Donald Trump was elected US President on a ticket promising disruption.  There is no question that he has delivered that in spades so far.  But there is quite a gap between creative disruption and wanton destruction. It is not at all clear to me that his time in power so far has not delivered more of the latter than the former.  And the impact of that destruction may well prove to be deeply disadvantageous to the US in the long-term.

Global Trade

Trump’s trade policies have already had a deeply destabilising effect on global trade.  Imposing tariffs on neighbouring countries increases international distrust and lowers willingness to seek to cooperate across borders.  Even if the tariffs are never actually imposed, the mere threat of them disrupts trading patterns and undermines confidence; whilst their imposition disrupts supply chains and unleashes inflationary pressures. Deporting millions of immigrants threatens the US economy.  Fewer employees chasing more jobs will fuel inflation.  Higher US inflation brings the threat of higher US interest rates, which has a global impact on the cost of servicing sovereign debt, with implications for governments and companies around the globe.

Many companies will already be reflecting on what the intensification of economic competition between the US and China will mean for them: a return to the status quo ante of international cooperation, or by a flight to protectionist and isolationist economic and political policies?  What would such a retreat mean for international trade and supply chains?

Global Energy

As during his previous tenure, one of Trump’s first acts was to withdraw the US from the Paris Climate Change Agreement.  If we were not already teetering on the brink, this act alone would have condemned the world to the certain overshoot of the crucial 1.5-degree target.  If the US questions the climate change science and is no longer committed to reducing its emissions, why should other countries?  The hard-right in countries across the globe views climate change as a hoax and green policies as expensive and anti-competitive – a stance which has already given energy companies cover to retreat on their net-zero commitments. Trump’s cynicism is grist to their mill.  And if the US does produce a glut of oil, bringing down the cost of manufacturing in the process, the hard-right’s demands (including in the UK) to open up more oil and gas fields will become more strident – with self-evidence consequences for the climate and environment if the centre ground gives way on this issue.

If the US does ‘drill, baby, drill’ it may flood the international market with cheap oil (aiming at market share, not market price).  It is worth reflecting on the implications of that outcome for other hydrocarbon-producing countries/regions. Saudi Arabia’s break-even price is between $80-$96/barrel. Brent crude is trading today at around $76/barrel.  US shale oil breaks even at around $55/barrel.  It is not complicated economics to ask how Saudi’s national budget (and political stability) might survive faced with a prolonged period of oil at US shale prices….  And for renewable companies, how does a surge of cheap oil affect their investment decisions?  If oil and gas are cheap, it undermines the incentive to invest not just in renewable technology, but in the supporting infrastructure.  And beyond the investment decisions, what are the implications of adaptation for global development (already damaged by the loss of US funding), immigration and the sustainability of cities and infrastructure faced by rising global temperatures and sea-levels? How should financial services companies respond to the change in priority accorded to incentives to invest in renewables/hydrocarbons – especially if ESG investing is rewarded on one side of the Atlantic and punished on the other?

Global Politics

We have seen a rise in support for hard-right political parties across Europe.  Trump’s victory (and immediate post-inauguration hyper-activity) has given a boost to the hard right in countries including the UK, Austria, Germany, Italy and Hungary.  European hard-right parties share a dislike of immigration, an antipathy towards the EU and a scepticism about climate change.  The hard-right believes in minimal regulation and a small state. Trump’s administration has lit a bonfire of regulations and dismissed the regulators.  The right-wing across Europe is clamouring to follow (Labour has not been slow to leap on that bandwagon - Rachel Reeves has encouraged regulators (who are supposed to be independent) to ‘strip out growth-restraining regulation’).

Companies need to reflect on the impact of these changes. Will governments in power across the continent use the combination of anaemic economic growth and the rise of the hard right as an excuse to give way to right-wing pressure and row back on net zero commitments, prioritising (any sort of) economic growth over meeting climate change targets?  Will Trump’s example set the course for a de-regulated Europe generating economic growth but at the expense of public health and an explosion in corruption?  How should companies set their own internal policies faced with such a revolutionary change? As Trump sets fire to Federal ESG and DEI policies, how should companies plan their own ESG and DEI policies in Europe? 

