Download the report:
Executive summary
The uncertain geopolitical environment entails significant economic risks for Germany and Europe and is worsening the investment climate in key regions of the world. The risk of a trade war between the United States and China is a particularly serious issue. The escalation of violence in the Middle East has, for the time being, destroyed the economic opportunities that arose from the Abraham Accords and the India-Middle East-Europe Economic Corridor initiative. This concerns, among other things, the development of green energies.
The second term in office of US President Donald Trump brings considerable uncertainties about the future security policy of the United States. This applies in particular to the future development of the war in Ukraine and the tensions surrounding Taiwan. Trump's approach to foreign and security policy is characterized by a fundamental contradiction: On the one hand, he stresses international engagement in the sense of “peace through strength,” which relies heavily on military and economic power. On the other hand, he promised his voters that in future he would keep the US out of wars and conflicts.
Trump's personnel decisions so far when it comes to the foreign policy positions in his administration do not indicate an isolationist turn in US foreign and security policy, but rather a robust internationalism. Nevertheless, this shows little regard for multilateral institutions or the interests of allies.
The erosion of liberal democratic principles will intensify during the second Trump administration. The attempt to soften democratic restrictions domestically is likely to go hand in hand with a declining self-restraint on the part of the US in terms of power politics at the international level. This development particularly affects NATO with its democratic values and decision-making processes.
An opportunity for a short- and medium-term easing of security tensions is emerging at the start of the second administration when it comes to ceasefires or an interim agreement to end the wars in Gaza and Ukraine. In both cases, however, there are so far no prospects for long-term stabilization or even a solution to the underlying conflicts.
The security environment in Europe, the Indo-Pacific region and the Middle East has become significantly more volatile in recent years. China, Russia and Iran have increased their military spending considerably and at the same time intensified their military cooperation. From their perspectives, there is currently an opportunity to revise the existing regional and international order, including by force. However, the example of Iran shows that revisionist states can also overestimate their own capabilities.
Implications for businesses can be found in the report (Download above)