Trump's Return Signals a Global Vibe Shift: Key Takeaways for Europe and Switzerland
On Monday, January 20, 2025, Donald Trump was sworn in as the 47th president of the United States. His reelection is part of a broader vibe shift. The effects of it were already evident before Trump’s inauguration and are now expected to intensify in the months ahead. Geopolitically Correct analyzes the implications of this shift for Europe and Switzerland, offering insights for governments and businesses.
In this edition:
The Vibe Shift Explained
Political Impact in Europe and Switzerland
Lessons from History: A Flavour of Reagan and Jacksonianism?
The Vibe Shift Explained
In a recent opinion piece British-American historian Sir Niall Ferguson argues that the re-election of Donald Trump can best be understood by applying physical principles to geopolitics. One event — the election of the new US administration — triggered political chain reactions around the world.
FOR GOVERNMENTS. Just as in physics, where a single force can trigger a series of events, Trump’s re-election has set off a geopolitical chain reaction. In this sense, Trump’s re-election is part of a global “vibe shift” — cultural, political and economic — with geopolitical consequences. After the American electorate re-elected Donald Trump, the German and French governments fell. In the Middle East, Syria’s longtime dictator Bashar al-Assad fled the country after rebel forces captured Damascus. Meanwhile, in Asia, South Korea experienced tumultuous moments as former President Yoon Suk Yeol declared martial law. These events, which unfolded in the weeks following Trump’s re-election, were of course driven by many and not just one factor. In Syria, for example, Russia, the protector of Bashar al-Assad’s regime, prioritised its war efforts in Ukraine over support for Assad. However, it still shows what Sir Niall Ferguson calls a ‘‘vibe shift’’. Governments need to be aware of this and act accordingly.
FOR BUSINESS. At the same time as the German and French governments fell financial markets have shown trends suggesting investor anticipation of policy shifts. One single stock, Tesla, rose on the back of Elon Musk’s involvement in the new administration and as a close advisor to the new US president. Meanwhile, the Russian currency weakened and both China and Iran displayed weak economic signals. Companies are adapting to the new mood. We are already seeing the first reactions, with US banks pulling out of climate initiatives and Meta ending its fact-checking programme on its platforms.
Political Impact in Europe and Switzerland
On January 09, 2024, Elon Musk engaged in a conversation with Alice Weidel, the leader and chancellor candidate of Germany’s right-wing party AfD .
FOR GOVERNMENTS. In Italy, Prime Minister Giorgia Meloni, who heads a right-wing government, has established herself as an internationally respected figure. Meanwhile, France’s Rassemblement National continues to gain ground, and similar trends can be seen in Hungary and Sweden, where right-leaning parties are establishing themselves. These parties were democratically elected and reflect the will of the people. Their growing influence reflects a shift in mood across Europe as voters increasingly look for leadership that prioritises national sovereignty, economic stability and cultural identity. This could make it much more difficult for the EU to reach consensus. It may also have security implications, as public opinion shifts on issues such as NATO commitments, defence spending and responses to the war in Ukraine. Interestingly, the change in mood has been much less noticeable in Switzerland. The country has a broad coalition of parties in the executive government (Federal Council), so the whole political spectrum is represented in the decision-making process. This leads to different viewpoints being taken into account. In addition, the direct democratic system allows the population to vote on political issues several times a year.
FOR BUSINESS. Many tech CEOs, such as Jeff Bezos, Mark Zuckerberg or Sundar Pichai, contributed financially to President Trump’s inauguration celebrations and made personal appearances. They are positioning themselves according to the new US domestic political reality. President Trump has not yet imposed any tariffs and foreign stocks and currencies have rallied in relief. It remains to be seen whether Trump will impose tariffs on Mexico and Canada on 1 February if the illegal immigration and border crossing situation does not improve. So the threat is still there. No tariffs on European goods yet either. However, Trump has already said that he wants to reduce the trade deficit with the European Union through tariffs. Or by making the EU buy US oil and gas. This shows that the situation for European companies remains volatile. For Switzerland, the introduction of tariffs will also have a negative impact, but it will hurt both Switzerland and the US. The bilateral trade balance between the two countries is a surplus for Switzerland on goods of USD 25 bn in 2023 and a deficit for Switzerland on services of USD 20 bn in 2023. On the positive side, the US remains Switzerland’s largest destination for foreign direct investment (FDI), valued at USD 350 bn in 2023. Furthermore, Swiss companies have created 400’000 jobs in the US and Switzerland is the 6th largest foreign investor in the US. However, economic uncertainty remains for Switzerland, with potential tariff measures under review by the new US administration
Lessons from History: A Flavour of Reagan and Jacksonianism?
The America First doctrine is not new. Trump proposed it during his first term (less successfully). It is a reactive form of Jacksonianism. But it also includes a modified version of Reagan’s Peace Through Strength, which dominated politics and economics during the Reagan era.
FOR GOVERNMENTS. The combination of Jacksonianism and Reagan’s “Peace Through Strength” policy suggests that Trump will continue to position himself as an advocate of forceful action, but at the same time cautious of overreach. Andrew Jackson also had a broad coalition with entrepreneurs. Trump himself is a former entrepreneur and has formed a coalition for example with Elon Musk. This will influence the decisions of the new US president. When it comes to Trump’s foreign policy concept of peace through strength, this is nothing new either. Si vis pacem, para bellum. If you want peace, prepare for war, has been used by many leaders before him. For the war in Ukraine this means that the US Administration will continue to support Ukraine militarily and force Russia into peace negotiations. Through strength, therefore, offers a door for diplomacy.
FOR BUSINESS. In the case of Andrew Jackson, a coalition with business ultimately led to a brief economic depression and a spike in inflation. For such a state-business coalition to work effectively, it is critical that the scope of state and/or private sector responsiblity is clear. A historical example of this can be found in the administration of Franklin D. Roosevelt, who warned business not to resist his labour and competition reforms.
Weekly Thought Provoker
Last week, Geopolitically Correct asked readers about how Europe should position itself in a G-Zero World. The result was as follows:
40% pointed to a focus on strategic autonomy and strengthening ties with Nato. This is what the EU is currently pursuing with its efforts to increase its defence spending while maintaining a focus on Nato and US support.
This week we’re asking: How should European governments and businesses respond to Trump’s “America First” policy? Vote and share your thoughts below:
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In Review
In 2012, Ian Bremmer, an American political scientist and founder of the Eurasia Group, published a book explaining the power vacuum in international politics, where no single country or group of countries takes the lead. Ian Bremmer believes that this point has arrived in 2025. He argues that we are in a uniquely dangerous period in world history, similar to the 1930s and the early Cold War. Geopolitically Correct looks at the consequences for European countries and the implications for governments and businesses.
In this edition:
What Is the G-Zero World?
Are We Prepared for What’s Next?
Multilateralism vs. G-Zero Realities