President Trump arrives
In our most recent look at geopolitics, we examined how geopolitics shapes our world, how power blocs develop and how they extend their influence over regional and world affairs. The most important event in recent days has been the arrival of Donald Trump as the 47th President with his inauguration taking place on January 20th. He leads the United States but has ambitions to develop – one way or another – closer relations with strategically important countries in America’s “near abroad”. President Donald Trump seems more determined than ever to shape America’s new political landscape in his image. These changes all have influence on the reality of geopolitics underlying the political changes we discuss here.
What should we pay attention to?
What did President Trump say at his inauguration and which of those statements are the most important – as in which are likely to be taken forward and influence our world rather than being allowed to wither on the vine and remain simply aspirational talking points?
There was talk of trade surpluses, military expenditure by NATO members (seemingly a constant irritant to President Trump) and unfair tax practices targeting the US, an issue which President Trump has returned to on numerous occasions during his campaign. It cannot have helped that China’s 2024 total trade surplus was recently revealed to be almost $1 trillion, with a third of that reported to be with the United States, only likely to exacerbate concerns about mercantilism and prompt discussion of tariffs possibly being imposed on China, despite Chinese corporate profitability declining and suggestions that the country feels like it’s in recession despite hitting its growth target.
A Trump second term also raises the prospect of overseas competitors being subjected to additional US taxes just as American multinationals are also on occasion through the “undertaxed profits rule”.
Many more hangers on in 2024 than in 2016
Bearing in mind that President Trump has had four years outside the Oval Office to consider and refine his policies for the next four years, we noted in an earlier analysis that, unlike the first Trump term, where there seemed to be an absence of concrete plans after Trump’s 2016 election victory, there are a broader range of individuals and organisations who see a Trump presidency as being useful in advancing their own causes and interests. There are certainly more actors with an agenda than there were eight years ago, when Trump’s 2016 victory came as something of a surprise to an, at the time, unprepared country. This 2024 victory was widely anticipated, by markets and by those seeing to benefit from a Trump presidency.
Unsurprisingly, given that there seems to be no love lost between the two camps, one element of Trump’s inauguration day was now-President Trump very publicly (using a desk and chair as stage props for the signing) repealing a whole series of Executive Orders rolling back many of Joe Biden’s policies and plans which had been instituted over the past four years. There was nothing too unexpected in this. Candidate Trump had promised this bonfire of the regulations as part of his plan to “Make America Great Again”.
Greenland back on the menu
On the other hand, there are a range of countries which have been warned that “Making America Great Again” could also mean that they themselves would be somewhat less great in future. In alphabetical order (to avoid any favouritism), Canada, Greenland, the Gulf of Mexico (the Gulf of America?) and the Panama Canal are all in Trump’s sights as far as we can tell. These are generally grown-up countries unaccustomed to being potentially renamed or dismembered by a passing American president, so for most of these countries and their leaders, it’s a new paradigm… but one that they will need to get used to in short order as they are clearly top-of-mind for Donald Trump right now.
Trump has tried to buy Greenland in the past. I was on West Greenland when he made his first attempt, while on the way to see the Danish Queen as part of a state visit. She rejected the idea, Trump cancelled his state visit, went back to Washington and since 2019 nothing has been heard of the idea… until now. It has reemerged – perhaps because you cannot keep a good idea down, or perhaps because the US is still focused on the role that Greenland could play on the world’s geopolitical stage as part of an expanded collection of like-minded countries and territories, with an extraordinary reach into areas where the world’s power blocs are already competing for influence. Its re-emergence of course may not be entirely welcome for Greenland’s economy, which is focused on attracting international resource companies, among other investors, and where “regime change” might have a negative impact on the island.
O Canada!
Merging Canada into the US as a “51st state” is another idea doing the rounds after President Trump mused about it in passing. It seems to be being taken seriously enough in some quarters (notably Canadian ones) that politicians are forced to rule it out, however unlikely they may think it is in reality, thereby giving it legs – just as the west is working hard to help Ukraine avoid being forcibly enjoined with the Russian sphere of influence (what we might call “the Moscow bloc”). While it is true that the US and Canada are tightly linked economically across North America, it may be asking a lot that a country which remained neutral, or even royalist, during the next door War of Independence between England and the North American colonies some time ago, should decide that it wanted to revert to being just another state within the United States.
