Geopolitical Risk in a Trump 2.0 World
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Hi, I'm Ravi Agrawal, Foreign Policy's Editor-in-Chief. This is FP Live. Welcome. We are starting to learn the contours of Trump's second presidency at a rapid clip as he announces key administration positions.

On foreign policy, you have Marco Rubio for Secretary of State and Mike Waltz for National Security Advisor. Those were somewhat along expected lines, you could say. But then we've also had Elise Stefanik for UN Ambassador and the former Fox News host Pete Hexeth for Defense Secretary as surprises. This was a change election signaling the rejection of things as they were.

Now, all of these appointments have gotten me wondering. Each of them has one common trait, loyalty, fealty even, to Trump. And the question then is how much personnel matters in a second Trump White House and what Trump actually wants to do with all this power he's accumulating.

Well, whatever he does do, we know it's going to be turbulent. And so there's a huge amount of geopolitical risk that countries and companies are trying to factor into their work. Well, my guest today is the world's foremost geopolitical risk expert. Ian Bremmer is the president and founder of Eurasia Group, as well as GZERO Media. As you've probably noticed, this is an extra episode this week. The news is moving quickly.

we should probably get used to it. As always, write us. We're at live at foreignpolicy.com. Let's dive in.

Ian, welcome back. Hey, great to see you, Rod. You too. So let's just start with personnel quickly, and we're only going to focus on the roles related to national security here. What do the choices of Rubio, Waltz, and Hexit tell you about foreign policy in a Trump 2.0 world? A harder line, of course, in terms of China, in terms of support for Israel, in terms of

Russia more balanced, frankly, than what you would have heard from Trump or from J.D. Vance? I mean, frankly, if those were the only three posts we were focusing on, Hegseth is unusual in the sense that he has no managerial experience whatsoever. So he really shouldn't be SecDef. But

Trump picked him in a kind of normal way, which is he's a television personality and he looks like the role that one would see as SecDef. He's got a nice, strong jaw and great hair and, you know, speaks well and all of these things that, you know, impressed Trump was very telegenic in the way that, you know, Rex Tillerson,

felt like a secretary of state when Trump first met him, even though they had never met before and their policies weren't particularly aligned. So I don't think we would find that surprising. More surprising, of course, the more recent appointees that also matter for national security. If you think about national security from a broader perspective, like for example, the stability and sanctity of rule of law in the United States, Matt gets a very, very concerning pick from that perspective. Tulsi Gabbard, uh,

a lot of what she has said, the conspiracy theory is she's floated and promoted, uh, the willingness to align more with talking points from American adversaries like Syria, like Iran, like Russia, uh, then supporting what anyone in the foreign policy establishment left or right would accept. That would be a greater concern. And of course, um,

the position that is not a position, but nonetheless seems to matter a lot is Elon Musk. Uh, and I'm not talking about running, uh, the department of governmental efficiency, which is a non-governmental organization with no particular, um, authority. I'm talking about the fact that he is spending a lot of time directly with the president in key meetings was on the phone call with Zelensky just met with the Iranian ambassador to the UN. I mean, clearly that,

is a national security position, even if unappointed. And that is very unusual for the US and the rest of the world as well.

There's so much to parse through there. Let's talk about geopolitical risk in terms of if you're a CEO or a business. So no one knows this better than you. Trump is unpredictable. He can be a roller coaster. Yet stocks saw a bump when he won. The dollar has been rising too. What is your sense of how businesses around the world are viewing a second Trump term?

short-term, very positive for the stock market as a whole. That is a combination of more

fiscal spend, irrespective of the 2 trillion that Vivek and Elon promised to take out. Again, Congress holds the pen on that. It ain't gonna happen. No one thinks it will. The fact that a lot of sectors feel like they will be more unrestrained with regulatory rollback, that is particularly true with the financial sector. It's true to a degree with the tech sector, writ large, things like crypto, for example, oil and gas.

Pharma stocks, of course, took a major hit on the back of the RFK junior appointment. No surprise there. But generally speaking, it seemed to be a benign environment. Taxes, you expect tax extenders on tax cuts that were otherwise going to roll into an end. And, you know, that all is problematic.

