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by ian bremmer
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.
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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.
Iran portrayed as an origami tiger, being coaxed by Netanyahu.
Israel’s assassination of Hezbollah leader Hassan Nasrallah last Friday didn’t just deal a crushing blow to the once-fearsome Lebanese militia. It also exposed Iran’s vulnerabilities and marked a pivotal shift in the region’s balance of power.
The death of Nasrallah caps several weeks of successful Israeli strikes against Hezbollah’s military capabilities and chain of command that have left the group weaker than it has been in almost two decades.
Israel is now pressing its advantage with a limited ground incursion into southern Lebanon – the natural conclusion of the sabotage, bombing, and assassination campaign of the 10 days prior. The end goal of the operation remains the same: to clear the area south of the Litani River of Hezbollah fighters, weapons depots, and infrastructure in accordance with UN Security Council Resolution 1701 to safely return the 60,000 displaced Israelis to their homes in the north. The IDF has indicated the targeted offensive is expected to stay close to the border and end within weeks, as opposed to a more protracted occupation of extensive Lebanese territory (best-laid plans, though …).
Hezbollah would normally be expected to respond to such an escalation with heavy missile and rocket strikes on Israeli military installations, civilian infrastructure, and densely populated urban areas. That hasn’t happened. At the very least, Hezbollah could be counted on to defend its strongholds. Yet Israel’s ground offensive has met virtually no resistance thus far. While Hezbollah retains a significant fighting force, an entrenched arsenal of precision-guided weapons (though it’s unclear how much of it survives), and an ability to rebuild over the long term, the group is in such disarray that it’s hard to imagine it mustering the capacity or command to mount a response that passes the cost-benefit test at this time.
It’s become even harder to imagine Iran, its patron, reacting sharply to Israel’s escalations and risking a regional war that could draw the United States into the fight.
For starters, the Islamic Republic lacks good options to effectively retaliate against the Jewish state without inviting devastation to its homeland. That is especially true now that Hezbollah, previously the leading edge of Iran’s efforts to deter Israel, is reeling from Nasrallah’s death. Apart from its impressive array of ballistic missiles, most of Iran’s military is built upon Cold War-era hardware. It is no match for Israel’s overwhelmingly superior technological, intelligence, and military capabilities, let alone its nuclear weapons. A direct conventional conflict with Israel would not go Tehran’s way – and that’s before you bring the US military into the equation.
Moreover, President Masoud Pezeshkian and Supreme Leader Ayatollah Ali Khamenei have expended political capital on pursuing a policy of détente with the West in the hopes of obtaining sanctions relief. They have calculated that improving the economy while delivering limited reforms is their best hope for stabilizing the regime’s crumbling internal position amid a legitimacy crisis born of domestic dissatisfaction with stifling repression and growing economic woes. Getting directly involved in a war with Israel and, potentially, the US would make resuming diplomacy impossible and jeopardize the regime’s survival strategy. There’s nothing Iran’s leadership values more than self-preservation.
At the same time, Khamenei is under intense domestic pressure from hardliners and conservative elites to reestablish some deterrence and bolster Iran’s credibility within the Axis of Resistance at the risk of inducing unwanted trouble.
This tension explains why Iran launched 180 ballistic missiles against Israel yesterday – a largely performative attack it framed as its one-and-done, catch-all response to Israel’s assaults on its interests (including the killings of Nasrallah, Hamas leader Ismail Haniyeh, and several other Axis of Resistance and Iranian officials). The strike was heavily telegraphed and calibrated to limit damage, causing only two injuries and one fatality – a Palestinian man in the occupied West Bank. Much like its April response to Israel’s Damascus bombing and its 2020 reaction to the US assassination of Iran’s military chief Qassem Soleimani, Tehran sought to strike a balance between retaliating to save face and avoiding further escalation.
The problem for Iran is that its approach has lost all credibility and become counterproductive in the face of Israel’s capability asymmetry.
With Hezbollah no longer a viable insurance policy against direct Israeli attack, Israel has achieved escalation dominance – and both sides know it. Faced with the choice between risking a direct war with Israel and the US he can’t win or backing down in the interest of self-preservation, Khamenei has always chosen the latter. Knowing that gives a more risk-tolerant and increasingly emboldened Israeli Prime Minister Benjamin Netanyahu a green light to keep crossing Iran’s red lines without expecting serious consequences. Which means Khamenei’s retaliations (such as yesterday’s) not only fail to deter Israel but induce it to escalate further.
