Cozen Currents: 2024’s Home-Grown Geopolitical Risks

January 23, 2024

“As the risk of a recession in 2024 has been fading, myriad geopolitical risks have risen to the forefront of concerns among the business community. Some of these risks are of a home-grown variety – most notably, the potential return of Donald Trump’s ‘America First’ foreign policy.”

— Howard Schweitzer, CEO, Cozen O’Connor Public Strategies

The Cozen Lens

  • A second term for former President Trump would mean the return of his “America First” foreign policy, including its resulting geopolitical uncertainty.
  • President Biden and Chinese President Xi Jinping have successfully lowered the temperature in the US-China relationship and established a floor. But this floor’s strength will be tested in 2024 as American politicians compete to prove their “tough on China” bona fides.
  • The domestic politics of US involvement in geopolitical conflicts in the Middle East and Ukraine are testing President Biden’s ability to maintain his fragile political coalition.

What Would the Second Round of “America First” Look Like?

The Davos Consensus. To hear attendees of the World Economic Forum in Davos, Switzerland tell it, former President Trump has a lock on a second term.

  • Davos predictions are famous for inaccuracy (In 2016, Hillary Clinton was expected to win and Brexit was thought unlikely), but it’s still meaningful that the global business community expects a second Trump term.
  • Even JPMorgan Chase’s Jamie Dimon, the longest-serving current CEO of a major bank, is hedging against a Trump victory. He offered some measured praise of Trump’s approach. “Take a step back, be honest. He was kind of right about NATO, kind of right on immigration. He grew the economy quite well. Trade tax reform worked. He was right about some of China,” he said.

Trade Policy. Trump has signaled that a second term would take his protectionist approach to the next level.

  • The trade deficit was a top issue for Trump’s first term and is likely to remain so should he return to the White House. In August, Trump called for a universal tariff of 10 percent on imports from all countries, a move that would withdraw the United States from the global economy. He doubled down on tariffs in a Wall Street Journal op-ed last summer.
  • Robert Lighthizer, Trump’s former US trade representative, would likely play a starring role in a second Trump term. He recently argued that the president has broad authority under federal law to unilaterally set tariffs.
  • In addition to across-the-board tariffs, Trump would likely crack down on China, shifting from the Biden administration’s focus on “de-risking” and limiting Beijing’s access to critical technology to a broader “decoupling” of the US and Chinese economies. This could include revoking permanent normal trade relations with China as advocated by Lighthizer. Trump has also proposed phasing out imports of essential goods such as electronics, steel, and pharmaceuticals from China over four years, and requiring the sale of Chinese-owned holdings that threaten US national security.

Relationships with Allies. A second Trump term could destabilize the US role in the global world order.

  • Trump has sown doubt about the US commitment to NATO. When asked at a Fox News town hall earlier this month if he would commit to the alliance, he demurred. “Depends on if they treat us properly,” Trump said. “Look, NATO has taken advantage of our country. The European countries… took advantage of us on trade and then they took advantage of us on military protection.”
  • A Trump victory would also likely mean the end of US support for Ukraine. Trump has declined to endorse a Ukrainian victory or back aid for Kyiv. He has also claimed that he would end the war in 24 hours if voters return him to office. The former president, who was impeached for the first time over allegations of pressuring Ukraine to help him politically, has also floated tying Ukraine aid to congressional Republicans’ investigation into Hunter Biden. More recently, he has thrown cold water on a prospective deal on border security reforms and Ukraine funding. Ukrainian President Zelensky has said that he is “frightened” by the idea of Trump back in the White House.

Managing US-China Relations During the Silly Season

An Imperfect Floor. President Biden and Chinese President Xi Jinping have sought to build a “floor” in the US-China relationship through increased diplomatic connections, but it remains far from stable.

  • The revival of diplomatic engagement in the second half of last year has lowered the visible temperature in the US-China relationship. However, this could easily be undone, given the tension that still lies under the surface and the ever-present competition between the two superpowers.
  • US political dynamics surrounding China make it challenging to maintain stability. In the current environment, an incident does not have to be on a massive scale to wreak havoc in relations (see,e.g., surveillance balloon).

Testing the Floor. The biggest test to this stability in 2024 may be the pressure on American politicians in an election year to continually demonstrate that they support “tough on China” policies.

  • In the US, being tough on China has become a prerequisite for politicians of both parties to run for office successfully.
  • Given this dynamic, Biden must walk a very fine line and the environment binds the Biden administration in its decisions, such as review of tariffs imposed under the Trump administration.
  • Meanwhile, Republicans will use their control of the House to contrast their platform with the policies Biden is pursuing. While it is doubtful that many of these GOP policies will be turned into bills sent to the president’s desk, the constant scrutiny creates a difficult backdrop for the White House to navigate in dealing with Beijing.

