World leaders gather at the UN next week bracing for a crisis they can't quite see

Fred Kempe
Over the weekend, the United States and China agreed to put their bilateral trade war on hold for 90 days to negotiate lingering disagreements but the deal downplayed two crucial areas: forced technology transfers and intellectual property theft.

The 73rd United Nations General Assembly opens on Tuesday in New York with world leaders bracing for the next global crisis – and the rest of us uncertain about what they would do if it comes.

Don't be fooled by the fact that U.S. markets hit record highs this past week, that global growth remains steady, or that the Trump administration in its first two years has escaped any crisis of the sort that came with the 9-11 terrorist attacks of 2001, the 2003 Iraq War or the Lehman Brothers meltdown of 2008.

In my many years of taking the global pulse around UN week, where more than 120 leaders will gather, I've seldom seen or sensed such uneasiness and uncertainty. I've never known a time when the potential sources of volatility have been so widespread geographically.

The debate, hence, has become less about the likelihood of a crisis and more about what form it might take, with what severity it will strike, and whether world leaders will have the capacity to contain it. They worry above all that America looks unbalanced to them, and thus the default source of stability during such a crisis feels like more of a wild card.

Reporters next week will focus their attention on what President Donald Trump says in his speech to the General Assembly at the opening and again a day later, when he personally chairs a special session of the UN Security Council on stopping nuclear proliferation. (Expect a mixture of vilifying Iran and praising North Korean leader Kim Jong Un , whom he branded as "rocket man" on the same stage last year.)

However, excessive focus on Trump's words would miss the more consequential story. A crisis is brewing in the cauldron of excessive debt, growing trade tensions and mounting geopolitical risk. The stakes are historic in nature during our new era of global competition, characterized by Chinese efforts to displace U.S. leadership, Russia's actions to disrupt it, and American uncertainty over how and whether to preserve it.

The list of potential sources of instability are many.

It could come in the form of economic war or financial crisis. Those odds grew this week with Trump's new tariffs on $200 billion of Chinese goods, China's return volley on $60 billion of U.S. imports and Trump's threat to turn the screw yet another notch.

It could come as a security crisis out of the Mideast, a prospect underscored by this week's Syrian shoot-down of a Russian military reconnaissance plane. Initially, Moscow blamed it on Israel, but the incident only underscores the perils of so many potent parties operating over contested territory. Mideast crises rarely remain within the region's borders, having expressed themselves as extremist ideology, terrorist strikes and refugee flows.

It could grow out of the political populism and nationalism that is unsettling Europe through Brexit, Italy's disruptive government, the rise of the German right and the new sanctioning of Hungary. European Union institutions have seldom faced so many simultaneous, centrifugal challenges

Historic shifts often come in clusters. Don't forget that the 2008-09 financial crisis, which weakened and distracted the United States, was accompanied by the Russian invasion of Georgian territory and Beijing's staging of the 2008 Summer Olympics, signaling the more assertive period ahead.

Worth watching most closely is how relations unfold with China. A U.S.-Chinese crisis, if not contained, could poison the most significant bilateral relationship for the global future.

Markets appear to be betting that Trump's new tariffs are merely another negotiating tactic, one that will ultimately result in a de-escalating deal. The real optimists even believe this trade conflict could create more value as China opens up markets and stands down from its unfair trade practices.

What that underestimates is that this drama may become about far more than trade for China. In a recent conversation, a Chinese official told me that his leadership is growing more concerned every day that Trump's real purpose isn't to get a deal but to undermine China's rise.

Chinese President Xi Jinping 's response will also be informed by historic memory of foreign humiliations past. It's worth remembering that the First Opium War in the early 19th century grew out of a trade deficit being settled. The British East India Company balanced a substantial trade surplus with the Qing Empire by paying for Chinese goods with opium it grew in India.

Though it's unlikely anyone at the White House was aware, Trump announced his tariffs just as the Chinese were commemorating the 87th anniversary of the Mukden incident, when a fake attack by dissident Japanese soldiers served as pretext for the Japanese invasion of Manchuria.

This trade fight could turn out being much more than a trade fight. Markets beware.

There's no doubt Trump has chosen the right trade target in China, but as The Wall Street Journal argues compellingly, he's going about the struggle all wrong. He should have first settled the trade fights he had started with his allies, whether over Nafta or in Europe, and he should re-enter the Trans-Pacific Partnership that he abandoned in the first days of his administration.

"Then lead a coalition to confront Xi Jinping from a position of strength with targeted trade enforcement rather than scattershot tariffs," writes The Wall Street Journal. "The real worry is that Mr. Trump supports tariffs for their own sake, and he may not want a China deal. With Donald Trump and trade, you never know."

Not knowing what drives U.S. behavior may result in misunderstandings or miscalculations that result in crises. Perhaps that's the bottom line for this year's UN General Assembly, which provides a better peg to reflect on global risks than a platform to address them.

Frederick Kempe is a bestselling author, prize-winning journalist and president & CEO of the Atlantic Council, one of the United States' most influential think tanks on global affairs. He worked at The Wall Street Journal for more than 25 years as a foreign correspondent, assistant managing editor and as the longest serving editor of the paper's European edition. His latest book – "Berlin 1961: Kennedy, Khrushchev, and the Most Dangerous Place on Earth" – was a New York Times best-seller and has been published in more than a dozen languages. Follow him on Twitter @FredKempe and s ubscribe here to Inflection Points, his look each Saturday at the past week's top stories and trends.

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