That’s a very dangerous place for the Islamic Republic to be in. Unless and until something changes, Israel’s government will continue to take more aggressive actions to degrade Tehran and its proxies until its security and political objectives have been achieved. For instance, Israel is very likely to leverage yesterday’s attack to strike back more forcefully than it did following the April episode, possibly by targeting IRGC and missile production-linked facilities in Iran. While direct shots at the country’s energy infrastructure, nuclear program, or senior leadership may be deemed too escalatory for the current cycle, they will no doubt be on Netanyahu’s mind next time an opportunity arises.
Longer term, the only way for Iran to restore some semblance of deterrence against Israeli attack is to turn to its nuclear program. That doesn’t mean imminent weaponization. In fact, a sudden dash toward a bomb is unlikely to happen under Khamenei, as this would go against his long-standing fatwa banning Iran from producing weapons of mass destruction, derail Pezeshkian’s hopes for diplomacy with the West, and risk war with the United States. That moment is, however, more likely to come once the 85-year-old supreme leader is dead or deposed – especially as it becomes clear that the next US president will have limited willingness (in the case of Donald Trump) or political space (in the case of Kamala Harris) to pursue talks. Israel may well attempt to strike Iran’s underground nuclear sites, but far from killing the nuclear program, that would only set it back and encourage Tehran to redouble its efforts to weaponize.
And when it finally does … the regional balance of power will be upset yet again, encouraging other powers to nuclearize in response and making a combustible Middle East even more dangerous.
While the cross-border fire forced about 60,000 Israelis and 100,000 Lebanese from their homes, neither side was inclined to escalate the skirmishes and risk a full-scale war, knowing the destructive consequences of such a showdown. Israel had little appetite to open a second front against Iran’s most formidable proxy while it was actively fighting a grinding war in Gaza. Meanwhile, neither Hezbollah – under growing domestic pressure amid public discontent with Lebanon’s enduring economic crisis – nor its patrons in Tehran – now betting on regional de-escalation to obtain sanctions relief and bolster the regime’s stability – had an interest in going to war on behalf of Hamas.
But after nearly a year of contained clashes, something shifted in Israel’s strategic calculus that led it to dramatically raise the stakes and expand the confrontation with Hezbollah last week.
First came the attacks on Sept. 17 and 18 using remotely detonated Hezbollah pagers and walkie-talkies, which not only killed dozens and injured thousands of the organization’s members but also crippled its communications network. Two days later, the IDF assassinated Hezbollah’s top military commander, Ibrahim Aqil, along with the entire chain of command of the group’s elite Radwan unit while they were holding an in-person meeting in a residential building in Beirut. (Aqil’s predecessor, Fuad Shukr, had been killed by an Israeli strike in the same Beirut neighborhood back in July.)
Then, on Monday, Israel launched a massive aerial campaign targeting Hezbollah strongholds across the country – primarily in southern Lebanon but also in the eastern Bekaa Valley and southern Beirut’s Dahiyah suburb – and destroying tens of thousands of rocket launchers and weapons depots. More than 550 people (including at least 50 children) were killed that day alone – nearly half the total number of Lebanese fatalities during the entire 2006 war with Israel. One of yesterday’s airstrikes also took out the commander in charge of Hezbollah's rocket and missile division.
As many as half a million Lebanese have already fled for the north as Israel looks set to intensify its bombardments over the coming days and weeks, threatening to expand the conflict even further.
What changed? What is Israel’s new endgame? And will Israel’s actions or Hezbollah’s response trigger an all-out war?
Two fronts, no more
Here’s what didn’t change: Some 60,000 Israelis have been displaced from their homes for almost a year. That may not sound like a lot, but in proportional terms, it’s the equivalent of the entire population of the state of New Mexico (2.2 million) being evacuated for a year.
These people have grown frustrated at their inability to sleep in their own beds – or send their children to their schools – and they’ve become a thorn in the side of Prime Minister Benjamin Netanyahu. Although the Israeli government regularly vowed to do something to allow them to return home, everyone understood that confronting Hezbollah was a distraction Israel couldn’t afford while the fight against Hamas was still ongoing.
But major military operations in Gaza are now winding down. While a negotiated cease-fire remains out of reach, the Israelis have so thoroughly degraded Hamas’ offensive capabilities, destroyed its tunnels, and decapitated its leadership that there’s not much more left for them to accomplish in the Strip. The IDF is accordingly withdrawing most troops from Gaza, freeing them to be deployed elsewhere (read: to the north) if needed.
Moreover, while most Israelis blame their government for the failure to secure the release of the hostages held by Hamas, there is widespread public support for a campaign to return displaced residents to the border areas threatened by Hezbollah. This is critical for the embattled Netanyahu, who can leverage the opportunity to galvanize his fragile coalition, boost his popularity amid mounting domestic tensions, and extend his tenure in office. He also has a chance to rewrite his legacy and become the prime minister who neutralized the threats from Hamas and Hezbollah, instead of the one who oversaw the worst intelligence and military failure in the country’s history.
