Trending Now
We have updated our Privacy Policy and Terms of Use for Eurasia Group and its affiliates, including GZERO Media, to clarify the types of data we collect, how we collect it, how we use data and with whom we share data. By using our website you consent to our Terms and Conditions and Privacy Policy, including the transfer of your personal data to the United States from your country of residence, and our use of cookies described in our Cookie Policy.
by ian bremmer
Donald Trump on a throne spinning a globe on his finger.
The global response to Donald Trump’s imminent return to power has been nothing short of remarkable.
From Israel's Benjamin Netanyahu hinting at a potential Lebanon cease-fire as a "gift" to the president-elect, to Ukraine's Volodymyr Zelensky saying the war will “end faster” under the incoming administration, to European and Asian leaders expressing Stockholm syndrome-levels of excitement to work with him, foreign leaders have been lining up to kiss the president-elect’s ring since his election victory two weeks ago.
To be sure, most US allies and adversaries still dislike and mistrust Trump. But with memories of the clashes, chaos, and unpredictability of his first term still fresh, they know that they get crosswise with Trump at their own peril. The president-elect still believes America is being taken for a ride, values are something other countries use to constrain US power, and allies are only as good as the money they spend on US goods and protection. And Trump is willing to flex Washington’s full military and economic muscle – whether in the form of high tariffs or the withdrawal of US security support – to extract gains from other nations.
World leaders are accordingly doing everything they can to avoid becoming a target of his wrath, using flattery and favor to appeal to Trump’s ego and transactional nature in the hopes of getting in his good graces. After all, they know Trump is nothing if not willing to sit down with anyone – whether a longstanding democratic ally or a brutal dictator – to try to cut a deal that makes him look good at home.
The upshot is that at least in the early days of his presidency, Donald Trump is poised to rack up far more foreign policy wins than many people appreciate. Not because he’s a “stable genius” or a particularly gifted negotiator, but because he’ll be running the world’s largest economy and most powerful military, with leverage over virtually every country and less aversion to wielding it than any US president that came before him.
But that’s table stakes for Trump. There are three reasons why his ability to get concessions from other countries and put points on the board early on will be greater than during his first term.
First, Trump is no longer isolated, with a growing number of world leaders eager to welcome him to the international arena. Eight years ago, the president-elect was an outlier, with few true friends on the global stage apart from Netanyahu, Gulf leaders, Hungary’s Viktor Orban, Japan’s Shinzo Abe, India’s Narendra Modi, and a handful of others. But things have changed since.
Italy's Giorgia Meloni, currently the most popular G7 leader, shares Trump's views on immigration, social policy, and economic nationalism. Argentina’s Javier Milei, the chainsaw-wielding “Trump of the Pampas,” was the first foreign leader to meet with him after the election. In Canada, the Conservative Party's Pierre Poilievre is poised to replace Prime Minister Justin Trudeau, promising a much more Trump-aligned relationship. Germany’s Olaf Scholz will likewise soon be replaced, probably by the opposition conservative Christian Democrat leader Friedrich Merz, a wealthy former businessman who is ideologically closer to the incoming American president. South Korean President Yoon Suk Yeol is strategically positioning himself to become the new Shinzo Abe, going as far as taking up golf again to establish a closer relationship with Trump. The list goes on.
Trump is no more a fan of multilateralism than he was eight years ago. He remains mistrustful of alliances and indifferent to other countries’ values and political systems. But whenever he attends gatherings of the G7, G20, and NATO now, the president-elect will at least be surrounded by like-minded leaders who will be much more receptive to his “America First” agenda and inclined to play by his rules.
Second, the world is much more dangerous than it was in 2017, raising the stakes of misalignment with Trump. Major wars raging in Europe and the Middle East, heightened US-China tensions, and a more fragile global economy make the costs of being on the wrong side of the president-elect exponentially higher than they were during Trump’s first term.
And third, Trump’s domestic political power is significantly more consolidated this time around. The president-elect has unified control of Congress and a pliant Republican Party, knows his way around Washington, DC, and is surrounding himself with far more ideologically aligned loyalists than in his first term. Gone are the institutionalist career staffers and establishment Republicans who often checked Trump’s most disruptive impulses. For world leaders, this means alternative backchannels to get around the president-elect’s foreign policy preferences won’t be nearly as available or effective. Whether or not they like it, it’s Trump’s way or the highway now.
It’s no wonder that we’re seeing so many countries preemptively bend the knee, desperate to find common ground with Trump before he takes office. China, for instance, is floating potential concessions to avert an economically destabilizing trade war, from organizing a Ukraine peace conference to buying US Treasuries and increasing purchases of American goods. Iran granted a meeting to Trump advisor-extraordinaire Elon Musk in an apparent effort to facilitate a de-escalatory deal. Taiwan’s leadership is planning a massive new American arms purchase offer to show Trump they’re serious about paying more for US protection. Meanwhile, Ukraine is not only expressing readiness to negotiate a cease-fire but is also weighing several sweeteners – including potential business deals, access to the country’s natural resources, and Ukrainian troop deployments to replace US forces in Europe after the war – to convince Trump that continued US support is in his personal and political interests.
None of this means that every effort to appease Trump will succeed, or that Trump’s mere presence in the White House will end every war, de-escalate every conflict, and resolve every disagreement. If history is any guide, most attempts to strike a lasting deal with the president-elect will fail. In the long run, his approach will erode America’s influence on the global stage, deepen the G-Zero vacuum of leadership, and make the world a more dangerous place.
In the near term, however, Trump’s penchant for bilateral deal-making, disregard for longstanding American norms and values, reputation for unpredictability, and unrestrained leadership of the world’s sole superpower will increase the odds of improbable breakthroughs.
Welcome to Trump’s international honeymoon – it may not last long, but at least nobody’s having any fun.