Global Relations

The image of the President of the US, the supposed leader of the Free-World, blithely ignoring international borders (and law) to assert territorial rights over sovereign countries sent a shock-wave round the world. His claim to Greenland (owned by a fellow NATO member) will bring relief in Beijing and Moscow: it is difficult for the West to criticise a Russian invasion of Ukraine and/or a Chinese invasion of Taiwan whilst the US is asserting its claims over Greenland.  And his dispute with Canada will bring joy to the same collection of hostile states. Victory in the Cold War was achieved by creating a united international economic and political opposition to communism: dividing allies which supposedly share the same values and principles serves only to weaken the collective ability of the West to demonstrate the same sense of common purpose in the face of regimes which are inimical to our democratic norms.

The difference in the West’s response to attacks on civilian infrastructure in Ukraine and Gaza have already drawn harsh criticism from the Global South – criticism which Trump’s sanctions on S Africa have only exacerbated.  The freezing of US aid and development funding will result in life-saving projects in some of the poorest countries in the world being curtailed.  If Russia and China step in to pick up the pieces, there will be long-term implications for Global North/South relations.  Western companies working in the developing world should consider the potential implications of such a re-drawn map of global influence. Extractives companies may face growing hybrid attacks – on-line mis/disinformation campaigns supported by geopolitical opportunism and manoeuvring – or expropriation of their assets.  Western companies should consider the potential impacts on the safety and security of their employees operating in these regions.

Global Institutions

Arguing that the US should ‘take over’ Greenland, Canada and (now) Gaza, ignoring internationally established borders and offering support for illegal displacement and ethnic cleansing of entire populations demonstrates at best, a cavalier disregard for the rules-based international system and sets a dangerous precedent.  If the US can behave in this way, what constrains other countries from doing likewise?  If the new message of global politics if ‘might is right’, what prevents the slide to anarchy?

US withdrawal from international organisations has already impacted funding decisions for the UN and the WHO and the freeze on USAID disbursements has led to the virtual collapse of a range of international aid agencies and their projects.  In another sign of its retreat from the post WW2 Rules-Based Global Order, the US has also withdrawn from the OECD’s global tax deal and from the UN’s global tax initiative.  Despite its current financial wobbles, China (which views aid as a form of soft power projection and has long resented the fact that the global order established after WW2 was primarily determined by the West) is no doubt rubbing its hands at the opportunity to step into this funding space, giving Beijing a larger role on the world scene and in the process exacerbating the West’s already accelerating loss of influence over the Global South. 

A withdrawal of the US from the global scene raises profound questions about the longer-term viability of the post WW2 world order.  If there are no consequences for the US withdrawal, why should other countries continue to contribute? Will the US return to the international fold in four years’ time? If it does, will the world order look very different?  What are the business and commercial implications of a world order re-drawn according to Chinese rules – of a moribund WHO, a toothless WIPO or a collapsed WTO?

So: Is Trump Disruptive? Or Destructive?

Trump has managed the extraordinary feat of being both isolationist and expansionist in his first three weeks – threatening allies and foes alike with invasion, annexation or tariffs.  He is doing exactly what he (and Project 2025) promised: applying disruptive solutions to existing problems.  You don’t have to agree with him, but, to be fair, buried within many of his most outlandish declarations, are grains of truth: where does Gaza’s population live whilst its smashed and pulverised land is being rebuilt? Why should the US defend its NATO allies when only 11 out of 30 members currently meet the minimum 2% of GDP defence expenditure target placed on them by membership? The Panama Canal’s entry ports are indeed controlled by Chinese (well, Hong Kong) companies. If resource-rich and geostrategically-sensitively-located Greenland is going to vote for independence from Denmark, would it not be better for that independence to result in a relationship which was closer to the US than to Russia or China?  And how much longer can the US afford to allow multi-trillion-dollar internal deficits to inflate its debt? Old solutions have not fixed these problems.  His proffered solutions (like those being pushed by Javier Milei in Argentina) are uncomfortable precisely because they are new and disruptive.

Perhaps because it is not possible to embody this amount of disruption without the concomitant destruction, Trump’s first few weeks have also certainly been remarkably destructive – both domestically (see his slashing of Federal employee numbers) and internationally (trust and confidence shattered, relationships questioned, reputations damaged). 

So, which is it? Time will tell, but from an international and geopolitical perspective, the deepest irony here is that, in the medium to long-term, the consequences of Trump’s ‘America First’ agenda may well deliver the exact opposite – rather than Making America Great Again or increasing its international security, the Great Disruptor’s isolationist and protectionist policies may alienate natural allies and, in the process, hand the initiative to America’s fiercest competitors. The effect of that outcome would be profoundly, and possibly irredeemably, destructive.