This Trump Is Different: Three Geopolitical Views For 2025

Our Geopolitical Strategy team published their annual outlook, and see three trends shaping 2025.  

First, Congress is expected to pass tax cuts by the end of 2025, providing a fiscal thrust of 0.9% of GDP in 2026. This stimulus will likely embolden Trump to impose tariffs on major trade partners. This will lead China to retaliate by stimulating its domestic economy and strengthening trade ties globally, while Europe is also expected to respond. Finally, geopolitical risks will shift from Ukraine-Russia, which may approach a ceasefire, to escalating tensions between Israel and Iran, likely reaching a crisis point in 2025.  

In this volatile environment, our colleagues recommend staying long the USD and JPY vs. EUR. On equities, they also recommend being long US small caps relative to global ones, aerospace/defense vs. the broad market, Singapore over Taiwan, and Canadian energy vs. the Canadian market. Our geopolitical strategists anticipate pivoting into international stocks and emerging markets past the initial tariff shock.