While the United States was still busy counting votes, Germany’s ruling coalition led by Chancellor Olaf Scholz suddenly fell apart last Wednesday, plunging Europe’s largest economy into chaos. Now, Germans are set to head to the polls on Feb. 23 – seven months earlier than originally planned – to elect a new government at a particularly challenging time for their country, the EU, and the world.
What happened?
After less than three years in power, the so-called “traffic light” coalition of Scholz’s center-left Social Democrats, the environmentalist Greens, and the pro-business Free Democrats collapsed on Nov. 6 when the chancellor unceremoniously fired his finance minister and the Free Democrat leader, Christian Lindner.
The move followed months of bitter negotiations over how to plug a roughly €10-billion hole in next year’s federal budget. The coalition’s progressive partners favored taking on more debt to boost spending on infrastructure, defense, and aid to Kyiv (Germany is the second-largest contributor of military aid to Ukraine after the US). The fiscally conservative FDP opposed any new borrowing despite Germany’s low debt-to-GDP ratio, instead pushing for tax and spending cuts that would reduce welfare transfers, aggravate Germany’s malaise, and curtail support for Kyiv.
The standoff came to a head because Germany has a strict constitutional debt limit the government is not allowed to exceed outside of exceptional circumstances like the COVID-19 pandemic. When Scholz asked his finance minister to suspend the “debt brake,” citing the exceptional impact of the war in Ukraine, Lindner refused to budge, and the traffic light broke.
This was the conclusion of an uneasy marriage of convenience riven by ultimately irreconcilable differences about how to kickstart Germany’s long-stagnant economy and execute the foreign and security policy Zeitenwende (or “turning point”) that Scholz proclaimed when he replaced Angela Merkel as chancellor in 2021. One Russian invasion of Ukraine and three years of gridlock, high energy costs, and flat growth later, Germans have soured on their government. A recent poll found that only 14% of voters were satisfied with the ruling coalition, with 54% wanting early elections.
What now?
Scholz’s Social Democrats and Friedrich Merz, who succeeded Merkel as leader of the opposition conservative Christian Democratic Union, have agreed to hold a vote of confidence to trigger the dissolution of parliament on Dec. 16. Provided Scholz loses it – as is widely expected – early elections will then be held on Feb. 23.
In the meantime, Germany will be in a limbo of sorts. The chancellor and his remaining Green coalition partner will remain in office until a new coalition is elected, but as the head of a minority government, he now has to secure support from opposition parties on a case-by-case basis to get any laws passed. In particular, Scholz needs votes from Merz’s conservatives to pass an all-important 2025 compromise budget. But that’s a very tall order, requiring not only painful concessions from the CDU – especially on the suspension of the debt brake – but also that the SPD give up core elements of its legislative agenda in return.
If no budget is passed by year-end, as looks likely, Germany will enter into “provisional budget management” – a state of limited government operations and funding based on 2024 numbers. While this won’t lead to a government shutdown like it would in the United States, no new obligations or programs could be passed before a new government finally approves a 2025 budget, potentially not until the second or third quarter of next year. This would restrain Berlin from active policymaking during the critical early days of Donald Trump's presidency, at a time when Europe is more rudderless than ever and Russia continues to threaten Ukraine and NATO.
The road ahead
The opposition CDU/Christian Social Union center-right alliance leads the national polls with 34%. Of the “traffic light” coalition parties, Scholz’s SPD is polling at around 16%, while the Greens hover at 11%. Lindner’s Free Democrats, meanwhile, are currently below the 5% threshold required to get into parliament.
The far-right Alternative for Germany is the second-most popular national party, with 17% support, but all other parties continue to explicitly rule out the possibility of entering into a coalition with it. The newer pro-Russian, anti-immigration, left-wing Sahra Wagenknecht Alliance, which made large gains in September’s state elections, is somewhat less domestically toxic than AfD and polling at 6%.
Of course, there are still more than three months to go until the election, and these numbers will change, especially in the wake of the government’s collapse. But barring any major surprises, the CDU’s Merz is all but certain to become the 10th German chancellor since 1949. Assuming the conservatives’ most natural partner, the FDP, is unable to clear 5%, the only open question is whether the next government will be a grand coalition of the CDU/CSU and the SPD or another three-way coalition including them plus the Greens.
Grand coalitions have a long history in Germany and are popular with voters for their track record of delivering moderation and stability. Three-way coalitions, by contrast, are an unwieldy, unstable last resort for mainstream parties to form majority governments in Germany’s increasingly fragmented party landscape – a challenge that is only going to accelerate as the anti-establishment AfD and BSW continue to grow in popularity.
Whatever it looks like, the next government will have to contend with the big challenges that the current administration failed to address. Germany faces deep structural problems, including chronically low productivity and investment, high energy and labor costs, unfavorable demographics, a fragile export-dependent growth model, and an overly rigid debt limit rule.
But Berlin’s biggest challenges aren’t economic – they’re existential. At a time when Russia is testing NATO's resolve, China is challenging the Western-led international order, and America's commitment to Europe is in question, Germany must decide what kind of power it wants to be.
Will Europe’s economic engine finally step up as a geopolitical leader, or will it continue to punch below its weight? For Germany’s next government, there may be no more kicking this can down the road.
Walmart is helping customers save more this holiday season with a 29-item Thanksgiving spread at an even lower price than last year.
Now through Dec. 24, customers can count on Walmart’s Every Day Low Prices for a delicious and affordable holiday meal to enjoy with their families. The retailer is also offering customers the opportunity to gift a meal to loved ones or donate to the Salvation Army.
Learn how Walmart helps customers save money and live better all season long.
Donald Trump
America has spoken. Donald Trump will become president of the United States again. And I can’t say that I’m surprised.
