible. Fatigue among allies does not clear like a market; it accumulates like a stock, and a relationship that has been unstitched over several years cannot easily be stitched back together over several months. Whatever one thinks of the policies that produced it, the arrangement underwriting the dollar is being renegotiated by our friends, at their initiative, on terms we will not get to set. That risk was not on my list in 2022, and I have no choice but to place it at the very top now.

What to Do with This

For the business leader, the implication is not comfortable, but it is straightforward. Political risk used to be a line item for overseas subsidiaries. It is now a line item for headquarters, and sourcing decisions and capital budgets should be built accordingly. Energy exposure deserves the same discipline as currency exposure, and the dollar’s privilege, while intact, should be modeled as a variable rather than a constant in any plan with a horizon beyond a few years.

Resilience, I wrote then, is a form of insurance, and insurance is costly. I must admit that I did not anticipate our allies would be the ones buying it.

Grades are the author’s own and should be read accordingly.