Four potential geopolitical futures businesses must prepare for
As US trade tariffs bring long-standing tensions between the country and even its longest-standing trade partners, businesses around the world face an uncertain future. A new report from Nextcontinent has examined the state of play, and set our four scenarios for international supply chains and finance systems.
Since the dissolution of the Soviet Union in 1991, the United States has presided over a unipolar moment. As the only global superpower, America’s businesses were able to use the rest of the world as a means to undercut its own labour force. By outsourcing its means of production to what was then known as the third-world, where workers had few legal protections and the hourly wage was far lower, they cut production costs dramatically.
While this ensured that the world’s largest economy was able to ensure a constant supply of cheap goods for its increasingly underpaid working class, however, this also built an extremely vulnerable supply chain. Though initially, America’s corporate and political elites bought into the assumptions of Francis Fukuyama, that this was the end of history – so this fragility would never be tested – the 25 years since the turn of the century have seen relations between the US and its leading trading partners become increasingly fraught.
After years of will-they-won’t-they through the first presidential term of Donald Trump, his second administration has wasted no time in implementing a long-threatened regime of punitive tariffs. Allegedly aiming to address the country’s trade deficit – countries like Vietnam, which the US’ economy has long used as a cheap source of labour, unsurprisingly imports fewer premium goods from the US than it exports to the US – the immediate impact was to bring decades of tension to a head, upend the world’s trade system, massively devalue the dollar, and push America’s allies closer to its supposed rivals, in what has widely been referred to as a spectacular own-goal.
With the system of trade still in turmoil, businesses are unclear on how to plan for a future that once seemed so certain to them. Stepping in to help companies prepare for all eventualities, consulting group Nextcontinent has published a whitepaper, explaining four main scenarios which it believes are the most likely outcomes of the current escalation in geopolitical tensions.
1. Cold War 2.0
The most eye-catching of the prospective headlines is also the one which Nextcontinent suggests there is most material evidence for. But while the term ‘Cold War 2.0’ might grab headlines, it also suggests a kind of stasis which already seems to be becoming less and less likely to hold.
The researchers note that while this report can “only be speculative when it comes to Donald Trump’s intentions”, his administration’s first decisions “tend to point towards a direction where… the rivalry against China will be at the very centre of most reflections and decisions”, and will push other economies to pick a side in the escalating tensions. In particular, the blocs will distil into the traditional ‘West’ against China, Russia, North Korea, Iran, and other nations looking to counter the West. But remaining in this long-term rivalry depends on the decoupling of complex financial and digital ecosystems which have already long intertwined, and the remaining relevance of NATO.
As well as new nuclear arms races, according to the researchers, this could see an ideological polarisation – assuming that the West will promote “liberal democracy”, while China, Russia and others will advocate for “authoritarian capitalism”. However, illustrating how tenuous this dichotomy already has become, they concede that the new Trump administration may well end up entering “an openly neo-imperialist approach” to international relations – and deporting legal residents to prisons in Latin America certainly seems more like a form of authoritarian capitalism than liberal democracy. How willing the US’ historic partners in NATO continue to recognise the value of the security bloc.
After decades of allyship, Ukraine has still not been admitted to NATO, and it looks increasingly likely any peace deal to end Russia’s invasion will include rules barring it from such status. At the same time, the US’ support for Israel’s invasion of the Gaza strip – as well as incursions into Yemen and Lebanon – has alienated members such as Türkiye and Spain.
2. American renewal and containment of China
Nextcontinent also covered a scenario in which the world could return to the previous unipolar moment – if the US wins the rivalry. In this scenario, the US would be able to counter China’s rise via stronger alliances and technological leadership.
In this case, the economic sanctions and trade restrictions in place – and possibly more – would “weaken China’s economy, reducing its global influence”. Meanwhile, Western tech dominance – with leadership in AI, semiconductors, quantum computing and other new sectors – could keep China from “overtaking key industries”. Again, the consultants suggest that this option could lead to democratic values to “regain strength worldwide”.
But the scenario does come with significant risks – and not just the final doomsday scenario mentioned, in which the economic instability China faces “could lead to internal collapse or aggressive military moves as a last resort”. Well before that fantasy scenario, this option hinges on the US not driving its own allies away – as it has with the huge tariffs it has hit Europe, Canada and Mexico with. At the same time, the technological outlook already seems to be moving in the opposite direction.
With the release of DeepSeek, Chinese companies have already shown that they can match the AI technology of the West with significantly less capital, and crucially, less computing power. This means the potential economy emerging in the West around data centres and semiconductor chips could prove far less relevant than initially assumed in this clash.
3. Chinese-led world order
Another scenario presented by Nextcontinent paints a picture of a new world order, where China becomes the unipolar power. Victorious in the rivalry with the US, this would see China shape global institutions, economic norms and security alliances in the way the US has over the last three decades.
One sign which might worry observers that this scenario is on the cards, is the fall of the dollar. The volatility of the first months of Trump II has seen the US dollar devalue rapidly, and some speculators are beginning to suggest it is losing its status as a sure bet – which has previously seen it valued as the global reserve currency. If this trend continues, Nextcontinent suggests it could be increasingly replaced by the yuan as a prominent alternative to the dollar.
Amid this, the US would retreat into a “more isolationist stance”, while “China established dominance in the Indo-Pacific” – suggesting bad news for Taiwan, but also for democratic norms around the world. The study suggests these norms would go into decline in favour of “state-led capitalism and digital authoritarianism” – though critics might argue these are trends ever more present in many Western democracies already.
There are risks to both East and West when it comes to this order, however, and these may make it less desirable to political elites in China than rivals in the US might assume. The greater the amount of global hegemony the bloc takes on, the greater the responsibility for China, and the potential for imperial over-stretch. Occupying forces would face relentless backlash, and should China find itself in sustained military conflicts overseas (like the US in Vietnam and Iraq, or the USSR and later the US in Afghanistan), the scenario could lead to economic and political crises at home.
4. Multipolar stability
Finally, there is the potential for multipolar stability. Nextcontinent defines this as an avoidance of full confrontation, where the US and China settle into a long-term coexistence, which is still competitive, but ultimately stable. In this scenario, multiple other global players – including the EU, India and Russia – would also exert global influence.
In this case, there would be no grand decoupling of the powers, economically or politically, as the interdependence of their markets would prevail. At the same time, the US and China would cooperate selectively on crises like climate change or AI regulation.
Walking back from the present hostilities might seem unlikely. But the nature of US politics is of rapid transition. Donald Trump’s second stay in the White House is currently limited to four years, so his administration might not outlast any scrap with China. With the cost of living (and the notorious price of eggs) continuing to rise thanks to the trade wars, his successor – Democrat or Republican – may opportunistically look to establish these kinds of relationship with China, which wouldn’t be a million miles from how they were prior to 2016.
Ultimately, though, Nextcontinent expects a more ambivalent outcome. Noting that “the future will most probably be a mix of those different scenarios”, the researchers state that each eventuality presents “serious impacts on the business environment and on companies, as they already experienced it following the Russia-Ukraine conflict or the recent Trump administration tariffs policy”.
