In 2024, voters around the world chose change: in South Africa, France, Britain and Japan. But nowhere is the anti-government trend more important than in the United States. The global uncertainty created by power swings between right and left—from Barack Obama to Donald Trump to Joe Biden and back to Trump—has once again brought the world’s only military superpower to every corner of the globe. The region’s political and business leaders have been left scrambling for space. opportunities and threats.
Trump’s 2016 election came as a surprise to allies and adversaries in Europe, Asia, the Middle East and beyond, but it came in a context of relative international stability. His comeback victory has come in a dramatically more volatile—and dangerous—geopolitical environment. Trump must manage two wars and a US relationship with China that has become increasingly confrontational.
For business leaders navigating the next four years, there are important questions that must be answered.
Are we headed for a trade war with China?
Trump’s primary interest in China lies in its large bilateral trade surplus with the U.S. Trump has said he will impose significant tariffs against Beijing and third countries through which Chinese-made goods enter the United States. The president-elect says the strategy will bring more manufacturing and jobs to the US. For now, it seems likely that China will withstand some kind of backlash, even if it further slows China’s already rapid economic growth.
There’s one potential off-ramp to this escalation of the trade war with China: Trump’s new adviser, tech mogul Elon Musk, has told Chinese officials he can build a better relationship with the president-elect. Given Musk’s motivation to build Chinese market share for Tesla and a variety of AI ventures, he has every reason to try to win new friends in Beijing. There is a deal to be made here. Trump is not a bigot on tech, and he might be willing to care more about tech issues like the export controls that now block semiconductor sales to China to score points in economic sectors. are
But in 2025, US-China relations look very likely to deteriorate. Trump appears committed to a tough-on-tariff approach that he knows is popular with his closest trade advisers, congressional Republicans, and much of his political base.
Trump is also unlikely to handle relations with Taiwan as carefully as President Biden has, and Beijing will not hesitate to back down when Taiwan is an issue. We should expect US-China relations to take a significant turn for the worse in 2025 – with worrying implications for China’s stagnant economy.
Will Europe be united on Ukraine?
Regarding Russia’s war in Ukraine, Trump promised to end the killing quickly. To do so, it will need leverage with both Kiev and Moscow. The source of Trump’s power with Ukrainian President Volodymyr Zelenskyi is clear: Without continued U.S. support, Ukraine’s weapons and ammunition will run out early next year. It won’t be easy for Zelensky to offer Russia de facto control over occupied Ukrainian territory in exchange for peace, but his forces cannot sustain the fight without active support from the Trump administration.
279 billion dollars
US trade deficit with China in 2023 ($103 billion reduction from 2022)
Source: US Bureau of Economic Analysis
It is much less clear what Trump might do to Vladimir Putin. The Russian president is not easily swayed by US pleas and insists that time is on his side in Ukraine. But if Putin is offered concessions that would allow him to claim victory and ease Russia’s isolation from the West, he may be willing to scrap a deal that deviates from his previously stated goals. be less
Ukraine’s fate is more important to most Europeans than anyone in Washington, and America’s NATO allies fear that Trump will not share his Ukraine strategy with them. He can also leave them to read in the newspaper.
If Trump pushes Kiev into anything that looks like a capitulation, Poland, the Baltic states and the Nordic countries will feel a direct threat from Russia. But as the Russian offensive approaches the end of its third year, Europe is undoubtedly war-weary. Hungary’s Viktor Orbán and other right-wing politicians across Europe want normalized relations with Moscow. Even for countries that have pledged sustained support for Kiev, such as Germany, the cost of this policy is already high and rising.
Trade Policy Trump is now preparing for Europe’s affairs here as well. He threatened during the election campaign that he would consider Europe a “mini China” for refusing to buy American cars and agricultural products. Such an approach could lead to another trade war, as the US and Europe impose penalties in exchange for tit-for-tat. The drop in exports would be a major blow to Europe at a time when growth, particularly in Germany, is already faltering. Trade wars could also trigger a new round of inflation in the US by limiting the supply of all kinds of goods.
Trade pressures, combined with uncertainty over Ukraine, could force Europeans to unite — or it could force individual European governments to strike side deals with Washington, aimed at easing individual economic burdens. What they are carrying now.
Will Trump calm the Middle East, or increase its wars?
Trump’s strongest international ties are with Benjamin Netanyahu’s government in Israel and Mohammed bin Salman in Saudi Arabia. The crowning achievement of his first term’s foreign policy was the Ibrahim Accords, which normalized relations between Israel and several Arab countries, agreements that have so far survived the wars in Gaza and Lebanon.
The next logical step for Trump would be to extend this norm to Israel and the Saudis, which would be an economic and security win for both countries. Currently, Saudi officials continue to insist that any such deal would depend on the creation of a Palestinian state, a non-starter for most Israelis. Trump is the best guide to test Saudi resolve on this question.
As we move toward 2025, Israel’s war with Hezbollah in Lebanon is edging closer to a ceasefire before President Biden finishes packing. Now that Trump has won the election, Netanyahu can cut a deal that won’t give Democrats a political victory. In Gaza, violence is more likely to continue, as the Israelis are far more determined to “break” Hamas than Hezbollah, and Trump is unlikely to advocate for the creation of a Palestinian state or amelioration of Gaza’s humanitarian crisis. Keeping
Another question looms before the US regime change: Will Israel and the US go to war with Iran? Would Netanyahu risk a wide-ranging regional war by directly attacking Iran’s heavily fortified underground nuclear facilities? It’s a move that would send energy prices soaring as traffic through the all-important Strait of Hormuz could come to a screeching halt.
Political and business leaders are trying to identify opportunities and threats.
But Trump has regularly criticized President Biden for trying to stop Israeli attacks on the country. It was Trump who abandoned the Iran nuclear deal during the Obama presidency, and after ordering the assassination of Iranian Defense Chief Qassem Soleimani in January 2020, he was likely persuaded to do so when Faced with a combined US and Israeli military force, Iran will buckle.
How will the Global South fare?
Trump’s economic policies will strengthen the dollar and increase inflation, putting developing countries under more economic pressure. True to form, Trump is likely to have a positive relationship with hard-line populist leaders like Argentina’s Javier Meli and El Salvador’s Naib Buquel.
But Trump’s Middle East policy will further damage public perceptions of the United States in countries with large Muslim populations, particularly in Southeast Asia, and in many poor countries where governments already treat the United States as a role model. are less inclined to Instead, many of these countries may become closer to China—a trend that has unsettling geopolitical and economic implications.
What will Trump mean for America’s North American neighbors?
Mexico and Canada, America’s biggest trading partners after China, know they will face more economic pressure from Trump 2.0.
Mexican President Claudia Schönbaum will be in a particularly difficult spot.
The US-Mexico-Canada Free Trade Agreement is due for renewal in 2026. Trump will expect Sheinbaum’s administration to cooperate in limiting illegal immigration across the U.S.’s southern border and take a tougher stance on Mexican drug cartels, which are responsible for violent crime in both countries. Sooner or later, Mexico’s lack of leverage will likely force Sheinbaum to offer Trump something of his own accord.
That’s less true for Canada, especially if, as is expected, Populist Conservative Party leader Pierre Poilever becomes the country’s next prime minister in the coming months.
An economic libertarian, Poilievre is likely to push for deregulation and the repeal of current Prime Minister Justin Trudeau’s carbon taxes. He has said he is eager to prevent the loss of companies and workers in an environment conducive to growing business in America.
This article appears in the December 2024/January 2025 issue. good luck With the headline “Global Business Braces for Trump 2.0”
