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Greenland. The Panama Canal. The Gulf of America. Bold rhetoric from the incoming Trump administration challenges diplomatic orthodoxy and unsettles geopolitical dynamics, even where substance or clarity is lacking. Businesses should revisit geopolitical assumptions and accommodate evolving regulation and scrutiny. Most importantly – they should stay nimble.
As Control Risks explores in our annual global forecast, there is uncertainty about the direction in which Trump's leadership will take the United States and the world. What is certain is that great power geopolitics are back. Nations will reevaluate national strategic priorities and alliances, while the sanctity of international agreements will face heightened uncertainty.
A pressing conference
At a 7 January press conference in Florida, Trump expressed an interest in taking control of the Panama Canal and Greenland, including by military force or under threat of tariffs, as well as in renaming the Gulf of Mexico the “Gulf of America” and in the US taking over Canada. He also spoke about asking NATO members to increase defence spending further, having successfully secured concessions during his first term.
Allies and foes of the US alike have recognised a need to engage with Trump and his team, no matter how bold the rhetoric. For instance, since 7 January, Greenland has implied it will work with the Trump administration and acknowledged a legitimacy to US strategic interests in the territory encompassing Greenland.
Later in January, Trump advisor and tech billionaire Elon Musk sparked controversy with social media posts supporting fringe and opposition parties in foreign countries, principally the UK and Germany. In the UK, Musk’s comments have been highly influential in driving news coverage and political debate, illustrating Musk and Trump’s capacity to influence and potentially destabilise politics abroad.
Governments must assess whether they should respond to comments by individuals (inside or outside traditional diplomatic channels) and how to respond to specific issues the Trump administration raises, whether through rhetoric or policy. Doing so presents challenges for governments, as it could imply or confirm perceptions of weakness or incompetence domestically.
Realism reigns
This is not all about Trump. The geopolitical environment has been increasingly anarchic for many years now. A collapse of norms is revealing an absence of rules. The chaotic US withdrawal from Afghanistan in August 2021, Russia’s resilience in the face of Western sanctions, and the increasingly significant role of Gulf states, China and India in debt relief signal a world order moving away from Western hegemony and the rules-based system that has existed since the end of the Second World War.
However, Trump injects aggression and urgency into this process. His return will add volatility and uncertainty and prompt states to radically reevaluate alliances and reassess national strategic priorities. Progressive, idealistic, values-based diplomacy is out; realism, nationalism, and protectionism are in. Protecting national strategic interests will be paramount
Territory, trade and interference
Trump is unpredictable. However, we can identify several geopolitical trends that Trump’s administration will likely introduce, amplify, or accelerate.
One is territory moves. Respect for territorial integrity is weakening. Other states may be emboldened by Trump’s position on Greenland to pursue their own territorial ambitions. Border disputes continue to fester in geopolitical hotspots, particularly in Asia, such as those between North and South Korea, between India and China, and over the status of Taiwan.
Another trend is bartering and bribery. As tariffs and other trade controls become more common globally, powerful states may increasingly use access to resources, partnership, territory or goods as leverage. Trump may draw on the US’s trade advantages over Europe, such as its LNG exports, to extract further concessions on defence spending.
A third trend is foreign interference. Scrutiny of foreign involvement in politics, infrastructure development and business will likely intensify, and the role of foreign interests in domestic affairs may become increasingly consequential. The risk of malicious and external actors exploiting, publicizing, or misusing information about the roles of foreign actors in domestic affairs may rise. States may more closely regulate, control, or limit the presence and role of foreign state and non-state actors accordingly.
This does not mean that the world is necessarily fragmenting into distinct blocs, that globalisation is over, or that global conflict is inevitable. It does mean that seemingly unlikely scenarios, both positive and negative, should be taken seriously.
For the US, there is potential for blowback as disruptive geopolitics bites back. Trade, conflict, and territorial ambitions pushed by Trump could have unintended consequences, even if they are only felt in the long term.
Offensively defensive
Governments, organisations and businesses alike will adopt a range of strategies to manage the international implications of the second Trump administration. Moves made by the US technology industry regarding regulation and personnel ahead of the Trump inauguration in late January are illustrative. Prior experience of Trump’s first term will inform decision-making. For decision-makers, scenario forecasting will be a critical tool, and these scenarios must be realistic and flexible.
Companies should closely monitor regulatory risk trends to anticipate changes in regulation and enforcement patterns. Sanctions will likely grow more complex as a range of different states use them. Regulation may become more politicised in a polarised and hostile geopolitical environment, with companies subject to evolving pressures from host and home governments. Scrutiny of footprints, partners and links to governments will be of intense interest to state and non-state actors, who may seek to exploit connections and information in support of geopolitical objectives.