This election comes at a time when people all over the world are unhappy with where their countries are going, and they don’t trust their political institutions to right the ship. Some of that is a product of the deepening geopolitical recession, which is in part driven by a backlash against globalization and the globalist elites who promoted their own economic and political interests at the expense of their populations. Some of it has to do with the economic and social disruption caused by post-pandemic surges in inflation and immigration.
As a result, what was historically an electoral advantage in democracies has become a liability in the current cycle: incumbency. Over the past year, most incumbents around the globe have either been forced out of office or seriously underperformed at the ballot box (e.g., in the United Kingdom, Japan, France, Germany, Austria, India, South Africa, etc.). Those who haven’t faced voters yet are deeply unpopular and expected to lose power soon (e.g., Canada, Germany, Norway, etc.).
The fact that Kamala Harris couldn’t escape this fate after four years as vice president to an unpopular administration was therefore hardly unexpected. No party has ever retained the White House when incumbent approval is as low as it is. Over 70% believe the country is on the wrong track, and Americans have little confidence in their government’s handling of the top issues they care about: inflation and immigration.
Sure, inflation – the average rate at which prices in the economy increase over time – has come way down from its pandemic-induced highs and is now near the Fed’s target. But prices themselves are still high owing to years of above-target inflation, and those prices aren’t coming down absent a recession (not to mention the fact that Trump’s plans promise to increase inflation). Fair or not, the party in power gets blamed for that. Similarly, illegal immigration has also been coming down, but crossings are still at elevated levels, and most illegal immigrants find ways to stay in the country. Many illegal immigrants also moved (or were moved) from red states to blue states, making the issue more important to more of the country than before.
Democrats had hoped to counter these headwinds with messages about access to abortion, the economy, and Trump’s threat to democracy and general unfitness for office. But a problem got in their way: a hyperpolarized information environment that makes it difficult for either side to reach across the aisle to the other half of the country. There are two radically different information spaces in the US, and the gap between these algorithmically boosted, media-driven bubbles is only growing. It’s increasingly difficult to have a single conversation on any policy issue, let alone to find compromise on solutions, when we don’t even agree on basic facts about what the problems are. That’s a very dysfunctional place to be for our civic democracy.
Ultimately, though, the American people looked at the two candidates and found Trump’s message more compelling, and they handed him as resounding a national victory as either candidate could’ve hoped for in today’s polarized environment. Trump shattered his previous ceiling of national support and made gains across the board relative to 2020. He is on track to sweep every swing state and become the first Republican to win the popular vote in 20 years on the back of a broad-based shift to the right in almost every geography – from rural areas to my very own New York City – and with nearly every demographic group, including young, female, Black, and Hispanic voters.
The Republican Party also took control of the Senate, with at least 52 and as many as 56 seats in the 100-seat chamber – enough to confirm Trump’s appointees, but not enough to get away with repealing the legislative filibuster or confirming obviously unqualified nominees. Republicans are favored to win a narrow House majority, too, though the exact margin may not be known for several weeks due to slow counting in states like California and close races elsewhere. A unified government – along with an already friendly judiciary – will make it significantly easier for Trump to enact his domestic policy priorities, from tax cuts and defense spending increases to immigration overhauls.
And if you think Trump’s return will have a profound impact on the United States (fact-check: true), it will matter even more for the rest of the world.
The biggest loser is Ukraine. Trump has repeatedly said he will end the war there in 24 hours. Of course, what he really means is that he wants to freeze the conflict along the current territorial lines, with Russia de facto getting to keep the land it has conquered. The war is already going badly for the Ukrainians, with Western military and economic support past its peak. Trump will try to unilaterally cut a cease-fire deal with Zelensky and President Vladimir Putin even before the lame-duck period ends, using military aid to Kyiv as leverage over both sides without coordinating with America’s European allies. If Trump calls Zelensky first and demands a cease-fire (and the de facto cession of territory), and Zelensky refuses, the ball will then shift to Putin’s court.
Regardless of the election outcome, Ukraine would have been forced to negotiate sooner or later. The difference is that Harris would have coordinated that negotiating position with Ukraine and the EU. Trump doesn’t want to be responsible for “losing” Ukraine, nor does he take issue with Ukrainian self-defense. But he thinks Ukraine’s defense should be paid for primarily by the countries that have the biggest stake in it: the Europeans. Trump’s bargaining approach may succeed at ending the war … or it may not.
Either way, Europe will have a big problem on its hands. Trump’s Ukraine policy will put a lot of strain on the trans-Atlantic relationship. The Europeans, many of whom are already struggling economically, will also be facing higher tariffs from the Trump administration. Will they take a stronger, more consolidated position on Ukraine, or will they fragment? Will they continue to align closely with the US on trade with China, or will they start to hedge more? Will the European Union crack under the pressure, or will it be galvanized by Trump to finally build a stronger, more strategically autonomous union? Those are all huge question marks.
Then there’s the Middle East. Israeli Prime Minister Benjamin Netanyahu was already riding high politically on the back of a string of military wins. He was a big winner yesterday as well, as he can expect greater support from Trump than he could have from Harris. The vice president was not going to end the special relationship with Israel, but Trump is going to make even more of a push to support the Israelis and the Gulf States – another group of winners. Trump and Netanyahu are also aligned in their enmity toward Iran. Will Trump’s blank check embolden Bibi to take even more aggressive actions in the region, potentially against Iranian nuclear facilities? That’s a very dangerous situation that bears close watching.
And let’s not forget China. The world’s second-largest economy is already underperforming, and Beijing is feeling increasingly defensive about the tariff threats coming from hawks like former Trump trade czar Robert Lighthizer. The Chinese are going to be frantically trying to establish back-channels to China-friendly Trump allies like Elon Musk, hoping they can facilitate a less confrontational relationship. Will Trump support that, or will his hawks get the upper hand and push for an even more confrontational approach? Beijing will move cautiously and slowly in this environment.
