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Introduction: Volatility Returns to Global Trade

As we move through the third quarter of 2025, the international economic landscape is defined by rising trade tensions, supply chain disruptions, and a resurgence of geopolitical risk. According to Adriano Bosoni, Director of Geopolitical Analysis at RANE, recent US trade policy shifts have ushered in a period of heightened uncertainty—one that is unlikely to dissipate soon. From tariffs not seen since the 1930s to a renewed scramble for rare earth resources, Bosoni argues that investors and businesses must brace for a radically changed environment.

Tariffs Surge to Historic Highs

While the United States has recently signed a series of agreements with major partners—including the European Union, Japan, the United Kingdom, and several Southeast Asian nations—Bosoni cautions against interpreting these deals as a return to free trade. “Virtually all of these agreements imposed a blanket tariff from 15% to 20%, and in some cases, like steel and aluminum, tariffs are much higher—up to 50%,” he explains.

The numbers are stark. “As of now, the overall average effective US tariff rate is around 18%, the highest level since 1934,” Bosoni notes. Just months ago, before the Trump administration’s latest moves, the average was a mere 2.5%. The result? “Within seven or so months, we’ve gone from 2.5% to 18% as the effective tariff,” a shift Bosoni calls “very indicative” of a broader move away from free trade.

Importantly, most of these new agreements are only framework deals, with key details and dispute mechanisms still under negotiation. “There is still a significant degree of uncertainty about what the United States’ trade relationship with the world will look like,” Bosoni cautions. Even moments after some deals were announced, disputes about implementation surfaced, highlighting the persistent volatility in global trade.

China’s Rare Earth Dominance: A Geopolitical Lever

Amid these shifting trade dynamics, rare earth elements have emerged as a strategic flashpoint. Bosoni is unequivocal: “I cannot stress enough how important rare earths are…everything from consumer electronics to space shuttles and weapons relies on rare earths for their manufacturing.” While rare earth deposits are globally dispersed, China wields near-total control over the processing and refining stages—handling between 80% and 90% of global capacity.

This dominance gives China enormous leverage in trade negotiations. “China knows that it has this tool that it can use to pressure the United States into a deal,” Bosoni says. Unlike the European Union, which sought a zero-for-zero tariff agreement and came away with a 15% rate, China has been willing to tighten its export regulations further, making clear its readiness to use rare earths as a bargaining chip.

While the US has begun tentative steps to reduce its dependency—such as recent investments in domestic mining with companies like MP Materials—Bosoni warns that these efforts are only “a drop in the bucket” compared to China’s entrenched position. He also notes that the US has shown flexibility in other areas, recently allowing select semiconductor exports to China despite earlier restrictions, signaling the high stakes and complexity of this strategic rivalry.

Trade Policy, Inflation, and the Federal Reserve

The surge in tariffs is not just a trade story—it is feeding directly into domestic inflation and complicating monetary policy. Bosoni explains, “If you have higher tariffs for your imports…sooner or later this translates into higher costs for consumers.” Whether through more expensive raw materials for factories or higher prices for imported goods, the impact will ultimately be felt by American households.

But tariffs are not the only source of uncertainty. Bosoni points to mounting concerns over the independence of the Federal Reserve, as political pressure mounts for rate cuts and even for changes in central bank leadership. “The independence of a central bank is one of the most precious things that a developed economy can have,” he emphasizes. “The minute you start playing around or questioning the independence of your central bank, financial markets, currency markets, even domestic and foreign investors start questioning whether or not this sacrosanct principle…will be weakened.”

This institutional uncertainty, combined with persistent fiscal deficits and rising interest expenses, is weighing on the US dollar. “Over the past few months, the dollar has lost 10-13% versus the euro,” Bosoni observes, tying the trend to both trade and institutional anxieties.

The Dollar’s Enduring Status—For Now

Despite these challenges, Bosoni remains skeptical that the dollar’s global reserve status is under immediate threat. “For the next few years, if not decades, the dominance of the dollar will continue, despite the challenges,” he asserts. No rival currency—neither the euro, with its own internal weaknesses, nor the yuan, constrained by capital controls—appears poised to displace the dollar anytime soon.

Yet Bosoni acknowledges that “the United States’ absolute and unchallenged financial supremacy may be fading.” While the dollar remains “very wanted and very desired,” the era of effortless dominance is likely ending, replaced by an environment of greater scrutiny and competition.

Russia-Ukraine: Stalemate and Sanctions

On the geopolitical front, the Russia-Ukraine conflict continues to resist resolution. “Russia right now is in a relatively comfortable situation,” says Bosoni, citing slow but steady Russian advances and a lack of urgent pressure to negotiate. Economic pain is mounting for Russia—rising inflation, a dwindling sovereign wealth fund—but not yet at levels that would force major concessions.

Recent US threats of secondary tariffs on Russian oil exports could trigger new rounds of talks, but Bosoni is cautious about expecting a breakthrough. “Russia is interested in keeping alive the fiction of a negotiation…without really making any meaningful concessions.” Until winter slows battlefield operations and economic pressures intensify, Moscow is unlikely to shift its stance dramatically.

Conclusion: A New Playbook for Business and Investors

In summarizing the landscape, Bosoni stresses the magnitude of change. “The contrast between pre-January and post-January effective US tariff rates is very representative of what the Trump administration is trying to do: redesign the way the United States works and interacts and trades with the rest of the planet.”

For investors and businesses, the message is clear. The age of low tariffs and frictionless globalization is over—at least for now. Navigating the coming months will require a keen awareness of policy shifts, geopolitical leverage points like rare earths, and the evolving interplay between fiscal, monetary, and trade dynamics. As Bosoni’s analysis makes clear, ongoing trade and policy volatility will continue to shape the landscape—bringing both risks and potential opportunities for investors in the months and years ahead.

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