For other economies, it is a strong dollar. It is very weak peso. It's very weak. Most emerging market economies around the world, Israel, one of the only countries that's seen a bump in terms of the shekel. The Ukrainians,

have actually seen their bonds do much better because the markets are hopeful, rightly in my view, that there will be a near-term ceasefire imposed essentially with pressure from Trump on both Zelensky more greatly and also on Putin. So, I mean, the markets are responding to all of this, but those are short-term responses.

Long term, you are clearly going to have a lot of inflation in the United States on the back of policy on tariffs.

on the back of policy on illegal immigrants to the US, you're also going to see a lot of hedging. A lot of hedging because a lot of countries around the world are feeling that the United States is not a leader to be counted on and is also not a leader with values that align with traditional American allies.

And I do think that long term there will be economic implications for that. But that is not the way the markets respond. Markets are an immediate, you know, sort of animal spirits reflect what we have right now. And right now people are believing in the U.S. economy.

Wow. So a lot of different issues there. We'll come to each of them, but I wanted to start with tariffs. This strikes me as the area where anything could happen. So Trump has proposed 20% tariffs on all countries, 60% on China. Who knows where he'll actually land? What are you expecting? How are businesses and CEOs preparing?

We know that Trump sees foreign policy through an economic lens, through a tariff lens. He cares a lot more about that than he does, for example, technology. He focused on U.S.-China, on those 25 percent, ultimately tariffs, which Biden maintained. So, I mean, he identified a policy that was going to hurt American consumers, but was aligned with where the American public was and Biden stuck with it.

Technology policy, he did nothing. And Biden did the CHIPS Act and Biden did the export controls on semiconductors. So, you know, it's really the tariff lens is very important for Trump. And it's inconceivable to me that he would be trying to roll that back. It's not only important because he for decades has been railing against.

tariff against trade deficits, against Japan, back in the 90s, for example. This is well before Trump was a political contender on the national stage, but also because Trump really is focused on more jobs at home, more capital at home, more investment at home, and using both carrots and sticks

subsidies and tariffs to incent that behavior. And even though he has lots of billionaires and CEOs that are very, very aligned with him personally, and they'll be happy with him from their own tax perspective, he doesn't have the chamber of commerce in his pocket the way historically many Republicans have.

And that's because he's rejecting globalism. He's rejecting the idea that I want to let these multinational corporations do business in an unfettered way around the world. I want them to come back to the United States and they may have to pay some costs for that. So that, I think, means we should expect more tariffs.

And he'll negotiate those tariffs. I don't think that anyone believes that 60% is an operable number for China, especially because of the damage it would do to the U.S. economy. But it will, that very conversation will drive the potential for a deal with the Chinese, who are under a lot of economic pressure themselves. It will also drive behavior to decouple

from China and the Chinese market more quickly than multinational corporations otherwise would. And that will speed up because the Chinese economy itself is performing so badly. Now, will he at the same time also hit the Europeans and the Japanese and the Mexicans on that front? Well, he'll do some of it at the same time because he wants to hit those corporations that are acting as pass-throughs

for excess Chinese manufacturer, which is the only thing that's working in the Chinese economy right now because their consumer demand is Zippo to the United States. That's a Robert Lighthizer focus. We'll see it from other parts of the administration as well. He'll also be talking about, I want the Europeans to spend more on NATO. 2% is not enough. Now it's 3%. That's the operable term. I expect he'll say that. And some of that will be paid out in trade concessions.

Same thing with the Japanese, same thing with the South Koreans. So all of this is gonna continue. What numbers we end up with, I don't know. There'll be somewhere in between and determining where that number is will in part be on the back of how well those leaders are able to navigate

President Trump and a fairly strongly aligned administration. And I guess some market signals as well. I'm also curious about market signals for deportations. So Trump has been very clear he wants to deport some number of illegal immigrants. We don't know how many. And it's also clear that Americans are very angry about a porous border and an asylum system that has been prone to abuse. What is your sense of

how much he might start with and what kinds of market signals will you be looking out for as potential checks on any attempt to deport 1 million, 3 million people outside of this country? Well, first, I think they're willing to accept economic cost and inflation and challenges with labor rates and availability on the back of illegal immigrants. First of all, because they actually do have law on their side.

