United States: Trump's Victory Creates High Stakes for Global Businesses

With the unexpected but resounding victory of Donald Trump in the 2024 U.S. election, global politics are once again set for a seismic shift. His win, echoing 2016, has reignited discussions around "America First" policies, which emphasize cutting back on foreign commitments to prioritize domestic concerns. For allies, rivals, and nations entangled in prolonged conflicts like Ukraine and Gaza, Trump’s return to office stirs both apprehension and anticipation.

For Ukraine, U.S. aid has been a cornerstone of its defense in the ongoing conflict, but Trump’s approach suggests a new trajectory. He has openly questioned the necessity of extensive aid to Ukraine, arguing that such resources might be better directed at domestic issues. Analysts warn that a reduction in aid could embolden Russia and potentially shift the balance of power in Eastern Europe. In response, the European Union might face increased pressure to step in, as noted in an Atlantic Council report, which cautions that such a shift could strain NATO allies and drive them to boost their defense investments to ensure regional security.

In Russia, however, officials have cast doubt on Trump’s rhetoric. Russian official Dmitry Medvedev noted that U.S. internal forces may compel Trump to maintain some level of support for Ukraine. Medvedev also argued that a swift resolution to the conflict might not align with U.S. stakeholders’ interests in sustaining influence over Eastern Europe. Kremlin spokesperson Dmitry Peskov suggested Trump’s claims of ending the conflict "overnight" are likely exaggerated, though he admitted that an American administration genuinely seeking peace could be more favorable than prior ones.

In the Middle East, Trump's policy shift is expected to have equally profound effects. On November 1, during a visit to Michigan, he confidently proclaimed that under his leadership, there would be peace in the region. Former CIA director predicted that Trump would grant Israeli Prime Minister Benjamin Netanyahu a "full carte blanche" approach, implying considerable freedom in regional policy and security. This would mark a stark departure from previous administrations that attempted to balance support for Israel with diplomatic constraints. According to AP News, this support may embolden Israel to intensify its actions in Gaza and assert itself more strongly in the region, potentially without significant U.S. intervention.

Trump’s return could also mean a renewed "maximum pressure" campaign on Iran, similar to the approach he previously championed. Measures could include sanctions and diplomatic isolation, heightening the risk of escalating proxy conflicts across the Middle East. The Middle East Eye warns that Iran, likely to resist such pressure, could respond through allied groups like Hezbollah in Lebanon or Houthi forces in Yemen, raising tensions across the region.

At the same time, Turkish President Recep Tayyip Erdogan has expressed hope that Trump’s administration might curb U.S. arms support to Israel. Erdogan has also conveyed intentions to work closely with Trump on the crises in Gaza, aiming to position Turkey as a mediator.

These foreign policy shifts are not only geopolitical but have significant implications for specific business sectors. The defense industry, which has benefited from U.S. military support to allies, may experience a downturn in demand if aid to Ukraine is curtailed. Companies previously engaged in supplying arms to U.S.-backed nations may face decreased orders, compelling them to seek new markets. Politico highlights that defense spending among NATO allies could see a corresponding increase, as European nations might compensate for reduced American involvement by expanding their own military capacities.

The energy sector could experience both opportunities and disruptions under new administration. Europe has sought to decrease its reliance on Russian energy, with a pivot to U.S. liquefied natural gas imports. Trump’s commitment to American energy independence, including fossil fuels, aligns with European demand for alternative energy sources. However, Trump’s tendency toward protectionist policies, particularly with tariffs, could introduce trade tensions that might complicate these energy partnerships. Industry experts anticipate that U.S.-based energy firms may benefit from increased exports, but caution that global energy prices could be destabilized by these geopolitical shifts.

Trump’s re-emergence also revives his earlier focus on renegotiating trade deals, potentially targeting countries like China and members of the European Union. In a second term, he may seek to renegotiate terms for U.S.-EU and U.S.-China trade, potentially re-imposing tariffs that had strained global trade flows in his first term. For businesses with extensive international supply chains, this could mean higher costs and increased barriers to entry in key markets, creating pressure to relocate operations or diversify suppliers.

Additionally, his administration may emphasize reshoring U.S. manufacturing, incentivizing companies to bring production back to the U.S. This could present both challenges and opportunities: companies with extensive overseas operations might face additional taxes or tariffs, while businesses that comply with reshoring efforts could benefit from tax incentives or government contracts.

Trump’s policies are also expected to focus on protecting American technology and intellectual property, particularly from perceived threats like China. This could involve restrictions on Chinese tech firms operating in the U.S., creating a challenging environment for tech businesses that operate globally or rely on Chinese partnerships. Companies such as semiconductor manufacturers might also be impacted if Trump revives efforts to restrict technology exports to China, potentially limiting their access to a massive consumer base and supply of rare materials.

Ultimately, Trump’s presidency once again raises questions about the future of U.S. global leadership. The Atlantic Council underscores that rivals like Russia and China could capitalize on a reduced American footprint in conflict zones, as the U.S. moves toward a less interventionist stance. China’s potential expansion in the Asia-Pacific region, for instance, or increased Russian influence in Eastern Europe might recalibrate the strategic balance. Some experts suggest that while Trump’s foreign policy may align with domestic interests, the consequences for international stability are complex and far-reaching, affecting peace, alliances, and the balance of power across multiple regions.

In closing, Trump’s policy directions will likely increase geopolitical uncertainty, which typically translates into market volatility. As companies and investors attempt to predict potential tariffs, sanctions, and trade deals, global markets might see more frequent fluctuations. Businesses with multinational operations may face new regulatory risks, tariff pressures, and supply chain disruptions, leading them to reassess their market strategies, prioritize diversified sourcing, or relocate manufacturing to mitigate these risks.

In light of these shifts, businesses may need to consider strategic responses to a more protectionist U.S. policy. This could include reinforcing contingency plans for supply chain disruptions, strengthening regional operations in stable markets, and proactively engaging with policymakers to navigate shifting trade policies. For sectors reliant on cross-border trade or international investment, Trump’s presidency could prompt a need to adapt and innovate to remain competitive amid a changing landscape.