To be sure, just as he did in his first term, Trump will be able to get some foreign policy wins just by virtue of being the president of the most powerful country in the world. But the potential for things to go sideways is much greater in this environment. Geopolitics are in for a volatile and unpredictable ride, and the United States is about to become the epicenter of it.
So take a deep breath and strap in, folks. It’s going to get bumpy.
Collage of modern leaders and innovations
Last week, I explained what happens when the world’s most powerful geopolitical actors abdicate their leadership responsibilities. America’s war with itself continues to escalate with few guardrails. The conflicts in Ukraine and the Middle East show no signs of sustainable resolution. The nuclear threat level is rising for the first time in decades. In short, the world is growing more dangerous.
But that’s only half the story. Today, I want to focus on why I remain hopeful about humanity’s future, even as our G-Zero vacuum of global leadership keeps getting worse.
Cold War 2.0? Not so fast
Let’s start with what’s perhaps the best news for global security and prosperity: Despite heightened tensions and gloomy headlines, fears of a new cold war between the United States and China are overblown.
Yes, the US and China remain powerful rivals with very different political and economic systems, and their governments increasingly deal with each other in zero-sum terms. Chinese leaders view the US strategy toward China as containment, while the bipartisan consensus in Washington is that Beijing’s goal is to supplant the US as the preeminent global power.
But here’s the reality: It’s hard to fight a cold war when nobody else wants to take sides. Every major country in the world sees the need to maintain good relations with both China and America. Try telling Japan or Europe to choose between its security relationship with Washington and its commercial ties to Beijing. Even India’s Narendra Modi won’t boost relations with the US at the expense of his largest trade partner.
More importantly, both superpowers are far too preoccupied with their own internal problems to sustain the kind of long-term confrontation a cold war requires. The United States remains consumed by its domestic political dysfunction, which will only intensify after next week’s election, regardless of who wins. Washington cannot afford to start a new war when it’s already managing two abroad and fighting another at home. For its part, China is grappling with its worst economy in decades. Xi Jinping knows that he needs relations with the US to be stable while the economy regains its footing. Chinese leaders have quietly pushed back their timeline for surpassing US GDP by five years. They’re even softening their stance on Taiwan, with 2027 no longer viewed internally as a hard deadline to “resolve” the island’s situation.
The most geopolitically important relationship in the world is fundamentally adversarial and devoid of trust. Its long-term trajectory remains negative, with no prospect of substantial improvement. But the two countries aren’t yet ready for a decades-long fight – they are trying to get their own houses in order first. At least in the near term, we should expect both sides to maintain their rhetoric while carefully avoiding conflict.
Globalization isn’t over
In more good news, rumors of globalization’s death are greatly exaggerated.
A visitor from another planet would be awed by the remarkable speed and scale of human progress in recent decades. Today, more than half of the world’s population belongs to the global middle class, and over 100 million people continue to be lifted from poverty every year. Two-thirds of humanity can now go online, up from just 16% 20 years ago. International air travel keeps getting cheaper, allowing more people to work and travel in more places. And global trade continues to grow despite facing all sorts of backlash.
This progress will continue because both developed and developing countries depend on it for the economic growth their citizens expect and demand – and the political stability that comes with it. Yes, national security-related sectors are becoming increasingly fragmented and polarized. But rather than spell the end of globalization, this fragmentation is setting the stage for a new form of globalization.
Take cutting-edge technologies, where US-China competition is fiercest and ever more zero-sum. The United States leads the commanding heights of artificial intelligence thanks to its unique ecosystem of venture capital, entrepreneurship, advanced semiconductor access, and world-class research universities. China, meanwhile, dominates the post-carbon energy transition through unmatched state investment in nuclear, wind, solar, electric vehicles, batteries, critical minerals, and related supply chains.
Neither side is happy about the other’s dominance, but globalization is stabilized by an effective balance of power between them. As with the security and commercial balance that most major countries seek between the two great powers, American leadership in AI and Chinese leadership in energy tech creates a natural buffer against global decoupling because other countries don’t want to choose sides.
If Washington decides to ban Chinese EVs and solar panels, Americans will be forced to pay more for their energy transition. Luckily, they are wealthy enough to make that choice. But the rest of the world won’t follow suit – they simply can’t afford not to buy the best-in-class green tech just because it’s made in China. Similarly, if Beijing bans the most powerful AI innovations coming out of America because it can’t control the flow of information and data – China’s leaders want ChatCCP, not ChatGPT – Chinese citizens will miss out on what I believe will be the best tools to unlock their potential and build their human capital. But the rest of the world will want access to the best AI they can find.
The result? A bilateral geopolitical structure that could fatally compromise globalization has become nearly impossible. Even if some in Washington and Beijing may want to do away with global interdependence, most of the rest of the world demands it. And it’s not possible in 2025 for whoever becomes the next American president to blow that up.
The headlines might scream “decoupling,” but globalization will continue – and these new technologies themselves will create unprecedented opportunities to connect the world in ways we can’t even begin to imagine.
AI will drive new opportunities for humanity
Which brings us to AI, a technology that offers us the best chance humanity has ever had to grow, teach, learn, heal, imagine, create, and build a more prosperous and equitable world – all on an unprecedented scale.
Large language models are fundamentally reshaping how we create, interpret, and access information, while large quantitative models are transforming how we manage our physical world. They will find the needles in every haystack and help bring dreams to life. We’re already seeing the AI revolution unfold: Machine learning algorithms are driving health care breakthroughs with new drug discoveries, early disease detection, and personalized treatments. They’re providing students with individualized instruction and feedback. They’re helping farmers sustainably manage crops, industrial organizations optimize operations, and vehicles avoid accidents. These are just a fraction of the thousands of AI use cases already being deployed globally, and they are growing exponentially.
