Perhaps more than any other factor, geopolitical volatility has had a major impact on markets to start 2025. Whether tariffs and trade policy between the U.S. and other nations, or the ongoing push for peace between Russia and Ukraine, investors likely need to stay abreast of the latest global news. Geopolitical analyst and entrepreneur Ian Bremmer spoke to advisors and investors at Exchange in Las Vegas Tuesday on how to understand a changing geopolitical world.
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Setting the Stage: Russia, China & Populism
Introduced by State Street Global Advisors Senior Managing Director Allison Bonds Mazza, Bremmer addressed the uncertainty investors are facing. Specifically, he began by pointing out that much of that uncertainty is coming from the U.S. itself.
To begin, Bremmer underscored the failure of the West to integrate Russia into the global system as the first reason for today’s global outlook.
“Back when the Soviet Union collapsed … Russia became independent and was not integrated into the West, not into the EU, not into NATO,” he explained. We had the G7+1, but the plus-one was never actually brought as a part of it. In other words, see our clubs? Can't join them.”
“They got really angry about that. They blamed the West, mostly the United States, and they now principally want to undermine and undo a US led global order,” Bremmer added.
Secondly, by contrast, China “has” been integrated into the global economy. That move, he noted, came with the assumption that that would help liberalize domestic politics in China. That happened contrary to U.S. expectations and has helped set the two nations at odds with one another.
U.S. & Global Populism
Finally, and most importantly, Bremmer said that many Americans have come to believe that their own political leaders — including media members and elites — don’t represent them. The ideals of a global system led by the U.S. — like rule of law and democracy promotion — he said, lost support from those same people.
Rather than owing to one individual or another, Bremmer said, structural factors have driven this newer, more volatile geopolitical era. A new “law of the jungle,” he noted, has become more popular, with powerful countries exerting their will over weaker ones for their own ends.
“I haven't mentioned any individual political leaders, because the reasons that I have given you for why the geopolitical order is so unstable are structural,” Bremmer said. “They've been coming for a long time, and [President] Trump is not the reason for them. He is a principal symptom of those challenges. He is perhaps the principal beneficiary of those structural challenges, but he did not cause that.”
Looking at that global map, with Mexico and Canada, Bremmer argued that those countries have very limited options regarding the U.S. After Canadian elections, he added, he expects that country to basically capitulate to the U.S, with Mexico likely doing the same. That may end in a new deal to address cheap goods from China in Mexico, for example, that compete with U.S. exports.
Turning to the U.S./China dynamic, Bremmer made a comparison between Japan/South Korea and Canada/Mexico. Those relationships are more stable, he argued, because of the U.S. rivalry with China. As to whether there might be a U.S./China rapprochement, Bremmer identified that despite the business interests in China of many Trump allies, he is pessimistic on the possibility of such a change.
Risk Regions to Watch
Instead, he sees the U.S. continuing to leverage its geopolitical power to isolate China from global supply chains. He also noted an intriguing lawsuit in Missouri in which U.S. citizens are suing the Chinese Communist Party (CCP) because of the role those people saw the CCP played in the COVID-19 pandemic. Regarding Taiwan, Trump’s criticism of the island nation has inspired fear in that country and led its most ardent nationalists to ramp up the temperature on nationalist rhetoric. With China, as the U.S. removes itself from international institutions, and outlast Trump, they can supersede the U.S. in those institutions.
In the Middle East, the good news, Bremmer said, is the Gulf States have reached new heights of prominence. Comparatively small, he said, those nations have oriented themselves toward global cooperation on technology, security, diplomacy, and more.
More negatively, however, should the Houthis in Yemen begin to feel a more existential threat from the U.S., they may use their ballistic missiles against more and more important targets like energy facilities and civilians in the region. The most autonomous Iranian proxies, even Iran diplomacy, may have limited ability to rein them in.
US/Europe Relationship & Risk
Europe stands out the most for suffering negatively from a change in U.S. administration. Bremmer said that not only does the Trump administration plan to exclude Europe from its negotiations with Russia and make them pay more for defense, it plans to continue to push for ideologically aligned parties to take over on the continent.
“It's existential for them, and at the same time, [there's] a third problem, which is that the United States is also telling the Europeans [that] your leaders are the problem. Not the Russians, not the Chinese — your leaders,” Bremmer said. “They will expand their fiscal spend broadly and take on more debt, and that [has led] the European markets to spike in the last couple of weeks. That's a positive.”
“Will they succeed in helping to ensure that they can have independent defense separate from the U.S.? I'm skeptical. I think they'll fail,” he added. “Will they be able to implement on the Mario Draghi plan for competitiveness and build world-class technological corporations — their own serious unicorns — with supply chain that will support them, independent from the U.S.? And the answer to that is no. So, Europe is in serious trouble … this is late for them.”
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