What Trump 2.0 Means for Europe, China, and Global Supply Chains

The Geopolitical Outlook

There are many geopolitical conflicts causing uncertainty, including in Russia, Ukraine, Israel, and Taiwan.

“The expectation is that you're going to have an even more supportive position when it comes to Israel,” said Antonio Martinez Castillo, head of Americas and global economics at FrontierView.

“I think Antonio is definitely right about Trump likely taking a much more friendly tone toward Israel and some of the Gulf countries,” agreed Rachel Oswald, foreign policy reporter at CQ and Roll Call.

Trump’s intentions to improve relations with Gulf states are all centered around securing cheaper oil prices, said Martinez. As part of this, we could see a push to normalize Saudi-Israel relations.

In Europe, Trump has repeatedly stated his intentions to end the war in Ukraine, but is it realistic? “The Ukrainians have been saying that if they were to agree to any kind of ceasefire, they need security guarantees that Russia wouldn't reinvade in a few years,” Oswald said. “Is Donald Trump willing to agree with security guarantees? I think a lot of this has to be figured out.”

In the Americas, one of the major policy concerns is that the USMCA trade agreement is up for renewal in 2026. While the trade details are relatively straightforward to resolve, according to Martinez, Trump’s immigration and narco agenda is likely to complicate matters.

Regarding China-Taiwan relations, Trump has not made his intentions clear. Oswald expects Trump to remain ambiguous on the matter, noting that he did say, “he didn’t think it would be a good thing if China invaded Taiwan.”

Economic Ties with Europe

While the Biden administration has improved economic relations with Europe, that may not continue into the Trump administration.

“I think the risk for a significant breakdown, by measures that the U.S. may pursue when it comes to trade with Europe, is a particularly large risk,” Martinez said.

“There are European countries that are looking forward to a second Trump administration, such as Hungary, but they are not major players in Europe,” Oswald said. “The major players in Europe are still led by governments that are very leery about what Trump 2.0 might mean for NATO.”

Martinez does not anticipate a better outlook for a US-UK trade agreement in the UK. If the political landscape changes, perhaps something will become available, but not in the short term.

Let’s Talk Tariffs

Trump has already stated his intentions to impose tariffs on the U.S.’s three largest trading partners: Canada, Mexico, and China.

“It’s approaching a near certainty that we will have tariffs of some form and very likely that those will be applied on day one,” said Christopher Siepmann, managing director at Weller James. “It's important, though, to distinguish between the purposes for the 60 percent China tariffs versus the 10 to 20 percent rest of world tariffs that have been floated as campaign promises.”

Siepmann explained that tariffs are either related to national security or reciprocity.

“Tariffs tied to national security are likely to be in place for the foreseeable future,” he said. “Tariffs tied to reciprocity may be withdrawn later, maybe not. But I would say that the tariffs that you can tie to security — and I'm thinking specifically of China tariffs — are likely to be much more sticky.”

Other tariffs, as have been teased for Mexico and Canada, would be of a reciprocal nature and more flexible for negotiation.

The Effect of Tariffs on Global Supply Chains

The biggest concern about the impact of global supply chains comes from China.

“China has moved from being a competitor we trade with to an adversary with whom trade should be tightly controlled, and in some cases, discouraged. As we've discussed, that's a bipartisan shift,” Siepmann said.

Many European businesses balance their efforts to benefit from Chinese supplies and access U.S. markets. However, Siepmann added that this will become increasingly difficult, and businesses may need to choose one side or the other.

Trump’s nomination for secretary of state, Marco Rubio, foreshadows this administration being very aggressive on China.

“I counted 50 bills that had a China focus that [Rubio] introduced,” Oswald said. “I think we're going to see that be a focus of Rubio at the State Department.”

Best Practices to Navigate 2025

President-elect Trump’s ‘America first’ policies may inflict undue harm on American companies with global supply chains, especially those reliant on China.

“The best chance of success for government affairs professionals is likely going to be with respect to tariffs and those trade policies in the reciprocity box, attempting to highlight the unforeseen harms of these tariffs and other policies, and giving policymakers a roadmap for how to achieve their policy goals while minimizing harms,” advised Siepmann.

Reducing exposure to, and reliance on, China will be the most important mitigating strategy. “The key takeaway from this conversation, I think for the next four years, is that China exposure equals risk exposure,” Siepmann said.

Getting ahead of legislation and having contingency plans in place, instead of playing catch-up when inevitable changes occur, will allow your organization to keep moving forward while competitors scramble for solutions.

If you want more specific insight on how Trump 2.0 may affect your business and industry, FiscalNote makes sure you have the inside scoop on Washington, D.C., and capitals around the world. It provides the tools to ensure you don’t overlook any aspect of your complex 2025 government affairs strategy.