The current (and the next) wave of technological change will drive a new globalization – one that moves beyond simply lifting billions out of poverty (though that will continue, too). The globalization of the past 50 years created a global middle class and radically enriched a small group of wealthy global elites, but it left many people behind. Now, thanks to AI and related technologies, those previously left behind can also expect access to better education, health care, and unprecedented opportunities for professional and personal growth.
Take India: Of its 1.5 billion people, roughly 50 million live like Europeans, 400 million like Indonesians, and a billion like sub-Saharan Africans. AI may or may not squeeze that top 50 million, but it’ll give the bottom billion a chance to join the rest. And this pattern will repeat worldwide. This isn’t just incremental progress – it’s a revolution that extends the promise of global development from national statistics into the lives of all individual human beings everywhere.
Mind the gap
Yes, we remain at serious risk of failing to realize these gains because we still lack global leadership. What should worry us most isn’t muscular confrontation between the United States and China – it’s their mutual abdication of responsibility. It’s Americans still fighting Americans. It’s Washington using none of its influence to end the war in the Middle East. It’s Chinese inaction on Russia and North Korea despite their leverage.
These challenges are profound. But the opportunities to build a better world are also greater than ever before. Globalization not only persists but is potentially becoming more inclusive as transformative technologies like AI offer the potential to extend prosperity to billions more people. Humanity’s capacity for progress and innovation thrives even in this G-Zero world order.
The question isn’t whether we have the means to create a more prosperous, equitable, and peaceful world – we do. The question is whether we can maintain enough stability in our leaderless world to realize that potential.
Get it right and we make it as humanity. Get it wrong … and we might not be here for much longer.
The G-Zero is getting worse: Why no one’s stepping up to solve today’s biggest wars
Collage of world events.
The lack of global leadership that characterizes our G-Zero world is getting worse.
As I explained during my annual “State of the World” speech in Tokyo last night, this leadership vacuum is most obvious in the ongoing wars in Ukraine and the Middle East, where everyone claims to want peace but no one is both willing and able to make it happen.
The United States has abdicated its leadership responsibility in the Middle East. It is by far the most powerful friend of Israel, but it has used none of its influence to bring the conflict to an end. The US hasn’t just been sitting on the sidelines – it has been actively supporting Israel’s capacity to wage a war that’s destroying the Palestinian and now Lebanese people.
China has likewise abdicated its leadership responsibility in Eurasia. It is by far the most powerful friend of Russia, but it has used none of its influence to bring the conflict to an end. China hasn’t just been sitting on the sidelines – it has been actively supporting Russia’s capacity to expand an illegal invasion and bring itself to the precipice of war with NATO.
As for the rest of the world? We’re just getting used to the higher level of instability that comes when the world’s most powerful actors – but especially a politically divided and dysfunctional America – step back.
None of the major conflicts in the world today are heading toward sustainable resolution. Ukraine is on a path to partition. The Palestinians are set to be removed from their territory and once again forgotten. Americans are fighting Americans. This is our present trajectory, and it’s not remotely sustainable.
Ukraine’s path to partition
Ukraine lacks the manpower and weaponry to take back all its land, and Vladimir Putin isn’t going to return it voluntarily. Alas, there is no magical third option. With or without a peace deal, Ukraine will eventually be de facto partitioned.
The real question is whether a post-war Ukraine can expect a safer and brighter future with deeper integration into the rest of the world, free from the constant threat of Russian aggression. Ukraine’s ability to achieve that depends on how much diplomatic, economic, and security support Kyiv receives from its Western allies over the next two to three years.
Diplomatic support remains a strong bet. EU integration will take many years and face growing resistance as populist and Russia-friendly parties gain ground across Europe. But with unanimous European support for the overall goal and a strong and pro-Ukraine EU leadership in place for another term, accession will remain on track.
Economic support will likely continue but diminish from present levels. Russia’s destruction of Ukraine’s infrastructure has sharply increased funding needs while undermining Ukraine’s productive capacity, at the same time as Western willingness and ability to provide aid is waning.
Security support – specifically, NATO membership or a similarly strong kind of formal security guarantee – remains the most challenging, though not impossible, area. It’s Putin’s brightest red line but also Ukraine’s primary and unconditional demand for accepting a cease-fire that cedes any territory. Without it, there’s nothing to deter Russia from trying to take additional Ukrainian territory in the future, and Kyiv will never come to the table. With it, NATO risks direct war with Russia.
Even if that offer is eventually made, Russia has a veto. If Putin doesn’t agree to a cease-fire and Russia is still launching missiles at Ukrainian cities, then NATO membership for Ukraine would be tantamount to an automatic NATO declaration of war on Russia. Dangerous … but still constructive if this trade of membership for land can earn international support for Ukraine and put pressure on Russia to end the war.
In the meantime, we should expect limited Russian advances at great human cost and missile strikes on Ukrainian infrastructure to continue. We should also expect more asymmetric warfare from Ukraine, along with the real risks of military escalation that come with it.
All the while, the West will continue in an undeclared hybrid war against a rogue Russia as Putin grows older, more isolated, further from day-to-day decision-making, and more prone to impulsive mistakes. And Russia’s alliance with Iran and North Korea – two other rogue states committed to sowing chaos on the global stage – will grow stronger and less predictable.
So even if the war in Ukraine stabilizes over the next few years, Russia’s broader struggle with the West will undoubtedly become more dangerous.
The Middle East’s paradox
The dynamic in the Middle East is precisely the opposite. There is no outcome of the war in Gaza that is acceptable for both Israelis and Palestinians. But the regional and global risks may prove less severe than in the Russia-NATO case.
