As Donald Trump prepares for his second term as the 47th President of the United States, the geopolitical landscape stands on the brink of substantial change. Early nominations for his administration already signal a marked shift in US policy. 

In this analysis, we explore the geopolitical implications of Donald Trump’s re-election, offering forecasts on the Russia-Ukraine conflict, the Middle East crisis, and Europe’s strategic challenges.

Key Insights:

• Proposed US tariffs of 10–20 percent on imports, including from the EU, will likely affect key European industries like healthcare, automotive, and machinery with a decrease in exports. In this scenario, Germany and Italy will be among the hardest hit, with a likely drop in GDP. Retaliatory EU tariffs may escalate trade tensions.
• Trump’s deregulation agenda will boost US businesses but disadvantage European firms, which must adhere to stricter EU standards, potentially stifling innovation and competitiveness in strategic sectors.
• Trump’s skepticism of NATO and potential US pivot to the Indo-Pacific will pressure Europe to enhance defense capabilities and develop strategic autonomy, reducing reliance on US security guarantees.
• We expect Trump’s re-election to intensify the Russia-Ukraine war temporarily as both sides seek leverage for negotiations. Reduced US support under Trump may force Ukraine to negotiate under less favorable conditions, possibly leading to a cease-fire or truce over the next year.
• Trump’s steadfast support for Israel is expected to embolden its actions in the region, particularly regarding targeted strikes against Iran and its proxies. Additionally, recent security threats are likely to reinforce Trump’s hardline stance on Iran. However, in Lebanon his new administration will likely exert pressure on Israel and the Hezbollah to adhere to the terms of the ceasefire agreement reached in November.

Transatlantic Relations Under Trump: Economic Shifts and Security Challenges

The re-election of Donald Trump as US President is expected to introduce sweeping changes across trade, regulatory frameworks, and defense strategies. These shifts will likely pose significant challenges to Europe’s economic stability and security architecture, necessitating strategic adjustments from EU member states.

• Trade Policy: Under Trump’s “America First” agenda, the proposed imposition of universal tariffs ranging from 10 to 20 percent on all imports—including those from the EU—aims to reduce the US trade deficit and restore domestic manufacturing jobs. However, these tariffs will likely severely impact key European industries, particularly healthcare, automotive, and machinery sectors, which are among the largest exporters to the US within the EU. These industries will likely face a drop in exports and overall turnover. Germany is likely to be by far the hardest hit by an increase in US tariffs, followed by Italy, Ireland, France and the Netherlands, which are the main exporters of EU goods to the US. We anticipate a fall in gross domestic product (GDP) across EU members states. Moreover, the EU is preparing retaliatory tariffs in response, potentially escalating into a trade war that could disrupt transatlantic commerce.

• Deregulation Initiatives: The Trump administration is expected to prioritize deregulation as a means of boosting domestic economic activity. Areas targeted for regulatory rollbacks include Environmental, Social, and Governance (ESG) standards, artificial intelligence, cryptocurrency governance, and data protection. This approach may benefit US businesses by reducing compliance burdens. However, it presents competitive challenges for European companies, which must continue adhering to the EU’s strict regulatory framework. This regulatory disparity risks placing European firms at a disadvantage, particularly in sectors like technology and financial services, where innovation and competitiveness are heavily influenced by regulatory conditions.

• Defense and Security Posture: Trump’s skepticism toward NATO has been a hallmark of his foreign policy. Trump’s defense rhetoric is characterized by threats of US withdrawal and repeated assertions that Washington will not defend allies who fail to meet NATO’s defense spending benchmarks. This stance suggests a potential reorientation of US strategic focus away from Europe toward the Indo-Pacific, particularly in countering China’s rising influence. As a result, European nations may face increased pressure to enhance their defense budgets and take greater responsibility for regional security, including in the Russia-Ukraine conflict. This shift underscores the urgency for the EU to reduce dependency on the US and develop a more cohesive and autonomous defense strategy.

Trump’s Return to the White House: Short-Term Escalation In Russia-Ukraine Conflict and Prospects for Negotiations

Donald Trump’s return to the White House is anticipated to influence the trajectory of the Russia-Ukraine conflict significantly. During his campaign, Trump frequently expressed his intent to end the war quickly, asserting he could achieve peace within 24 hours. Additionally, Donald Trump has criticized US involvement in the conflict, labeling it as costly and misaligned with American interests. His statements suggest a highly likely shift in US foreign policy toward reduced military and financial support for Ukraine, which would force changes on the battlefield and at the negotiating table.

• Trump’s Policy Perspective: Trump has repeatedly criticized US funding and arming of Ukraine. He has emphasized negotiation as the pathway to ending the conflict, yet specifics of his approach remain unclear. Insights from J.D. Vance during an interview suggest a potential framework that could include:
  • Maintaining the current territorial demarcation lines as a basis for peace discussions.
  • Establishing a demilitarized zone.
  • Ukraine agreeing to abstain from NATO membership.

