Around the world in 2024, voters chose change: in South Africa, France, Britain, and Japan. But nowhere does the anti-incumbent trend matter more than in the United States. The global uncertainty created by an oscillation of power between left and right—from Barack Obama to Donald Trump to Joe Biden and back to Trump—in the world’s only military superpower has again left political and business leaders in every region of the world scrambling to spot opportunities and risk.
The 2016 election of Trump was a surprise to allies and adversaries in Europe, Asia, the Middle East, and beyond, but it came in the context of relative international stability. His comeback victory comes in a dramatically more unstable—and dangerous—geopolitical environment. Trump must manage two wars and a U.S. relationship with China that has grown much more confrontational.
For business leaders navigating the next four years, there are critical questions that must be answered.
Are we heading into a trade war with China?
Trump’s primary interest in China remains in its massive bilateral trade surplus with the U.S. Trump has said he will levy significant tariffs against Beijing and against third countries through which Chinese-manufactured goods enter the U.S. The president-elect says this strategy will bring more production and jobs back to the U.S. He may not carry out his threat of 60% tariffs on China, but it’s likely that he’s not entirely bluffing. For now, it appears China will counter with a tit-for-tat response of some kind, even if it further slows China’s already tepid economic growth.
There is one possible off-ramp from this escalation of the trade war with China: Trump’s newest advisor, the tech mogul Elon Musk, has told Chinese officials he can broker better relations with the president-elect. Given Musk’s incentive to build Chinese market share for Tesla and assorted AI ventures, he has every reason to try to win new friends in Beijing. There is a deal to be had here. Trump is not a hardliner on tech, and he could perhaps be enticed to give ground on tech issues like export controls that now block the sale of semiconductors to China—to score points in economic areas he cares more about.
$279 billion
THE U.S TRADE DEFICIT WITH CHINA IN 2023 (A $103 BILLION DECREASE FROM 2022). SOURCE: U.S. BUREAU OF ECONOMIC ANALYSIS
But in 2025, a worsening of U.S.-China relations looks much more likely. Trump appears committed to the tough-on-tariffs approach he knows is popular with his closest trade advisors, congressional Republicans, and much of his political base.
Trump is also unlikely to manage relations with Taiwan as carefully as President Biden has, and Beijing will not hesitate to push back when Taiwan is at issue. We should expect U.S.-Chinese relations to take a significant turn for the worse in 2025—with worrisome effects on China’s stalling economy.
Will Europe remain united over Ukraine?
On Russia’s war in Ukraine, Trump promises to quickly end the killing. To do that, he’ll need leverage with both Kyiv and Moscow. The source of Trump’s power with Ukraine President Volodymyr Zelensky is clear: Without continued U.S. support, Ukraine’s weapons and ammunition will run low early next year. It won’t be easy for Zelensky to offer Russia de facto control of occupied Ukrainian land in exchange for peace, but his forces can’t sustain the fight without active Trump-administration support.
It’s much less clear what Trump can hold over Vladimir Putin. The Russian president has not been easily swayed by requests from America, and he insists time is on his side in Ukraine. But if Putin is offered concessions that allow him to claim victory and shed some of Russia’s isolation from the West, he might be persuaded to cut a deal that comes short of his previously stated goals.
Ukraine’s fate is far more important to most Europeans than to anyone in Washington, and America’s NATO allies worry that Trump won’t share his Ukraine strategy with them. He might even leave them to read about in the newspaper.
If Trump pushed Kyiv toward anything that looks like surrender, Poland, the Baltic states, and the Nordic countries would feel directly threatened by Russia. But as the Russian invasion approaches the end of its third year, Europe is undeniably weary of war. Hungary’s Viktor Orbán and other right-wing politicians across Europe want normalized relations with Moscow. Even in countries that have pledged durable support for Kyiv, such as Germany, the cost of that policy is already high and rising.
The trade policy Trump is now preparing for Europe matters here too. He threatened on the campaign trail to treat Europe as a “mini-China” for refusing to buy American cars and agricultural products. Such an approach could lead to another trade war, as the U.S. and Europe impose tit-for-tat penalties. An export slowdown 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 U.S. by restricting supplies of all kinds of goods.
The trade pressure, combined with the uncertainty over Ukraine, could force Europeans together in solidarity—or it could lead individual European governments to seek side deals with Washington, meant to lessen the individual economic burdens they’re now carrying.
Will Trump calm the Middle East, or escalate its wars?
Trump’s strongest international relationships are with Benjamin Netanyahu’s government in Israel and Mohammed bin Salman’s in Saudi Arabia. His greatest first-term foreign-policy accomplishment was the Abraham 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 normalization to Israel and the Saudis, which would be an economic and security win for both countries. For now, Saudi officials continue to insist that any such deal would depend on creation of a Palestinian state, a nonstarter for the vast majority of Israelis. Trump is the leader best placed to test Saudi resolve on that question.
As we move toward 2025, Israel’s war with Hezbollah in Lebanon is moving closer to a ceasefire before President Biden finishes packing. Now that Trump has won the election, Netanyahu can cut a deal that wouldn’t give Democrats a political win. In Gaza, the violence is more likely to continue, since Israelis are far more determined to “break” Hamas than Hezbollah, and Trump is unlikely to advocate for the creation of a Palestinian state or even an improvement in Gaza’s humanitarian crises.
Another question swirling ahead of America’s regime change: Will Israel and the U.S. go to war with Iran? Will Netanyahu risk a broader regional war by striking directly at Iran’s heavily fortified underground nuclear facilities? That’s a move that would send energy prices surging as traffic through the all-important Strait of Hormuz might quickly grind to a halt.
Political and business leaders are scrambling to spot opportunities and risk.
But Trump has regularly criticized President Biden for trying to restrain Israeli attacks on the country. It was Trump who abandoned the Iran nuclear accord forged during the Obama presidency, and having ordered the assassination of Iranian defense chief Qassem Soleimani in January 2020 has likely persuaded him that Iran will fold when faced with a coordinated U.S. and Israeli military.
How will the Global South fare?
Trump’s economic policies will strengthen the dollar and increase inflation, leaving developing countries under even more economic pressure. True to form, Trump will likely have positive relations with hard edged populist leaders like Argentina’s Javier Milei and El Salvador’s Nayib Bukele.
But Trump’s Middle East policy will further damage popular views of the U.S. in countries with large Muslim populations—especially in Southeast Asia—and in many poorer countries where governments are already less inclined to treat the U.S. as a model worthy of emulation. Many of those countries might instead grow closer to China—a trend with unsettling geopolitical and economic implications.
What will Trump mean for the U.S.’s North American neighbors?
Mexico and Canada, America’s biggest trade partners after China, know they will face more economic pressure from Trump 2.0.
Mexico’s president, Claudia Sheinbaum, will be in a particularly tough spot, especially given the renewal due in 2026 of the U.S.-Mexico-Canada freetrade agreement. Trump will expect Sheinbaum’s government to cooperate to limit illegal immigration across the U.S.’s southern border and to take a tougher stance on Mexican drug cartels responsible for violent crime in both countries. Sooner rather than later, Mexico’s lack of leverage will likely force Sheinbaum to offer Trump much of what he wants.
That’s less true for Canada, particularly if, as expected, the populist Conservative Party leader Pierre Poilievre becomes the country’s next prime minister in 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’s eager to stem the loss of companies and workers to the increasingly business-friendly environment in the U.S.
This article appears in the December 2024/January 2025 issue of Fortune with the headline “Global business braces for Trump 2.0”
This story was originally featured on Fortune.com