United States: Will Trump Pitch a Grand Bargain with Beijing?
As Donald Trump prepares to be inaugurated on January 20, 2025, his decisions regarding America’s geopolitical relations with Russia and China will take center stage. These choices could reshape the global balance of power, influence the global economy, and redefine international alliances.
Russia: Resetting Relations or Strategic Stability?
The incoming administration’s approach to Russia remains a critical question. Trump’s strategy could include a “land-for-peace” deal with Ukraine, resetting ties with Russia, or even ambitious plans for Europe’s security integration. Strategic stability talks and arms control agreements may appeal to many, but a broader reordering of relations could face significant resistance domestically and internationally.
China: Tariffs, Taiwan, and a Potential Grand Bargain
While the China relationship is less immediately urgent, its long-term significance outweighs that of Russia. Trump could impose new tariffs on Chinese imports, bolster Taiwan’s defense, or propose a grand bargain. This deal might leverage China’s partnership with Russia to secure a resolution in Ukraine in exchange for reduced US commitments to Taiwan. While such a deal could stabilize trilateral relations, its high price and potential short-lived calmness may invite criticism.
Asia and the Pacific: China Braces for American Tariffs
Trump’s second term looms large over Asia, as leaders anticipate a potential trade war and its impact on regional flashpoints like Taiwan, the South China Sea, and North Korea.
Trade and Regional Tensions
The prospect of tariffs ranging from 10–60% on Chinese imports would pressure trade-dependent nations. Trump’s policies could either escalate tensions with Beijing or compromise US allies and partners in Asia.
North Korea and Xi Jinping’s Challenges
Kim Jong Un’s intensified belligerence, including nuclear development and military support for Russia, complicates the region’s stability. Simultaneously, Xi Jinping faces domestic economic struggles, with tightened Communist Party control curbing private sector innovation.
Global Economy: Will Trump Hit the Inflation Pump?
Trump’s fiscal and trade policies are poised to shape the global economy in 2025.
Tariffs and Inflation Risks
If Trump imposes sweeping tariffs and deports millions of undocumented migrants, the resulting economic pressures could lead to resurgent US inflation. The Federal Reserve’s response will be crucial, as the global economy braces for retaliatory measures from affected countries.
Digital Currencies and Deregulation
Trump’s support for private digital currencies and potential deregulation of financial services could force other nations to reassess their financial systems. These changes may peak during the IMF/World Bank annual meetings in October.
Climate Change and Economic Policy
The effects of climate change on global economies are becoming more evident. However, Trump’s scepticism towards climate policies and multilateralism may hinder coordinated global responses in the lead-up to COP30 in Brazil.
Europe: Can Germany Renew Its EU Leadership?
The early German Bundestag elections on February 23 will test the EU’s largest economy and its role within Europe.
Germany’s Economic and Political Challenges
With a struggling car industry and two consecutive years of economic contraction, Germany’s next government will face the task of revitalizing the EU’s leadership and providing stronger support for Ukraine.
European Commission and Security Initiatives
A new European Commission will focus on coordinated defence and economic security measures to navigate the impacts of US-China trade tensions under Trump’s presidency. NATO, while wary, will collaborate to strengthen Europe’s security landscape.
Global Health: Preparing for the Next Pandemic
The negotiation of the “Pandemic Agreement” reaches a critical stage, aiming for adoption in May during the World Health Assembly in Geneva.
Cooperation Amidst Tensions
The agreement’s success could redefine global equity in health and international cooperation on transnational risks. However, Trump’s re-election may shift health leadership dynamics, with middle powers or the EU stepping in to fill the gap.
Climate Change and Health Security
Climate-related challenges, including extreme weather and pollution, are increasingly affecting global health security. The forthcoming review of the WTO’s legal mechanism on intellectual property rights for public health reasons may also shape access to medicines globally.
Defense and Security: Filling the Trump Security Void
The global security landscape faces intensified conflicts in the Middle East, Ukraine, and Sudan, compounded by Trump’s “America First” agenda.
NATO and EU Responses
As Trump reduces US defense commitments, NATO and the EU will work to enhance collaboration, strengthen military readiness, and rebuild their defense-industrial bases. Britain is expected to pursue a stronger UK–EU defense pact, alongside a Strategic Defense Review to prioritize technological innovation and regional partnerships.
Middle East: Anchored in Security and Containment
Trump’s Middle East strategy in 2025 is likely to revolve around two pillars: Israel’s security and Iranian containment.
Regional Instability
Conflicts in Iran and Syria will persist, but they are unlikely to dominate Trump’s foreign policy agenda. The administration’s focus will remain on maintaining alliances and countering perceived threats to US interests.
Artificial Intelligence: An Opportunity for Global Fairness
AI governance will gain prominence in 2025, with significant international summits and new regulations shaping the global approach.
Key Summits and Agreements
Events such as the AI Action Summit in Paris and Rwanda’s Africa AI Summit will foster collaboration on building “public-interest” AI. The EU’s AI Act, set to take effect in August, will likely influence a global code of practice for AI companies.
Challenges and Opportunities
As geopolitical tensions rise, balancing national politics with global cooperation will be a key test for governments. Emerging powers could leverage AI governance to gain influence, advancing equitable and trustworthy AI development.