At the other end of the spectrum, little Panama, owner of the Panama Canal since the Torrijos-Carter treaties at the end of 1999, is in the line of fire because Hong Kong companies control port facilities at both ends of the canal. President Trump wants the waterway back in American hands to reduce China’s potential influence over the region. Those companies are now being audited to get a better handle on what is actually going on at either end of the Panama Canal.
There are a range of issues creating potential irritants across the region. Some are the normal jostling for position among neighbours, while others may well be being stoked by outside agitators keen to advance their own ends as discussed earlier.
We’ll always have Paris?
One thing that President Trump did not wait around to do was to withdraw the United States from the Paris climate accord. As soon as ex-President Biden had left, President Trump announced that the US would withdraw from the Paris Accord (for the second time) – the one and only country ever to do so. While clearly attractive to President Trump’s base, the move is likely to have a longer-term negative impact on global emissions and may also leave the US behind the curve when it comes to issues of global leadership on climate issues.
Can US democracy survive a second Trump term?
Taking all of this together, it is clear that the question which the FT asked recently – whether US democracy will survive a second Trump term – is both very relevant and vital to the success of western interests. It’s too early to say, in my view. There are certainly unusual pressures on it as a concept in the current political environment, but we have seen the American republic successfully fight back against many perceived threats with the price of liberty being eternal vigilance.
Only time will tell.
This article has been approved by Tideway Investment Partners LLP; however, the views and opinions expressed in the article are not necessarily the views and opinions of Tideway.
The content of this document is for information purposes only and should not be construed as financial advice. We always recommend that you seek professional regulated financial advice before investing.
About the Author
Stephen O’Sullivan was an ‘anchor’ client in the founding of Tideway and has been a client of James Baxter since 1999.
Stephen began his oil & gas career as an oil trader, economist and Asian corporate planner in the downstream and trading divisions of BP. He then spent several years with the upstream and gas divisions of Total, working with natural gas, NGLs, shipping, pipeline management and the Sullom Voe oil terminal. In 1989 he joined Coopers & Lybrand as a Senior Strategy Consultant in the oil & gas consulting team, working on the privatisation and restructuring of the energy sectors across emerging markets as well as on both sides of the nuclear sector. He lived and worked in China, Russia, Central Asia, Eastern Europe, Southern Africa and the Middle East in this period.
In 1995, he was appointed Head of Research and Oil & Gas Analyst at MC Securities in London – an Emerging Europe-focused investment bank, where his team was consistently number 1 ranked in EMEA oil & gas research. Following the sale of MC Securities to JP Morgan in 1998, he moved to Moscow as a Partner and Head of Research at United Financial Group, Russia’s leading independent investment bank, where he and his team were ranked the number 1 oil & gas research team and the number 1 Russia country team for nine years in a row.
After the sale of UFG to Deutsche Bank in 2005, Stephen became Head of EMEA and Latin American Research for Deutsche Bank where his research team was ranked the number 1 team across all the industry sectors, in both strategy and in economics, in country research for Russia & South Africa and across the entire EMEA region in 2006 and 2007. In 2007 he left Moscow and moved to Hong Kong as Head of Asian Research for Australia’s Macquarie Bank. In 2009 he joined Barclays Capital in Hong Kong to lead the build-out of the bank’s Asia ex-Japan equity research business.
Since 2013 he has been an investor in a range of businesses in technology, real estate and materials while living in Hong Kong. His major interests include China’s gas sector reform, China’s nuclear renaissance and the country’s global impact on energy markets. While based in Hong Kong he has also been a Senior Visiting Research Fellow at the Oxford Institute for Energy Studies, the world’s number 1 ranked energy think tank. At Oxford he published several major studies of the Chinese energy sector.
He is a contributing author to several international think tanks on global energy issues and has advised international law firms on the oil and gas sector globally.
