Elections Follow-Up Trump's World (Literally and Seriously)

“We’re gonna be fine. We’ll just buy more LNG from you, and we’ll make Trump happy” (Anonymous EU official)

President Donald Trump has barely been at the White House for a couple of weeks, and the world has already had a taste of his rule, and his policy priorities. While domestic policy, and immigration in particular, is front and center, his Davos speech highlighted America’s foreign policy goals.

What’s in today’s email:

The flurry of executive orders signed by the President on his first day in office have captivated the press’s attention. Spanning immigration to DEI to comprehensive pardons, these actions were sure to be heavily featured in the news. In fact, it is a typical stunt that all Presidents pull off as they are inaugurated. In that, Trump was no exception.

More important to gauge the direction of economic policy though - aside from the $500 billion AI fund that sparked a furious Nasdaq rally (as usual, people act first and ask questions later, a behavior that was in fully display again only a few days later when tech stocks tanked because a Chinese low-cost AI firm hit the market) - was the content of his speeches and interviews.

One in particular seemed to have set the tone for his Presidency - the one he gave (virtually) for the benefit of the audience gathered in Davos.

The bottom line is that given the global reliance on US trade deficits - and safe haven for foreign capital - President Trump’s plan to onshore, retrench and repatriate is sure to cause ripple effects across developed and developing economies.

Trump’s Priorities:

1) Control of natural resources - and shipping lanes - to isolate the US from global trade woes.

We’ve all heard President Trump arguing about the need to “seize” Greenland and the Panama Canal - as well as forming a Union with Canada - for the purpose of ensuring US access to natural resources, and specifically rare earth metals.

Leaving Canada aside for now - it is conceivable that he will end up finding an agreement with the Canadian government that ensures some level of US access to Canadian natural resources - Greenland and the Panama Canal are both quite interesting.

Greenland’s deposits of rare earths are among the largest untapped sources of rare earth materials outside of China. Neodymium, Dysprosium, Praseodymium and Terbium may be impossible to pronounce, but they’re crucial chemical elements to build new technologies.

As it’s been repeated over and over, Greenland’s geography makes it a prized strategic possession in the context of arctic ice melting, with new shipping routes potentially connecting Asia, Americas and Europe faster than the more traditional through the Suez Canal and the Malacca straits.

Needless to say, Panama’s strategic position is also the main reason why the US President is obsessed with controlling it.

All these moves, together, support the view that the United States’ strategic goal is to retrench and at the same time increase the country’s resilience against global turmoil. It is an attempt to de-risk America’s future, and unlike in the past, it seems to be a widely shared goal within the administration.

In other words, isolation has become widely popular among American voters - on both sides.

2) Disarming and nullifying EU “antitrust” enforcement of US tech companies.

Depending on where the viewer leans politically, in the past decade the EU has been either attempting to protect competition and ensure that tech companies play by the rule, or fighting its own version of a trade war against the US by unfairly targeting American tech companies.

The writer of this blog firmly believes the EU has been disingenuously using antitrust enforcement and regulatory powers to attain political goals. The unconfessed endgame would have been to nurture a “local” EU tech industry, but even that, without a developed venture capital infrastructure, was clearly a tall order. In fact, even the most successful European startups have been flocking to the other side of the Atlantic to implement their scaling plans (Klarna being only the latest one).

It does not help the EU that the new US administration seems to have embraced - not just for optics, but wholeheartedly - the cause of big tech. To be fair, Europe was not even featured in the US administration’s calculations on the topic of global tech dominance. The additional funding to AI as well as the united front shown at the inauguration are aimed mainly at pushing back against China’s competition.

But the EU will likely be the loser of this global battle. Trump seems to have fully embraced the tech moguls' disdain for EU regulatory and antitrust enforcement, and Vice-President Vance has gone as far as threatening a US disengagement from NATO if Brussels doesn’t stop its unfair targeting of America’s tech companies.

We can expect tech industry rules to become a bargaining chip in any EU-US trade negotiation, in addition to tariffs. But without a doubt, Europe negotiates from a position of weakness.

3) Bargaining with China (and Russia?) over spheres of influence.

…Which brings us to the new global order.

Plenty of commentators have argued that the current state of international affairs appears more similar to the pre-WWI world than to the cold war one. It is a fair comparison in the view of the writer. Instead of two global superpowers, there are several large powers jockeying for influence in their respective regions.

This is where speculation begins.

President Trump may not be explicitly giving in to Russia’s demands on Ukraine, but he seems sympathetic to the argument that Ukraine belongs in Russia’s sphere of influence. It seems plausible to infer that this could be an additional driver of his administration’s disengagement from the European theater - and from NATO.

The rethinking of trade ties with traditional allies such as Taiwan, Korea and Japan could - alone - be damaging for these countries, and drive a realignment in their national political frameworks. The main question is whether they will find a way to coexist with China or form an axis of opposition, which may include availing themselves with nuclear weapons (none of these countries would have technological hurdles to overcome if they wanted to do so).