There are a lot of corporations that are taking advantage of the fact that they're working with people that are undocumented. And he's trying to do something about that. And that is a very popular policy in red states. But it turns out it's also popular in blue states when they have to deal with actual illegal immigration. So, I mean, you got a lot of sanctuary cities across America.

blue America that sounded great in theory until those migrants showed up on their doorstep. My own New York City, you know, hotel costs have gone way up because a whole bunch of those hotels are spending an awful lot of money and putting a major drag on the New York economy by putting up illegal immigrants, some of whom made their way here by themselves, some of whom were shipped here, you know, by the Texas government and the Florida government. And why not? Why should the border states

have to deal with all that illegal immigration. So suddenly people that felt great about, oh, we'll be a sanctuary city when you don't have anybody here, suddenly you've got to pay for them and your views on migration have changed. It's exactly what we've seen across Europe. Not a surprise. And the European response is all of these governments end up tacking towards the right.

Suddenly, Viktor Orban doesn't look like an outlier on immigration. He's coordinating with Ursula von der Leyen and everybody else in Europe. And that is, I think, what is going to happen in the U.S., is you're going to see that Trump's policies on migration are going to become far more mainstream. In fact, they were far more mainstream and they were covered up by a Democratic elite that was actually far more to the left than their average voter.

That's very different from what we're seeing on inflation numbers. So in other words, migration has been a big issue that will move in Trump's direction. Inflation is a big issue that would have moved in Trump's direction were it not for his policies on tariffs.

on migration and ultimately on fiscal spend. And there he's going to take a hit. And so which is going to be more important? Interestingly, gas prices going to help him on inflation, right? The U.S. is now producing 13.5 million barrels a day more than ever before under Biden. That number is going up under Trump. I certainly think 14 million is a baseline number in the first year. If there's more tension in the Middle East, maybe more than that.

And that means that energy prices are going to be lower. And, you know, if it turns out that we have more inflation on a television, but we actually have, you know, two buck gas.

or possibly even less, which is the one thing that every week you go and you pay by itself and you know what that cost is, that will have an outsized impact, I think, on consumer sentiment, on mindset. So in some ways, Trump might be better set up in the near term on some of his domestic indicators cyclically than you otherwise would expect.

Wow. Well, one thing that's linked to Drill Baby Drill is climate change. And I mean, this is also another big area of divergence between Trump and Biden or Trump and Harris. And we know that Trump might try to roll back some of Biden's plans on promoting and subsidizing clean energy. The question I've been wondering is what is the private sector going to do? So have market incentives changed enough?

in such a way that clean energy is just the way to go, no matter what. I was struck by the news that the ExxonMobil CEO said that he wants Trump to stay. In the Paris Climate Accord. Yeah. Yeah. Which, I mean, you know, I bet that wasn't on your bingo card a week ago, right? I mean, ExxonMobil, that's one of the companies that historically, back when they were just Exxon, they were commissioning research on climate change and not only covering it up, but actively

actively lying about it, right? So, and now, I mean, the fact is that post-carbon energy investment at scale is not only proven, but is proven at a very efficient level. I mean, the costs of wind and solar have come down exponentially. And so everyone knows that we're going to see this at scale. So Texas, which we've thought of as oil and gas capital of the US, and it is,

But it turns out it's also post-carbon transition energy capital of the U.S. Just like China is the carbon emissions capital of the world, but it's also the nuclear, wind and solar capital of the world. You know, it turns out that the answer is all of the above. And Trump is certainly going to put his thumb on the scale in favor of CEOs of oil and gas companies who Biden wouldn't even take meetings with.

But he's not going to stop transition energy development because there are too many red state jobs that are reliant on it. And that will also limit how much he wants to roll back some of the subsidies that came from the Inflation Reduction Act.

