Global Businesses Bracing for Uncertainty Amid Geopolitical Chaos

As President-elect Donald Trump takes office, businesses around the world are bracing themselves for another year of geopolitical uncertainty, despite some executives' optimism about the upcoming year.

The ongoing U.S.-China relationship is a major concern, with many companies caught in the crossfire. The relationship has seen a number of tit-for-tat responses from both sides, including ByteDance owner TikTok facing an imminent ban stateside and e-commerce giants such as Shein and Temu being frequent targets for U.S. officials.

China has also been cracking down on foreign companies, with its antimonopoly investigation targeting chip giant Nvidia and a probe launched into Calvin Klein owner PVH. The degree to which the U.S. and Chinese economies are intertwined makes it difficult for companies to navigate trade controls and restrictions.

Analysts warn that tariffs are the biggest risk to global growth, with investment research firm Morningstar predicting a meaningful tariff increase on China. However, there is uncertainty around this prediction, and President Trump has also threatened tariffs on Canada and Mexico.

"The old playbook, focused on market size, costs, and efficiency, has been upended," said Reema Bhattacharya, head of Asia research at Verisk Maplecroft. "Now, geopolitics is the driving force."

Industry experts say that nearly two-thirds of executives surveyed by McKinsey & Co flagged geopolitical instability as a top risk to global growth. Forty-nine percent also cited changes in trade policy as a major risk.

"Some industries see the reset in the U.S. government as a chance to press for their favored policies," said Kim Glas, head of the National Council of Textile Organizations. "We look forward to working with everybody on both sides of the aisle."

Despite those headwinds, company board members reported having more confidence in business conditions than they had at the outset of 2024. However, 52% also thought that geopolitical conflict had the highest chance of being the next history-altering event.

The past few weeks have seen a number of global events that highlight the interconnected nature of geopolitics, including the fall of long-time Syrian ruler Bashar al-Assad, the historic collapse of France's government, and the brief institution of martial law in stable South Korea.

"Nothing happens in isolation," said David K. Young, president of the Committee for Economic Development. "We're living in a heightened geopolitical environment."

As businesses prepare for another year of uncertainty, scenario analysis around possible geopolitical issues has become a must for many companies. Organizations must increasingly grapple with complicated, global interconnectedness.