The remainder of 2024 is poised to be a pivotal period in global politics, with several countries heading to the polls to elect their new government. The potential impact on international trade and the geopolitical climate is immense and riddled with uncertainty. Here’s why.
Trade Risk
The anticipated shift towards nationalist policies is likely to impede global trade with the introduction of tariff increases, potentially triggering inflation and a slowing of export growth. Yet, on the other hand, these policies could also help re-invigorate domestic businesses - presenting a complex scenario for investors.
Upcoming elections in Taiwan, India, Mexico, Europe and of course the United States each have significant trade implications. These range from the possibility of increased isolation for Taiwan to the renegotiation of the United States-Mexico-Canada Agreement (USMCA), which is widely predicted under the next US presidency in 2026.
India’s strategy of using subsidies to lower trade barriers aims to enhance manufacturing in advanced sectors and attract foreign manufacturers, positioning the country as a global hub for electronics supply chains. Additionally, India’s trade negotiations with the UK, EU, and Australia could further embed it into the global economy.
Global organisations must navigate this evolving global trade policy landscape, mindful that the likely imposition of new trade barriers will necessitate more robust supply chains, strategic location planning and vigilant trade policy monitoring, to maintain competitiveness.
Climate Impact
We’ve made significant progress in many countries with climate change action and behavioural change, but there is a risk that elections and other economic developments could scupper this. With elections scheduled in five of the world’s largest carbon-emitting regions—the US, India, Indonesia, Russia, and the EU—these outcomes will likely shape the future direction of global climate policies.
Elections in the US and Europe in particular have the potential to trigger a shift in direction. In the US, the rise of populism and the decentralization of climate policy could add complexity, due to conflicting federal and state-level actions.
Businesses must keep abreast of evolving climate regulations in order to identify and establish the right partnerships, to secure supplies and to build the right expertise in their trade compliance teams.
Geopolitics
The remainder of 2024 presents further geopolitical instability. A Trump victory in the US could have significant market consequences and alter the nation's position on NATO and the UN, creating geostrategic opportunities for Russia and China.
Regardless of the 2024 election outcomes, governments will undoubtedly face long-term geopolitical challenges, such as balancing consumer demand for affordable products with protecting domestic industries from foreign competitors.
Businesses will need to assess emerging risks and opportunities and create contingency plans for the various political scenarios, including a team structure that will best respond to any major shifts in direction. Perhaps Trump v Biden is the obvious one, but the US is not the only country which is witnessing a close race between two highly opposing parties.
Conclusion
In summary, the 2024 elections mark a crucial turning point for global politics and economics. The interplay between nationalism, trade policies and climate change will have a lasting impact on the world. Businesses must adapt to the changing landscape and the various potential outcomes of these pivotal elections, which present both challenges and opportunities - but above all else, uncertainty.
The businesses which survive – and thrive – will be those who are prepared for every scenario and who have a strong trade compliance team in place to face into this transformational era.