• On-the-Ground Implications: The cessation or reduction of US financial and military aid under Trump’s administration would likely have profound effects on Ukraine’s ability to sustain its military operations. While Ukraine could continue fighting with limited resources, a decisive victory would become highly improbable. A halt in supplies may compel Kyiv to engage in negotiations, possibly under less favorable conditions. Trump administration will likely promptly organize negotiations in early 2025, possibly leading to a truce or cease-fire over the next year.

• Short-Term Developments:
  In the lead-up to Trump’s inauguration, both Russia and Ukraine are likely to intensify military operations to gain leverage in potential negotiations. Key anticipated developments include:
  • Increased US Support Under Biden Administration: The Biden administration is ramping up support for Ukraine, lifting the restriction on Ukraine’s use of US-provided weapons on Russian territory and sending anti-personnel mines to Ukraine.
  • Russia’s Strategic Posturing: Russia has updated its nuclear doctrine, presenting it as a warning to the West. The new doctrine lower the threshold for a nuclear strike in response to a conventional attack. Additionally, as of 2 December, we have already observed escalation in aerial bombardments, particularly targeting major Ukrainian cities and energy infrastructure.

We anticipate these dynamics to create a volatile period marked by heightened military activity, as both sides attempt to strengthen their positions before any potential negotiations. Large-scale bombing campaigns and heightened nuclear rhetoric will likely persist until at least 20 January, when Trump will take office.

Middle East Dynamics Under Trump: Sustained Support for Israel, Tough Stance on Iran, and Prospects for Lebanon’s Conflict Resolution

A renewed Trump administration is expected to maintain steadfast support for Israel, adopt a hardline approach towards Iran, and influence the broader Middle Eastern geopolitical landscape. While the Middle East may not be Trump’s immediate foreign policy priority—given the US’s focus on the war in Ukraine—his administration’s stance will likely prompt significant developments in the region.

• Continued Support for Israel: Donald Trump has consistently championed pro-Israel policies, aligning with Israeli Prime Minister Benjamin Netanyahu and American Christian Zionist groups. His return to office will likely embolden Israeli actions in the region, particularly concerning West Bank settlements and military operations. Trump has historically shown little sympathy for Palestinian concerns and is expected to give Israel greater latitude in its handling of occupied territories, potentially exacerbating tensions on the ground.
  
• War in Gaza and Lebanon: Trump’s stance on the Gaza conflict underscores his support for Israel’s military campaigns, coupled with calls to end violence—but through an Israeli victory. In Lebanon, the Trump administration is expected to closely monitor the implementation of the ceasefire agreement reached between Israel and Hezbollah on 26 November. The agreement outlines a 60-day transitional phase during which Israeli troops will withdraw from the south of the country. Simultaneously, Hezbollah forces will pull back north of the Litani River, while 5,000 Lebanese troops will be deployed to enforce compliance. Notably, this transition period is set to conclude on the first days of Trump’s return to the White House. The new administration is likely to exert pressure on both parties to adhere to the terms of the agreement, as Trump repeatedly emphasized his role as a peacemaker during his campaign. Additionally, his team was quick to claim credit for facilitating the deal. However, in line with the provisions of the ceasefire agreement, any violations by Hezbollah would highly likely prompt strong US support for Israel’s right to respond.
  
• Hardline Approach to Iran: During the presidential run, Trump has expressed a willingness to negotiate with Iran’s leadership. Nevertheless, his rhetoric and policy track record suggest a more confrontational stance. Additionally, recent developments will likely lead to a tougher approach towards the Mullah regime. In September, US federal agencies reported that an Iranian threat actor breached the Trump campaign and offered access to the Democrats. Moreover, in November, the US Justice Department announced federal charges in connexion with an alleged Iranian plot to assassinate Donald Trump ahead of the presidential election. These incidents are likely to reinforce a hardline posture, with an emphasis on containing Iranian influence and undermining its regional proxies.

Conclusions

• QuoIntelligence’s analysis indicates that Trump’s re-election is likely to trigger temporary escalations in the Russia-Ukraine war and the Middle East conflicts before his inauguration on 20 January. These likely developments are expected to give way to negotiation efforts post-inauguration.
• Organizations operating in or near conflict zones—or those directly or indirectly supporting parties involved in conflicts—must account for heightened geopolitical risks. Proactive risk management strategies are essential to mitigate risks.
• The EU risks being sidelined in geopolitical discussions as US policy under Trump interacts with the strategies of authoritarian regimes. This marginalization could undermine Europe’s influence on the global stage.
• European entities heavily reliant on exports to the US face significant risks from potential US tariffs and trade policy shifts.