Trump’s Re-election – Political Risks for International Companies and Economy at a Glance

The re-election of Donald Trump, particularly due to his large lead in the election results, has sparked surprise. Despite the high likelihood of this outcome, few companies are prepared for the political risks arising from this presidency. MBI CONIAS data helps companies, institutions, and organizations identify specific political risks and monitor their development regularly. This way, companies are not caught off guard by political developments but are instead prepared for political risks.

Below, we highlight three examples (out of more than 1,200 conflicts we currently monitor) that illustrate the national and international conflict situations that pose risks and should be observed over the coming months. If you would like a complete picture of the political situation and/or regular updates on the development of these conflicts and associated risks, please contact our risk experts.

Conflict: USA – China (Trade War, Technology Transfer) → Supply Chain Disruptions, Tariffs

Overview: During his first presidency, Donald Trump decided to reduce the trade deficit with China by drastic means and to prevent what he claimed to be unauthorized technology transfers to China. Previously outsourced production was to be brought back to the USA, incentivized by tax breaks. At the same time, new, more stringent regulations were imposed on trade between the two countries, such as restrictions on solar panel imports, with harsh penalties for violations. China responded with tariffs of its own. Additionally, the European Union has, in some cases, aligned with American tariffs and has also found itself in a trade war with China.

Possible Developments: Trump could significantly escalate the trade war, which the Biden administration has also pursued, sparking renewed escalation with further tariffs on both sides. He could also press the EU and other Western nations to join his trade policy.

Potential Political Risks: In the first phase of the trade conflict, there were already disruptions and delays in supply chains, which could occur again. Additionally, tariffs on various products threaten revenue and lead to profit losses in trade with China.

Conflict: USA – NATO (Membership Contributions), Related to: Russia –  Ukraine → Increase in Defense Spending, Rising National Debt, and/or Tax Hikes in Other Member Countries, Restrictions on Other Investment Spending

Overview: During the 2024 presidential campaign, Trump reiterated his stance that all NATO member states must significantly increase their military spending. Trump’s comments on Russia’s war against Ukraine also imply that, should a quick ceasefire fail, additional defense and support expenditures would be expected of European allies.

Possible Developments: European member states may face pressure from Trump’s administration to significantly and permanently increase their defense budgets.

Potential Political Risks: Unplanned and sustained increases in military spending could force already heavily indebted countries to take on more debt or even raise taxes. Furthermore, other investment programs and, consequently, contracts for domestic and foreign companies could be significantly curtailed.

Conflict: USA (Social Conflicts; Black Lives Matter) → Intensified Social Conflicts, Increased Protests and Strikes, Deterioration of Domestic Security

Overview: Analysis of data from our CONIAS conflict database shows that during Trump’s first term, the number of violent intra-state conflicts in the US, as well as the recorded number of violent actions, was well above the average of previous years. Even under Joe Biden, these numbers were markedly lower than during the Trump years.

Possible Developments: During his campaign, Trump used rhetoric that was, again, beyond what is typical of democratic leaders. As president, he could disparage certain groups, spread false claims about them, and directly or indirectly call for actions against them outside the bounds of legal legitimacy.

Potential Political Risks: Social cohesion may weaken further during Trump’s next presidency, leading to conflicts between ethnic or social groups that could become deeply entrenched. As a result, the methods used to assert interests could become significantly more aggressive. This could lead to more frequent strikes in businesses and an increase in violence by individuals as well as organized groups. Democratic decision-making processes might lose their value within society, and the atmosphere of violence could threaten the safety of visitors and local employees alike.

Our expert team is available at any time – whether for analyzing specific conflict risks or for tailored solutions to mitigate risks. Contact us to learn more about the impact of the current political situation on your business and to receive individual recommendations for action.

About the author:
Dr. Nicolas Schwank
Chief Data Scientist Political Risk
Michael Bauer International GmbH