Though a cease-fire remains elusive and Palestinian suffering continues, the Gaza war is effectively over. Israeli forces have largely achieved their military objectives, with most IDF troops now withdrawing and many redeploying to Lebanon.
The war has radicalized Palestinians in Gaza and the West Bank, who face dire economic prospects, worse security, and no hope of creating a better life for themselves or their families. Israeli settlers in the West Bank have grabbed even more occupied territory in recent months. No matter what happens, Palestinians are more willing than a year ago to follow leaders who call for revolutionary action against Israel. The risk of deadly terrorist attacks – in Israel and elsewhere – has risen sharply and will remain high for a generation. Meanwhile, Israeli attitudes have hardened against Palestinian statehood across the political spectrum – even among Netanyahu’s opponents.
Yet the broader Middle East outlook is more stable.
The Abraham Accords persist. Saudi Arabia now officially demands the creation of a Palestinian state as its price to normalize relations with Israel, but behind the scenes, Saudi-Israeli economic and security engagement continues apace. It’s not inconceivable that Riyadh will quietly drop its demand once the war is over.
For its part, Iran – now with normalized relations with Saudi Arabia – has shown restraint against Israel, even as Israel has crossed Tehran’s red lines, killed Hezbollah’s leaders, crippled its military capacity, and invaded southern Lebanon. Yemen’s Houthis, another heavily armed, well-funded Iranian proxy, continue to carry out strikes in the Red Sea. But that’s not enough to ignite a broader Middle East war, which none of the major powers in the region want.
Hezbollah, the Houthis, and even Iran itself know they can’t win an all-out war with Israel, and even the IDF’s very aggressive push into Lebanon hasn’t persuaded these enemies to launch effective counterattacks, because while they’re much more powerful than Hamas, Israel has established clear escalation dominance in the war.
The most likely long-term outcome of the war is that longstanding friends and allies in the West will keep Israel’s government more at arm’s length. Younger Europeans and Americans will view Israeli actions with deeper suspicion. But Israel will remain a small, asymmetrically powerful country in military, economic, and technological terms. It will continue to defend itself effectively. The plight of Palestinians, meanwhile, will gradually fall from the headlines. The Middle East will stabilize because the region’s most powerful actors know that they don’t want and can’t afford a regional war.
America vs. itself
Perhaps most concerning is the United States’ war against itself. Unlike the conflicts in Ukraine and the Middle East, the growing crisis of American democracy is a structural cause rather than a symptom of the vacuum in global leadership.
With the presidential election less than two weeks away, the problem is not just who's going to win (although there are certainly risks in that, too, and the outcome is anyone’s guess). The bigger problem is that most Americans strongly agree that there are forces inside the United States intent on destroying democracy – they just disagree on the nature and identity of those forces. The left sees Trump’s attempts to overturn 2020’s results, current legal maneuvers, and hyperbolic rhetoric as dire warnings. The right believes globalist elites and “deep state” bureaucrats have already subverted democracy by persecuting Trump, committing large-scale voter fraud, and enabling widespread lawlessness and illegal immigration.
The post-election period is uniquely dangerous, as nearly half of the country will view the outcome as illegitimate. No matter who wins, tens of millions of Americans will find evidence that their political system is broken. And they’re not entirely wrong.
While America’s economic and geopolitical fundamentals are resilient, its political dysfunction will reverberate around the world. Allies and adversaries are headed toward a world where the once-indispensable nation cannot be counted on to uphold global security, free trade, and the rule of law. Yet as long as most Americans’ daily lives remain unperturbed, US political woes will matter much more for the rest of the world than for the US itself.
That’s precisely why the G-Zero is going to get worse before it gets better: Nothing short of a “come to Jesus” moment can get the United States to finally confront its political division and dysfunction. Jan. 6 was clearly not enough of a jolt to elicit a response. Maybe this year’s post-election theatrics will do it – or perhaps it’ll take a run on the dollar or a military defeat to shake Americans out of their complacency. Until then, though, the country’s political crisis will continue to fester, and the global leadership crisis will grow accordingly.
Looking ahead
Nature abhors a vacuum. The deepening of the G-Zero world order has left us uniquely vulnerable to escalating geopolitical conflict and disruption. Without effective global leadership, these crises feed on each other and make responding much harder.
Yet despite these challenges, some of the greatest opportunities in human history still lie ahead. Other “crises” aren’t as bad as they may seem. In next week’s newsletter, we’ll explore why – despite everything I’ve outlined above – I remain cautiously optimistic about our capacity to build a more prosperous, equitable, and peaceful world.
Collage of Kamala Harris and Donald Trump
The specter of Jan. 6 haunts the 2024 presidential election.
Most Democrats believe former President Donald Trump should be in jail for his efforts to overturn the results of the 2020 contest – or, at the very least, that he should be barred from running for the highest office again. Most Republicans believe Trump as he continues to push the “stolen election” lie, spreads baseless claims of widespread voter fraud (especially by noncitizens) in November, and sows doubt about the election’s legitimacy.
Both sides argue that the stakes of the upcoming election are at their highest, with the fate of American democracy hanging in the balance. Barring an unlikely landslide, a large percentage of Americans will see the result as illegitimate, with challenges and recounts likely regardless of who wins.
Should Trump win, Vice President Kamala Harris will concede. That’s not to say that all Democrats would go gentle into that good night, especially if she wins the popular vote and the Electoral College is very close. Legal challenges in contested swing states could go all the way to the conservative Supreme Court, where they would probably flounder. Some individual Democratic lawmakers might then opt to vote for a resolution to disqualify Trump from the presidency by declaring him an insurrectionist and thereby ineligible to serve under Section 3 of the 14th Amendment. A few of them would also try to block certification of Trump’s Electoral College victory when Congress meets on Jan. 6, 2025, like they did in 2016 and 2004. But both efforts would be performative and futile, as congressional Democrats have neither the stomach nor the numbers to successfully overturn a legitimate election.