Corporations in the Crossfire. The competition between Democrats and Republicans to demonstrate their “tough on China” bona fides could bring unwanted attention to other entities, including corporations and business executives.

  • Last year, much of this energy was focused on outbound investment in China and the national security risks it may pose. The Treasury Department is working on a rule to address the perceived issue, and there are multiple bills in Congress, too. This drive has spotlighted venture capital and other private investment firms with significant China portfolios.
  • There is also interest in going beyond financial firms and discouraging corporations from having significant operations in China, particularly in sectors with national security importance. The CHIPS and Science Act’s China guardrails reflected this notion. The House Select Committee on the Chinese Communist Party has also invited executives from top semiconductor firms to testify, a hearing in which members will likely press the business leaders on their ties to China.

The Domestic Politics of Geopolitics

Biden’s Middle East Crisis. More than four months into the war between Israel and Hamas, escalating tensions in the region risk the hostilities expanding into a broader Middle East conflict, and fissuring President Biden’s political coalition at home.

  • Progressive Caucus Chair Rep. Pramila Jayapal (D-WA) sharply criticized Biden for launching missile strikes against the Houthis earlier this month, while Senator Bernie Sanders (I-VT) forced a vote on a resolution that would have required the State Department to report on Israel’s human rights record in its war with Hamas last week. Outside of Congress, December polling found 57 percent of registered voters disapprove of the president’s handling of the Israel-Hamas conflict. According to the same poll, 46 percent of voters believe former President Trump would do a better job managing the situation while only 38 percent believe Biden is better suited for the challenge.
  • The disapproval of Biden is greatest among young voters, an important segment of Democrats’ electoral coalition in recent years. Among individuals 18 to 29 years old, 72 percent disapprove of the president’s handling of the Israel-Hamas conflict. Those same voters back Trump over Biden 49 percent to 43 percent in a hypothetical 2024 rematch. That number stands in sharp contrast to the 2020 election in which Biden beat Trump by about 25 points among 18-29 year olds according to exit polling. While those numbers could shift significantly before November, Biden’s current weakness among traditionally Democratic voters could be enough to tip a close race in his opponent’s favor.
  • While Biden’s steadfast support for Israel may no longer be front of mind for younger voters come November if it fades from the headlines and is replaced by other issues, such as a Supreme Court ruling further restricting abortion rights, Arab-American voters aren’t likely to move on as quickly. This could pose a particular problem for Biden in the pivotal state of Michigan.

Ukraine’s Border Policy Problem. While diplomatic efforts in the Middle East threaten Biden’s domestic political coalition, the president is also struggling to find votes in Congress for his foreign aid package that would provide $61.4 billion in funding for Ukraine’s war effort.

  • Biden tied funding for Ukraine to funding for Israel, Taiwan, and border policy changes in an effort to gain votes from Ukraine-skeptical GOP lawmakers last October. That decision has tied money for Ukraine to immigration policy, an issue that Congress has been unable to find consensus on for more than 20 years. The White House and a bipartisan group of senators have been negotiating over the contours of a border policy deal since November, but an agreement has so far proven elusive.
  • Those negotiations have focused on policy changes that would raise the standard for asylum claims, establish an expedited expulsion authority, and potentially expand internal deportations. While negotiators are near agreement on a number of the major policy changes, they have been at a standstill for weeks over reforms to the president’s authority to bring individuals into the US through humanitarian parole, allowing them to bypass processing at the southern border. Senate Minority Leader Mitch McConnell (R-KY) and Senate Majority Leader Chuck Schumer (D-NY) suggested the Senate could begin voting on the supplemental aid package as soon as this week in an effort to light a fire under the negotiators.
  • While a bipartisan vote in the Senate on the long-stalled aid package would give both Biden and Ukraine a symbolic win, a Senate-brokered agreement faces much steeper odds of passage in the GOP-led House. Significant border policy changes are needed to get Ukraine funding over the finish line in the lower chamber where skepticism over the need to support the country is much higher. House Speaker Mike Johnson (R-LA) can only bring the supplemental funding package up for a vote if it garners support from conservative lawmakers including the House Freedom Caucus, who are making demands that they know the White House and congressional Democrats won’t accept as they would trigger a revolt among the Democrats’ progressive base. Furthermore, Trump is pressuring Johnson to not support any deal reached in the Senate as he wants to avoid Biden claiming a political victory on an issue that strongly motivates the GOP base.


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