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Okay, let's do a tour of the world, China. We've already riffed on the tariff angle. How are you gaming out US-China relations under Trump? Three different things I can say. First is that I was just in China three, four weeks ago, and this is by far the worst economy that they have had since the 90s, maybe the 70s. They're very aware of it.

And it has led them to be more risk averse and cautious towards most countries around the world. That's why they were willing to pull troops back from the contested border with India and why you got the first bilateral summit with Modi that Xi Jinping has had in five years.

That's why they're reaching out to the Japanese for a summit meeting that I expect will lead to some economic measures that feel like breakthroughs, even if they're more marginal. That's how they've reached out to the Europeans, more carrot, less stick around electric vehicle tariffs and other related issues. So they are more inclined to do a deal with the Americans if one is an offer.

And they are less inclined to go tit for tat against tariffs than to be more reserved and more cautious.

I just had a Chinese delegation in my office literally two hours ago, and that's what we were talking about. What do you mean by a deal, Ian? A deal on what? In other words, if Trump were to say there's going to be high levels of tariffs unless you're willing to sit down and offer concessions to me, the Chinese are more willing to talk about what concessions might look like in this environment.

So you have a China that is less looking to escalate conflict and more hoping to maintain stability. And they are showing that all over the world. And there is no reason why they wouldn't show that with the United States. That's number one. Number two, in the other direction, is that Trump's formal appointees so far are overwhelmingly hawkish on China.

Not just on the economic side, which is what everyone has been talking about for the last year, but also on issues like South China Sea, Taiwan, and general feeling like China is an adversary that must be contained, as opposed to sometimes an adversary, sometimes a friend, sometimes in between, which has been the effort made by Jake Sullivan et al. in the Biden administration, even if they don't always walk that talk. Mm-hmm.

So the Chinese are going to have a harder time with day to day relations with the Trump administration, where in the last year since the APEC summit in San Francisco, there's been a series of high level relations with the Biden administration, mill mill on the defense side, Treasury with Yellen.

particularly Jake and the Wang Yi channel on national security and foreign policy. And they have all been, I would say, quite open in their communications and fairly constructive, right? I think you'll have a hard time seeing that

under the Trump administration. Marco Rubio, I believe, will be the first Secretary of State that has ever been sanctioned, under formal sanction, by the Chinese government. So, you know, that just gives you a sense, right? But then you have the third point, which is that Trump personally

does not care about the value system, the political system of another country. Doesn't care. So the fact that China happens to be a dictatorship has zero bearing on Trump's willingness to do a deal with them.

It mattered a lot to Biden, who was willing to sit down and talk with Xi Jinping, who over the decades had developed a relationship with. But still, you know, Biden's worldview is autocracies versus democracies, bad guys versus good guys. And China was always going to be kind of in the bad guy camp. Trump does not see it that way at all.

doesn't care about the Uyghurs and genocide in Xinjiang, doesn't care about human rights, doesn't care about the lack of independent media. I mean, in many ways, Trump is more interested in making the US like China than he is in making China like the United States. Like he is more transactional. Quick note there, Ian, Rubio, for example, did care, demonstrably cared about the Uyghurs,

past legislation that you mentioned the point that Trump would just ride over that. Again, three baskets. The first basket is on the Chinese economic vulnerability, which orients them towards a deal or risk aversion. The second is Trump's formal appointees on national security writ large

all of whom are oriented towards a harder line policy on China, as you just brought up again. That's the second bucket. The third bucket is Trump himself.

Trump is not Rubio. Trump is not Ratcliffe. Trump is not Hegseth. He's not any of these people. Waltz. They're all pretty consistent on China. Trump is not. Trump has no interest in talking about things like human rights. None. Trump's view on Xi Jinping is just like his view on Kim Jong-un.