A final point of order. A Chinese invasion of Taiwan is more likely now than it ever was.

For starters, the Trump administration does seem to recognize that superpowers should enjoy regional dominance - with the exception of some more traditional Republican hawks, its anti-China rhetoric is focused on economic competition and technological rivalry.

Trump also seems focused on pushing China away from strategic positions in the Western hemisphere (particularly Greenland and the Panama Canal), but not on protecting the ring of US allies in the Pacific. Notably, nothing in his speech was said with regards to protecting Taiwan (or arming it in a meaningful way).

Europe’s Fears: Transatlantic Decoupling

Unlike 2017, President Trump has no traditional, globalist Republican presence in his cabinet with the exception of Marco Rubio (?).

The result of it will likely be transatlantic decoupling. Europe will suffer from it no doubt - how much depends on how it manages to stick together. On that note, Trump’s Divide et Impera (“divide and conquer”) approach is a major threat, as the war in Ukraine has already highlighted the limits of the EU’s coordination ability.

The threat of tariffs has been a constant since Trump first came to power in 2017. Even through the Biden administration, steel and aluminum levies on Europe were only suspended, not entirely eliminated.

But the transatlantic decoupling runs deeper than that. Compared to the first Trump administration, it appears that there no longer is the recognition of a common destiny, of a shared goal with Europe - a marked difference with the post-World. War II order.

Ironically, perhaps immigration has a lot to do with this. This generation of American leaders has limited ties and shared past with Europe, as they come from different countries and backgrounds.

Europe - in other words - is not so much a geo-strategic foe, Trump targets the EU as an idea - as it is no longer a priority. The disintegration of the European Union is not an open goal of this administration, more so the refusal to consider it a counterparty on par with Russia or China. Rather, Trump speaks directly to Germany, France, Italy, and - though it no longer is part of the EU - the United Kingdom.

The defense of Ukraine and NATO are hot topics. On the one hand, Trump wants an agreement that ends the Ukraine war, which is nonsensical to him. But he is torn as a Putin’s total victory would likely not reflect good on his record, and besides, the US military industrial complex is benefitting heavily from inflated government spending.

On that note, Europe is caught between the need to develop and streamline its own defense industry - with the stated goal of achieving strategic autonomy - and the US pushing for the purchase of US-manufactured weapons (here, too, it is likely that this will end up being included in trade and tariff negotiations).

Winners and Losers

Winners - Defense stocks bonanza to continue (in the US and likely in Europe. Rheinmetall was up ~25% from the beginning of 2025). Energy and mining (rare earths, new investments in exploration, fossil fuel subsidies?). Technology. The dollar, despite a potential for Fed cuts down the road.

Losers - European manufacturing. Trade-dependent currencies (KRW, for instance). European debt (despite a dovish ECB, European countries will have to spend to fill the investment gap, rebuild its military forces and offset the negative effects of tariffs and global trade woes).

Conclusion

Trump’s second term is shaping up to be a period of aggressive restructuring - of trade, of alliances, and of global economic power. His administration’s push for resource control, its open hostility toward EU regulatory oversight of US tech, and its pragmatic approach to China and Russia signal a shift away from the post-WWII transatlantic order.

For Europe, the stakes are high. Without the traditional backstop of US-led global cooperation, the EU must navigate an increasingly fractured world where economic nationalism reigns, defense spending surges, and industrial policies are shaped by tariffs rather than treaties. It’s a world the EU is not prepared for, at least not in his current structure.

In Asia, traditional US allies will have to decide whether to remain close US allies, go at it alone (which would increase volatility in the region, potentially in the form of new nuclear powers) or explore new ways of cooperating with China. Domestic politics in Japan, Korea and Taiwan will likely become more unstable as well.

Overall, as global trade becomes increasingly more transactional and geopolitical bargaining intensifies, defense, energy, and tech may stand to benefit, while European (and Asian) manufacturing, and European debt markets could potentially face uncertainty.

Disclaimer: The information in this newsletter is for informational purposes only. It does not and should not be considered to constitute an offer to buy or sell securities. The information should not be relied upon by any person to make an investment decision.

Sources:

Jiang Li’s LinkedIn post: “Trump also doesn’t seem as tied to rigid Cold War ideology as Biden, viewing everything more as a business deal”

Klarna ‘Definitely Ready’ for IPO After US Growth, CEO Says

Trump’s Davos Speech

JD Vance suggested the US's support for NATO could be pulled if Europe tries to regulate Elon Musk's X

Trump whisperer? Italy’s Meloni

Greenland is testing Europe’s willingness to stand up to Trump. It’s failing

Why is oil excluded from US tariffs against Canada

Tesla and Chinese Carmakers Could See Windfall From E.U. Emissions Rules