If Harris wins, Trump is all but certain to allege the election was stolen from him again – no matter how wide the margin. The former president not only continues to deny his defeat in 2020, but he has also repeatedly refused to commit to accepting the upcoming election results. Trump and his allies have spent years spreading conspiracy theories to prime the Republican electorate into believing that the only way he could plausibly lose is through fraud. They have laid the groundwork to dispute a potential 2024 loss and devoted substantial resources to prepare for the battles that could ensue.
Whether they could succeed where they failed last time is a different question … and the answer is no – at least not legally. Despite the considerable resources Republicans dedicated to the preemptive “stop the steal” movement, Trump has fewer options for challenging the results today than he did in 2020.There are two key reasons for this.
The first is that as a private citizen, Trump no longer has access to the levers of power that could allow him to contest the election successfully. He cannot, for example, order the US military to seize voting machines pending an investigation of election fraud, an idea he floated when he was still president in 2020. Nor can he direct the Justice Department to investigate and prosecute allegations. Attempts to intimidate election workers into “finding” extra votes for him or to pressure swing state governors into submitting alternative slates of electors are less powerful when they come from a bully with no pulpit.
The second guardrail the United States has today is the Electoral Count Reform Act passed by Congress in 2022. By clarifying the process by which states send their slates of official electors for Congress to certify, the new law effectively forestalls the “fake elector” scheme that Trump’s state-level allies attempted to implement in 2020. Moreover, the act raised the threshold for Congress to lodge an objection to a state’s electoral votes to one-fifth of the House and Senate, up from just a single member of each chamber. If that bar is met, majorities of both chambers then have to vote to disqualify a state’s electoral votes. This greatly reduces the likelihood that any objections occur at all.
The electoral system may be stronger than it was in 2020, but so is Americans’ mistrust of it. While court challenges and recounts are likely to be resolved before the Electoral College convenes on Dec. 17 to formally decide the winner, the delays and uncertainty these would create about the results would dent public confidence in the election and put pressure on congressional Republicans to vote to block certification.
Although most Republican lawmakers continue to roll their eyes at Trump behind closed doors – and even more will curse his name if he loses a winnable election – 147 of them did vote to object to certified results from Pennsylvania in 2020. Next Jan. 6, there will be even more Republicans in the House and Senate who are beholden to Trump or are unwilling to compromise their political future by condemning the former president’s antics. The changes made to the Electoral Count Act in 2022 mean a challenge is highly unlikely to move forward and prevent the winner from being certified, but even an unsuccessful attempt would undermine Americans’ already-low confidence in US democracy.
The bigger threat is political violence after the election. As more citizens believe their system is being subverted by their political enemies – with outcomes that can no longer be addressed by a free and fair vote – radicalization and support for civil disobedience will grow. This runs from the symbolic (refusal to participate in inauguration, attend political events, etc.) to the political (creation of “autonomous zones,” secessionist movements, etc.) to physical violence (rioting, militias, and targeted assassinations).
With Democrats in power, most key Proud Boys and Oath Keepers in federal prison, and Washington, DC, in full lockdown, a repeat of the Jan. 6 attack on the Capitol is unlikely if Harris wins. But violence could still come from far-right extremists and individual agitators seeking to disrupt vote counts and state legislative sessions to certify the electoral slate in swing states.
If Trump wins, the violence would come later as left-wing protesters rally at his inauguration and against his immigration policies. Coupled with his likely pardon of the Jan. 6 rioters, a National Guard deployment or an invocation of the Insurrection Act could spur a vicious cycle of escalating clashes.
None of this means the United States is headed for civil war. The risk of any political violence posing a serious threat to US stability remains very low. But we are likely to see a period of profound unrest the likes of which the country hasn’t experienced in decades.
The most divided and dysfunctional advanced industrial democracy will become more so.
Kamala Harris and Donald Trump surrounded by the economy.
The economy is the top issue for voters in November’s presidential election, and the outcome of the election will alter the course of the US economy. That’s because former President Donald Trump and Vice President Kamala Harris are running on two distinct policy agendas that, if implemented, would significantly differ in their macroeconomic consequences.
Harris would largely represent a continuation of President Joe Biden’s center-left policies. Trump 2.0 would plot a different path, with higher tariffs, immigration restrictions, and tax cuts akin to his first-term policies but in a much more challenging economic environment.
Although the race for the White House is too close to call and will likely remain so until Election Day, what policies ultimately get enacted depends not just on the occupant of the Oval Office but on the makeup of Congress. Polls show that Republicans are heavy favorites to flip the Senate, while control of the House will probably go to the party that wins the White House.
The upshot: If Trump wins, he is likely to come into office with a unified Republican government and a clear path to implementing his key policies (many of which – especially on trade and immigration – could be enacted through executive action, anyway). But if Harris wins, she will likely preside over a divided government with a Republican Senate that would force her to water down much of her agenda.
Let’s dive into how Trump and Harris might govern under these two most likely scenarios and compare the economic implications.
Probably the most disruptive leg of the Trump 2.0 agenda is its trade policy. Trump has promised to levy a dramatic 60% tariff on China and a 10% tariff on all imports. This is in addition to the tariffs he’d likely impose on key allied trading partners in Europe, Southeast Asia, and Latin America, especially those with large bilateral trade surpluses with the US. Tariffs are a tax on foreign-made goods: They raise prices and costs for American consumers and businesses.