Just like his view on Putin. It's like, this is a smart guy that I can sit down with. And if I can cut a deal, I'm going to cut a deal. I don't care if they're aligned with me or not. What does that even mean? That common values are not something. That's something that other countries use to try to make me look like a chump, make me look like a pushover. But I'm actually more powerful than they are. So if I sit down one on one, I have more leverage to get a better deal.

than any other president who's going to be risk averse in using that power. So don't fall asleep on the idea that irrespective of what all of his advisors have said, that when Trump sits down with Xi Jinping and he senses weakness, he's like, you know what? I'm going to come across as absolutely freaking brilliant. And by the way, it'll be very interesting if in the first phone call that Xi Jinping has with Trump,

Is Elon Musk on that call? I want to know that. I mean, he was on the Zelensky call, which doesn't matter all that much, but matters a lot if he's on the Xi Jinping call. On the Xi Jinping call, I mean, this is the guy with major business interests in China. This is the guy who, like publicly, when he posts on TwitterX,

He's vastly more careful what he says about the Chinese Communist Party than what he says about the SEC. Right. So if there's anyone in Trump orbit that wants to see, wants to facilitate a much better relationship between the US and China, it is the guy that has the most power that isn't appointed to a position, which is Elon Musk.

And we don't know the answer to that. So, again, I think the U.S.-China question with Trump is an extremely interesting question. On balance, it is tilted towards a deterioration in the relationship, even a marked deterioration relationship. But do not do not discount the idea that we could see a major breakthrough.

Wow. And there's also Tesla's leverage there for the Chinese, but I've got to jump to Ukraine because a lot of subscribers want us to go there. You mentioned this earlier just a little bit, but what's your sense of a chance of a breakthrough on a deal between Putin and Zelenskyy?

I think the likelihood, as I mentioned before, the reason why Ukrainian bonds are outperforming is because the markets expect that we're going to see a ceasefire. I think the markets are right. Whether or not that ceasefire is durable is an open question. Whether that ceasefire allows the Europeans to stay together.

is an open question or whether a number of European allies will say, you know what, I want to work with Russia again. I want to be aligned with Trump. You could easily see that with a significant number of European countries that would deeply undermine Europe's power, not only vis-a-vis Russia, but also on the global stage.

So there's a big, big question about what's going to happen with Europe here. There's not much question of what happens with the US, not much questions about what happens with Russia, really not that much question of what happens with Ukraine. It's going to be partitioned and Zelensky is going to be under a lot of pressure. But there's a lot of question about what's going to happen with the Europeans. Now,

Ukraine is going to lose 20% of its land, but you know, frankly, that is where we are right now. And I want to be clear to the audience. I am not happy about this outcome. My analysis has nothing to do with my personal preference here. Like I thought Trump was going to win. I did not vote for Trump, but I thought he was going to win. Like, I mean, you know, these are, these things are separate, but, um,

Ukraine losing 20% of its land, which is already de facto reality, does not mean that Ukraine is overthrown necessarily. Does not mean Zelensky is out of power necessarily. Does not mean the Ukrainian economy collapses necessarily. Trump does not want to be responsible for Ukraine collapsing.

He would prefer that not to be on his watch. And his advisers sure as hell would prefer that. And many of his advisers have been very strong supporters of Ukraine. And most of the Republicans in Congress have been very strong supporters of Ukraine. So I think that the actual policy by Trump on Russia-Ukraine will not be giving away the entire store to Putin. But does the 80 percent, is that protected by Europe?

That's a question. That's an interesting question. I mean, there are many countries in Europe that I think would be prepared to send troops to protect that 80 percent Poland, the Baltics, the Nordics, maybe Romania, possibly France, though I doubt it. But but they're much more likely to do it if it has NATO's blessing in the U.S. backing. And I have a hard time seeing that under Trump. In fact, I expect that Trump would be willing to say no NATO.

under a peace deal between the Russians and the Ukrainians. So, well, then, well, how do you make sure that Ukraine's 80% is actually protected? I think that's a problem, right? And I'm not someone who believes that Tulsi Gabbard is a Russian agent, a cutout. There's no evidence of that. There's just a bunch of people seeing what she says. And she's no more a Russian cutout than John Mearsheimer, right?

or Jeff Sachs is a Russian cutout, but they are oriented towards this is NATO's fault and we need to give the Russians what they want on NATO to ensure that we get peace. She's gonna run national intelligence. So the reality is that inside Trump's team, you do have people that very loudly sit in a position that is diametrically opposed policy-wise, diametrically opposed.

from what all of the frontline NATO allies would support. And that, that is a very serious problem. Having said that, you know, my good friend, Alexander Stubb, the Finnish president spoke with Trump just a couple of days ago and had, I would say a reasonably constructive conversation about what the next steps are going to be. And I,

It's not like he had much influence over Trump, but I think the ability of many of even the hardline Europeans to try to get to a place where Ukraine, the rest of Ukraine is stabilized is very high.

