
The way Cliff Kupchan sees it, there’s bad news and good news when it comes to geopolitics.
On the downside, the chairman of Eurasia Group — a global political risk consultancy firm — sees the world in its most dangerous place since the 1930s.
“What we have in both cases is what I call a geopolitical recession, declining political leadership from anyone, a relative power vacuum in the world,” he told those attending the Land Investment Expo hosted by Peoples Company in Des Moines last week. In the 1930s, this led to World War II, he says.
“That doesn't mean we're headed toward World War III, but it means that we should respect history and realize the significant dangers that lie [ahead] in our time,” he says.
The main reason for geopolitical leadership withdrawal is widespread disenchantment with globalist and free-trade beliefs, he says.
“There are millions and millions and millions of citizens in advanced industrial democracies that simply came not to believe what their leaders were selling,” he says. “Any government that doesn't have the backing of its citizenry, in my view, cannot lead the world aggressively.”
On the good news front, however, Kupchan sees a cease-fire in the Russian-Ukraine war coming this year. Meanwhile, artificial intelligence is brimming with ways to improve life.
Laser focus on China
Expect China and the U.S. to continue to be at odds economically. Tariffs on Chinese goods will start early and strong in President Donald Trump’s first 100 days, Kupchan predicts. He expects tariffs to have a top rate of 50% to 60%, with an average applied tariff of 25%.
“Those are staggering numbers,” Kupchan says. Before Trump took office, the average applied tariffs were at 10%, he says.
“The Chinese are bracing,” Kupchan says. “They're just terrified of Trump, but they didn't like [Joe] Biden much either.”
Expect China to hit back with tariffs, akin to what they levied during Trump’s first term against U.S. products such as soybeans and corn. At this point, it’s unknown if payments will be enacted to compensate farmers as they did during Trump’s first term, Kupchan says.
It’s also expected that the Trump administration will maintain or harden the Biden administration's technology export policy of placing Chinese firms on the Unreliable Entity List. Kupchan notes that the Chinese public is unhappy about what they perceive as a U.S. attempt to keep China frozen at current technology levels.
Good news
On the nonconfrontational front, Kupchan expects Trump to succeed in brokering a cease-fire in the war between Russia and Ukraine this year. Ukraine is gradually losing the war. However, Russia is incurring heavy casualties that’s spurring moves to force unpopular conscription amid high interest and inflation rates, Kupchan says.
A cease-fire won’t necessarily mean that Ukrainian wheat will be exported out of the country at larger volumes, Kupchan says. However, it will be less expensive for buyers due to lower insurance costs and lower shipping costs.
“It can go straight across the Black Sea,” he says.
There’s also good news coming from countries such as India. “Prime Minister [Narendra] Modi has adopted a market-focused and export-oriented manufacturing economy,” Kupchan says.
India also has been successful in politically moving toward countries such as the U.S. “There is more opportunity for the U.S. investors in infrastructure and the high-tech space,” he says.
Advances in artificial intelligence also bring good news. “It’s hard not be optimistic about the future, given AI’s ability to help us solve the murderous disease of cancer and other diseases,” Kupchan says.
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