While it would probably under-deliver on the headline 60% number, the Trump administration is determined to accelerate the pace of economic decoupling with China and would likely double the average tariff rate on all Chinese imports, with larger increases on intermediate goods (like semiconductors and auto parts) critical for US and global supply chains. China could either reciprocate Trump’s escalation, leading to a sharp worsening of the relationship and a new Cold War that would raise the risk of direct military confrontation. Or it could decide that its weakening economy demands a more conciliatory response, swallow the tariffs, and offer Trump a “grand bargain” that he could sell at home as a win. Either way, with baseline protectionism already higher than in 2017, Trump’s tariff increases would add to US inflation, reduce US GDP growth, and potentially disrupt supply chains. These impacts would be magnified by any in-kind retaliation from China or other targeted trading partners.
By contrast, Harris’ trade policy would extend the status quo under Biden. Tariffs would not come down from current levels, and they may even be expanded incrementally on specific sectors of concern as part of the “small yard, high fence” approach to de-risking from and tech competition with China. But by and large, Harris would lean more heavily on targeted export controls and domestic industrial policy than on tariff hikes. The US-China relationship would stay on the current path of “managed decline.”
A key campaign issue where Trump’s agenda would also have drastic and underrated economic implications is immigration. The former president has vowed to take executive actions to meaningfully crack down on migration flows at the southern border, restrict economic immigration, and deport millions of immigrants already in the US workforce. While the actual policy changes are likely to be smaller and more gradual than threatened, Trump 2.0 would deliver a material negative shock to the US labor supply that would increase the price level, fuel inflation, reduce GDP growth, depress the US economy’s productive capacity, and widen the federal deficit.
For her part, Harris would stick to the more restrictive stance Biden embraced this year barring migrants who cross the southern border illegally from applying for asylum. She would also continue her work with Latin American countries to reduce migration by addressing its “root causes” in the region, albeit mostly without success. Harris would face slim odds of passing comprehensive immigration reform through a Republican Senate. But if illegal immigration continues its current pace of decline and the issue becomes less salient over time, she could have the political space to loosen some restrictions, which would provide a disinflationary impulse and a boost for the US economy.
Where the differences between the two candidates are less stark than they seem is energy policy. Trump has a clear preference for maximizing domestic fossil fuel production, while Harris once opposed fracking and would continue implementation of the Inflation Reduction Act to spur the growth of renewables. A second Trump term would streamline permitting regulation, expand offshore and Arctic federal lease sales, speed up approval of new LNG export facilities, and loosen climate and emissions regulations. But with the Biden administration already supportive of the oil and gas industry, domestic output at record levels, and production determined as much by market conditions as by government policy, there’s only so much that Trump’s “drill, baby, drill” approach could realistically achieve. At the same time, while Trump 2.0 would curtail some of the renewable subsidies in the IRA such as the EV tax credit, a wholesale reversal of Biden’s signature legislation is unlikely because it was designed to generate vested interests in many red states and within industry.
Similarly, while a Harris administration would stick to the Democratic Party consensus on advancing the green energy transition through existing IRA subsidies and industrial policy, it wouldn’t take any meaningful actions to constrain domestic energy production in a way that could be seen as leading to higher gas prices at the pump. This is aligned with President Biden’s “all of the above” approach to energy sourcing to ensure the green transition is economically and, therefore, politically sustainable – the same approach that has been partly responsible for record-high domestic energy production levels.
Finally, we have fiscal policy, where neither candidate has a plan to fix the debt. Despite Trump and Harris offering radically different visions for taxation and spending, deficits are set to increase over the next decade regardless of who wins the election. Indeed, with general government debt at over 120% of GDP, federal budget deficits at 6+% of GDP at a time of peace and relative prosperity, and no prospect of entitlement reform until the 2030s, the mythical DC deficit hawk looks all but extinct.
Harris and Trump are both likely to extend the 2017 Trump tax cuts when the Tax Cuts and Jobs Act expires in December 2025. The main difference is that Trump with a unified government would substantially increase overall spending – particularly defense spending – without offsetting tax hikes, leading the deficit to balloon (possibly to 8-10%) over the next 10 years and putting the US on an even more unsustainable fiscal trajectory than it is already on. Harris, on the other hand, would also extend most of the expiring tax cuts but offset some with higher top marginal rates on high-income individuals. A Republican-controlled Senate would limit the scope for both tax hikes and non-defense spending increases, meaning her administration would increase deficits and debt less than Trump 2.0 would by 2035. Higher interest rates under Trump with a unified government would further widen the gap between the two scenarios.
What does it all add up to? Putting together the effects of higher tariffs, immigration restrictions, and wider deficits, a second Trump presidency is likely to result in higher inflation and lower GDP than a Harris administration. The combination of Trump’s stagflationary policies might prompt the Federal Reserve to end its rate-cutting cycle earlier, leading to higher-for-longer interest rates and slowing the US economy. Trump might then try to jawbone the Fed into lowering rates and weakening the dollar, undermining its independence and causing higher risk premia.
Some of you may dismiss this as alarmist or, worse, partisan. After all, there was plenty of handwringing from experts before Trump’s first term, too, and the US economy ended up doing pretty well until the COVID-19 pandemic hit. (Even if that performance was arguably an extension of the long and robust economic expansion that preceded it, juiced by Trump’s pro-cyclical, deficit-financed corporate tax cuts, and enabled by the Fed’s easy monetary policy.)
But the initial conditions really are very different now than in 2017. Growth is slowing. Interest rates are higher. Higher deficits and debt reduce fiscal space for further tax cuts. Inflation has only just normalized after several years above target. Domestic energy production is at record levels. And a lot of the policy low-hanging fruits that markets cheered in Trump 1.0 have already been picked.
Trump and Harris offer distinct visions for the economy. There are plenty of legitimate – even compelling – reasons for voters to prefer what the former president is selling. But anyone who expects Trump to snap his fingers and deliver 2019-level prices will be sorely disappointed – unless, of course, his policies cause a massive deflationary recession. Be careful what you wish for.