We don't have too much time left. Last quick question. I want to get to the Middle East and Iran specifically. It just strikes me that, you know, of the people we know in Trump's orbit, you have a group that really just wants to go in and bomb Iran's nuclear installations and another group that's really sort of hung its hat on the end forever wars movement. Who's going to win out there? What happens? Well, they can be aligned.

in the sense that Israel has proven to have escalation dominance in the region. And so far, the Iranians have not been able to do much of anything in response. Again, the potential of further strikes against Iran has gone up clearly with a Trump win. But they've particularly gone up if Iran does anything against Israel in the coming weeks. And you had heard from

from the Iranian government in the past two weeks that they were thinking about, very seriously thinking about more strikes, probably through proxies in Iraq against the Israelis. They have now reconsidered that. And they've reconsidered that because they understand they cannot give Israel any excuse.

to decapitate the IRGC, any excuse to take out the nuclear capabilities to a greater degree than the strikes they apparently took a few weeks ago, reported by Axios earlier today. So, yeah, I think that there is a risk. But I also think that there's a potential deal. And, you know, in the same way that I talked about China, the Iranian administration

permanent representative to the UN just a few blocks from me here was meeting with Elon Musk yesterday for an hour.

He didn't do that by himself. He wasn't freelancing. Trump knew he was doing that. So, I mean, is there a potential that Iran might offer a much more significant intrusive nuclear deal than the JCPOA that Obama signed multilaterally, but that Trump unilaterally walked away from? Yes, there's a chance. So again, you know, the United States, what I want to remind people of,

Trump is not committed to a lot of norms that the United States has stood for for decades, not at home and not internationally. But Trump is now committed

Running as of January, the most powerful country in the world. And there are enormous numbers of countries that will kiss his ass much, much harder and repeatedly, more repeatedly than they would have four years ago or than they thought they would have two weeks ago.

And that means that the ability of Trump to put some points on the board wins. Foreign policy wins in his early months is actually extraordinarily high. And when that happens, I think it is our obligation to call balls and strikes.

You know, I mean, you know, if he has a horrible appointee that's going to do a bad job, you say that if he has a good appointee that you think is capable, you say that. We talked about that in the opening. Same thing is true with foreign policy wins and losses. And, you know, I think that people they they need to know that that there are places that they can come that aren't going to just try to, you know, sort of damage their heads with fake news and tribalism. And, you know, we kind of we kind of owe it to people to do better than that.

We do indeed. And you and I will be right here through 2025 and beyond doing exactly that. Ian Bremmer, thanks for joining us. Good to see you, Robert. And that was Ian Bremmer, the president and founder of Eurasia Group, as well as GZERO Media.

Stay with us for many more great conversations on what a second Trump term means for the world. In the coming weeks, we will look at the global chip wars and how Trump might impact them. That's going to be with Chris Miller, who literally wrote the book on this, Chip Wars. And later, we will do our usual end of year look back and look ahead to 2025. That will be with the CNN host and author Fareed Zakaria. Lots more good stuff ahead.

If you have guest suggestions or feedback, we love hearing from you. Our email is live at foreignpolicy.com. FPLive, the podcast, is produced by Rosie Julin and the executive producer of the show is Dana Schoen. I'm Ravi Agrawal. I'll see you next time.

Thank you.

And some quirky non-political stories you probably missed. Vilnius, the G-spot of Europe. Nobody knows where it is, but once you find it, it's amazing. The Europeans. New episodes every Thursday.