Global Power Shifts: How the 2024 Elections Could Reshape Trade, Climate, and Geopolitics
The impact of economics and markets on elections is often bigger than the other way around – reflecting voters’ views on how well the incumbent government is managing the economic environment. But geopolitics is as ever cyclical, and this year’s election outcomes may prove a testament to this; given the scale of the 2024 votes and the prevailing cross-border challenges that nations grapple with, the outcomes of these elections are expected to have far-reaching implications for investors, businesses, and citizens alike.
With more than 40 % of the world’s population eligible to vote this year, 2024 is poised to be a pivotal moment in global politics, with the potential to reshape international trade, climate policies, and the geopolitical landscape. The below sets out the potential impact of anticipated outcomes and what tech companies can do to prepare.
Trade Risk
The trade risks associated with the 2024 elections are significant. The predicted trend towards nationalist policies is expected to hinder global trade through the introduction of tariff increases, potentially leading to inflation and a slowdown in export growth. However, these policies might also stimulate domestic industries, creating a complex dynamic for investors to navigate. The elections in Taiwan, India, Mexico, Europe, the United States, and the United Kingdom each carry their own trade implications - from the risk of Taiwan facing increased isolation, to the renegotiation of the United States-Mexico-Canada Agreement (USMCA) under the next US presidency in 2026. India’s subsidy-focused approach to reducing trade barriers is expected to boost manufacturing in advanced industries and attract foreign manufacturers into the country, which aims to become a global electronics supply chain hub. Its trade negotiations with the UK, EU, and Australia could further integrate India into the global economy.
Tech companies are required to navigate the shifting global trade policy agenda, expectedly focussing on focus on self-sufficiency in strategic technologies. While opportunities may arise through incentives provided for domestic tech production, the expected imposition of additional trade barriers will require companies to ensure more resilient supply chains, firmed up location strategies, and effective trade policy monitoring functions to maintain competitiveness. Staying abreast of trade negotiation developments, especially with countries like India, could help identify and capitalise on new growth avenues and strategic partnerships.
Climate Impact
Elections and other features of democracy - such as distorted public debate or unfavourable economic developments – bear the potential risk of slowing transformational climate action, infrastructure projects or behavioural change. With elections taking place in five of the world’s biggest carbon emitters – the US, India, Indonesia, Russia, and the EU -, the results will determine the trajectory of global climate policies. Elections in the US and Europe are expected to be particularly influential for the global climate trajectory, with the potential to either advance or dismantle significant climate legislation. In the US, the rise of populism and the decentralisation of climate policy could create an additional layer of complexity between opposing federal and state-level actions. In India, despite Modi being perceived internationally as a climate leader, rapid coal expansion and links to fossil fuel interests are reflective of many governments’ binary approach to economic growth and environmental protection. And while businesses in these democracies work to carve out their competitive advantage, China is racing ahead in green technology, taking a lead in renewables, electric vehicles and solar panels.
The outcomes of this year’s elections will have significant impacts on tech companies and their ability to remain competitive in climate-related technology sectors. Governments’ approach to resource security, skills development, climate legislation and global de-risking will set the foundation for sustainable market development. Businesses should stay vigilant of evolving climate regulations and respective trade barriers, ensuring compliance and strategic agility. Understanding market’s competitive advantage would assist in identifying and forging the right partnerships to secure skills and supplies.
Geopolitical Stakes
2024 further comes with significant geopolitical stakes. The potential for a shift towards authoritarian rule and the weakening of post-World War II institutions could redefine international relations. A Trump victory in the US could have profound market implications and alter the country's stance on NATO and the UN, revealing low-hanging geostrategic opportunities for Russia and China.
However, irrespective of the 2024 election outcomes, there are geopolitical challenges that governments will have to tackle in the long-term, including balancing consumer demand for low-priced goods while providing affordable environmental goods and protecting domestic industries from foreign subsidies. Industrial policies are here to stay and governments – regardless of who will be in power – may want to consider developing their very own.
Tech businesses should evaluate the geopolitical climate, identify emerging risks, and opportunities, and develop contingency plans that consider various political scenarios. Effective engagement with governments could help shape and anticipate upcoming interventions policy decisions, to identify policy incentive opportunities early, increase business certainty and help navigate an increasingly complex geopolitical landscape.
Projections
In conclusion, the 2024 elections represent a critical juncture for global politics and economics. The interplay between nationalism, trade policies, and climate change will shape the world for years to come. Businesses must remain vigilant, , adapting to the evolving landscape and the diverse outcomes of these pivotal elections, which present both challenges and opportunities, but first and foremost uncertainty, for businesses.
Companies should proactively monitor policy shifts and scenario-plan for potential outcomes, particularly in markets relevant to their supply chains or customer base. Resilient supply chains, effective engagement with policymakers and strategic partnerships with allies will be crucial in leveraging incentives and navigating the complexities of a potentially new geopolitical order. Businesses must be prepared to adapt swiftly to the evolving landscape, as the decisions made by voters throughout the coming months will have rippling effects on the global community
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