Linking Kazan to US Tariffs: Geopolitical Bifurcation of Global Trade and Finance

In the latest and clearest move yet, the United States has openly targeted the physical infrastructure of global trade. On April 17th, the U.S. Trade Representative revealed plans to impose port fees on ships docking in U.S. ports.

The fees will be based on net tonnage and container volume, starting at 18 dollars per ton for non-Chinese operators and 50 dollars per ton for Chinese-owned vessels, with a structure set to increase over time. A grace period of 180 days has been granted before implementation in October 2025, along with partial exemptions and caps.

With this, the United States has formally ended the era of neutrality in global shipping. Vessels carrying world commerce are now judged by their political origin.

From the major tariff announcements to the latest shipping penalties, many interpret these moves as isolated acts driven by domestic political pressures. However, looking closely at the reality, these moves are symptoms of a deeper fracture and realignment of global trade and finance.

And the roots of this realignment trace back to the BRICS Kazan summit held in October 2024, where China and Russia, through BRICS, presented the first structural challenge to the foundations of the Western-dominated global financial system.

The Kazan Link to U.S. Tariffs and Penalties

Trade and finance have always been two sides of the same coin. One side enables the flow of goods, the other enables the movement of money to pay for those transactions. Without one, the other cannot function.

For decades, as the reigning superpower, the United States dominated the flow of money through the SWIFT network, which intermediates over 90 percent of international payment flows even today. Simultaneously, it exercised quiet control over global trade by anchoring the insurance and reinsurance industries that underwrite maritime commerce. Given the inherent risks of ocean trade, no vessel moves without insurance. And all insurance companies require reinsurance. The reinsurance firms that dominate world trade are almost entirely of Western origin.

Before the rise of China, the United States also dominated global manufacturing. However, over time, the manufacturing base shifted decisively to China. Today, China accounts for nearly 28 percent of global manufacturing output, embedding itself into supply chains across electronics, textiles, machinery, and pharmaceuticals.

With the shift of the global manufacturing base, what emerged was a deep but unstable interdependence: the United States controlled finance, while China controlled physical production. Together, they ruled global trade and finance. The side controlling money is always more powerful. So, even in this equation, the U.S. reigned supreme.

It is this challenge to the established order that has brought us to the current realignment.

While Washington’s strategic concerns about China long predate 2024, the BRICS Kazan summit served as the strongest signal yet of an alternative architecture being built. The BRICS announcement of a multilateral reinsurance company, along with public discussions on expanding non-dollar trade settlements, crystallized what had been building quietly: an intent to reduce exposure to Western oversight in both payments and risk infrastructure. Essentially, this challenged the monetary supremacy of the U.S.

Geopolitical Bifurcation of Trade, Finance, and Supply Chains

Although the operational scale of these initiatives remains modest, their strategic symbolism is powerful and shows a clear direction for the future. Once the alternative financial infrastructure is in place, the shifting might just require intent. The Kazan announcements made the intent explicit: to bypass Western chokepoints like SWIFT and Lloyd’s, challenging U.S. monetary supremacy.

The signals of Kazan were clear. The U.S. may not be able to hold global finances in its clutch for long. The challenge was clear and upfront, announced at a multilateral grouping of BRICS, which itself was expanding very fast.

The question before the U.S. was what it could do to counter the same. Sanctions were out of bounds, both because of the number of countries involved in BRICS initiatives and because the United States' ability to sanction rests on its control over global finance—the very control now under challenge.

In response to this challenge to the finance side of the global trade equation, what the U.S. therefore opted to do was challenge the other side of the equation—viz., the production side of the global supply chain. And within six months, we had the U.S. imposing heavy tariffs worldwide, with China being the primary target.

Since the tariff war began in early April, we have seen a rapid evolution, with most countries opting for negotiations, except China, which still reels under 100 percent tariffs. The most recent levy of penalties on Chinese-made ships by the U.S. cleanly fits into this evolution.

The old global trade equations that held for nearly three decades are collapsing. Two parallel systems are now visibly taking shape: a United States-led bloc and a China-led bloc, each trying to complete what it lacks.

The United States is building its manufacturing base and partnerships. China is building its financial and payment networks.

The Fragmentation of Freight, Finance, and Commodities

The bifurcation is no longer theoretical. It is unfolding in real terms across freight, finance, and commodities.

Shipping is no longer neutral. The recent penalties on Chinese-built ships mark the beginning of a politicization of freight routes. Vessels are being classified by their origin. Insurance premiums will increasingly vary based on geopolitical risk.

Financial flows are realigning. South-South trade, increasingly settled in non-dollar currencies, now constitutes nearly 15 percent of emerging market trade. Russia has rerouted much of its commerce onto ruble-yuan settlement rails. India and the UAE have conducted crude oil transactions settled in rupees.

Even commodities are fragmenting. China and Russia are pushing for non-dollar benchmarks in energy and metals. Indonesia and India are exploring gold-linked trade settlements. Dual pricing mechanisms are emerging, where the same commodity has different values based on the political alignment of buyer and seller.

Europe’s Cautious Response

While the United States and China are clearly leading the process of bifurcation, Europe finds itself caught in a complex position. Economically, major European economies like Germany and France are deeply tied to China through exports and investments. Politically, however, Europe remains aligned with the United States through broader transatlantic security frameworks.

Faced with this dilemma, Europe has begun advocating for a strategy of "de-risking" rather than outright decoupling. The European Union has signaled that while it seeks to reduce overexposure to Chinese supply chains, it does not intend to sever economic ties completely.

This approach reflects Europe's attempt to maintain access to both sides, but such a balancing act will become increasingly difficult. As trade routes, payment systems, and even regulatory standards begin to fragment, Europe's space for neutral engagement will narrow over time. The global system that allowed Europe to play both sides comfortably is disappearing.

India’s Strategic Opportunity in a Divided World

Amid this reordering, India is uniquely positioned as the only large economy that enjoys strategic trust while maintaining autonomy, with the scale to absorb manufacturing shifts, the demographic advantage to power a growing workforce, and the institutional capacity to anchor new financial flows. This makes India attractive to both blocs, but particularly to the Western bloc.

For India, this is a rare historical moment. It is not just an opportunity to attract investment or gain manufacturing share. It is a chance to establish itself as a trusted and foundational node in the emerging bloc-centered global economy.

The choices India makes over the next few years in strengthening its supply chains, maintaining financial autonomy, and deepening trusted partnerships will determine whether it can truly emerge as a balancing power in this new global order.

What Lies Ahead: A Fragmented and Strategic World

The bifurcation of global trade and finance is unfolding before us. From the Kazan summit's signals to U.S. tariffs and penalties, the global commons is breaking into corridors governed by geopolitical blocs and political alignment.

For businesses, navigating this environment will require more than operational efficiency. Companies must build resilient supply chains, diversify financial settlements, and assess partners based on geopolitical alignment alongside economic viability. Strategic hedging and adaptation to dual regulatory systems will become essential.

The future will not be a neat division into two camps like during the Cold War, but a complex world where economic access is increasingly determined by geopolitics. Strategic corridors will replace shared global routes. Countries and companies that adapt early to this architecture will gain lasting advantages.

For India, this moment is both an opportunity and a test. By deepening manufacturing capabilities, securing critical technologies, and maintaining strategic autonomy, India can emerge as a foundational pillar in the emerging global order.