Escalate to de-escalate
Despite its expansion of the bounds of escalation, Israel’s government does not appear to be trying to provoke a full-fledged war, destroy Hezbollah, or occupy any (let alone all) sovereign Lebanese territory. Its goal, made official last week, is more limited: to fulfill its promise to return the approximately 60,000 displaced residents of the northern border communities to their homes and prevent Hezbollah from threatening their safety in the future.
The problem is that since Oct. 8, Hezbollah leader Hassan Nasrallah has publicly insisted on conditioning a cease-fire in northern Israel to a cease-fire in Gaza, and the odds of the latter being agreed to anytime soon are slim to none (with Netanyahu and Hamas honcho Yahya Sinwar sharing the blame).
Israel is accordingly seeking to force Nasrallah to decouple Lebanon from Gaza, stop Hezbollah’s attacks on its northern communities, and move its troops and weapons stockpiles away from Israel’s border in accordance with UN Security Council Resolution 1701. Established at the end of the 2006 war, this resolution calls for the withdrawal of all armed forces in the 18-mile stretch between Israel’s border and Lebanon’s Litani River.
The big question is whether Israel’s escalations over the past week are a prelude to a ground invasion to secure this buffer zone in southern Lebanon or a pressure campaign intended to compel Nasrallah to stand down without said invasion.
My take? Israel would strongly prefer not to have to resort to a large-scale ground incursion. The full-fledged war that it would cause entails much higher costs and risks than Israel wants, and Netanyahu is gambling the devastating show of force will render it unnecessary. Having said that, if the coming days and weeks of escalating military pressure fail to get Nasrallah to fold or trigger an unacceptably retaliatory escalation from Hezbollah (e.g., successful strikes on military installations, critical infrastructure, or cities, mass civilian casualty attacks, assassinations of military or political leaders, etc.), Israel would probably be willing – and certainly ready – to go all the way to achieve its objective.
Hezbollah’s dilemma
Nasrallah made a strategic blunder when he tied Hezbollah’s fate to a Gaza cease-fire. Again and again, he doubled down by publicly insisting on this linkage. Now his organization has been dealt the worst blow in its history, and he’s stuck with no good options to respond.
There’s no doubt that Nasrallah feels compelled to reciprocate Israel’s escalations, but Hezbollah has no effective means to do so without risking all-out war against an overwhelmingly superior adversary. Unlike the bounded confrontation we’re currently seeing, a full-scale war would entail intensive and sustained strikes by both sides on each other’s critical and state infrastructure (including electricity and energy assets, ports, and airports) as well as densely populated civilian areas. It would also feature Israeli tanks and boots battling inside Lebanon.
That is a war Hezbollah knows it can’t possibly win – and one that both the Lebanese public and the group’s Iranian backers desperately oppose. This is especially true after the events of the past week, which have severely degraded the group’s military capabilities, eliminated most of its leaders, dented its morale, and compromised its power to coordinate a response.
At the same time, Nasrallah has no face-saving way to walk back his threats to continue attacking Israel until there’s a Gaza cease-fire. But what good is keeping his word to the Palestinians if Hezbollah gets destroyed in the process?
What I expect, therefore, is neither full capitulation nor full defiance. Nasrallah will keep up his tough rhetoric and refuse to comply with UN Resolution 1701, but Hezbollah will quietly bow to the pressure to let up its attacks against northern Israel. The IDF’s intensifying air campaign, meanwhile, will turn southern Lebanon into a ghost town as civilians and fighters continue to evacuate the area, making it easier for a small contingent of Israeli troops to eventually set up a buffer zone with minimal resistance and allowing the 60,000 displaced to return home. Hezbollah’s deterrence will suffer greatly, but the tip of the Iranian spear in the Levant will live to fight another day.
Danger ahead
Of course, I could be wrong. There’s a lot of uncertainty and it’s ultimately a close call, with lots of room for accidents and unintended escalations.
But even if I’m right and all-out war doesn’t break out between Israel and Hezbollah, the regional situation will still remain exceptionally dangerous. Other Iranian proxies in Iraq, Syria, and Yemen are determined to continue the fight. The two-state solution is all but dead. Palestinians both in Gaza and the West Bank are being driven to desperation, their prospects of living normal lives deteriorating wildly before our eyes. The powerless Lebanese are watching as their moribund economy takes yet another hit. The impact all of this is having on the Arab public mood, normalization efforts with Israel, and radicalization and extremism cannot be overstated.
All the regional leaders I've met in New York for the UN General Assembly over the last 48 hours have told me that this is the most flammable they’ve seen the Middle East since 1967. They’re right. As I wrote last January, “The region is no longer quiet, and it won't be for ages.”