The G-19 Takes Stock of America First

The world’s next largest economies assess the disruption—and weigh their options--as Donald Trump prepares his return

There will be nervous chatter in the hallways when leaders of the world’s largest economies convene in Rio de Janeiro today.? But the talk among at least 19 of the delegations will focus on the man who is thousands of miles away preparing the orders he plans to issue on Day One of his next presidency.? They will be comparing notes on how best to deal with Donald Trump’s United States, which seems to be turning both more confrontational and more isolationist at the same time.?

Team Trump claims to want a “better deal” for America rather than abandon negotiation and cooperation altogether.? But sharp diplomatic departures by the traditional leader of the postwar global order will surely trigger both unexpected risks and opportunities.? Already, the names populating the next cabinet suggest Trump’s plans will be anything but incremental.

This may be President Joe Biden’s loneliest summit yet.? For the other leaders in town, there are just too many new openings to explore and too many unintended consequences to consider.

It’s still unclear if Trump’s priority in China is to redress the trade deficit ($280 billion last year) or press for regime change in Beijing.? If it’s mainly the former, then there’s a deal to be done.? Chinese leaders need to boost domestic demand anyway, and why not direct some of that money to U.S. exporters?? Moreover, if rebalancing trade flows really is Trump’s priority, this may leave President Xi Jinping more room to rein in Hong Kong’s democratic institutions or dilute Taiwan’s sovereignty.?

Beijing will also assess how much damage Trump’s tariff threats against friends and allies may create openings for Chinese diplomacy.? China’s cheap manufactures will look like much less of a problem to the rest of the world if the U.S. suddenly slaps 20% levies on all imports.? Moreover, if Trump somehow manages to end the fighting in Ukraine, Europeans may find it easier to settle trade disputes with a Chinese government that is no longer backing the Russian war effort.

Beyond the prospect of a trade war with its most important economic partner, Europe faces rising security risks from Trump’s open doubts about America’s NATO commitments.? No matter what happens in Ukraine, Europe will need to start spending much more on developing its own defense industry and independent foreign policy.? It might test its influence, for example, on leading a global coalition to advance climate policy now that Washington appears ready to drop out.

This may be President Joe Biden’s loneliest summit yet.? For the other leaders in town, there are just too many new openings to explore and too many unintended consequences to consider.

Russia looks to have the brightest prospects amid these new diplomatic alignments.? President Vladimir Putin won’t be in Rio himself (due largely to the threat of arrest by order of the International Criminal Court), but Trump’s promise to stop the fighting represents a step closer to keeping the land his troops occupy and lifting at least some of the economic sanctions that hamstring his economy.

Rising tensions between Beijing and Washington may also benefit India, the country with the booming economy that everyone wants to befriend.? Recent border agreement with China helps cool temperatures and there is scope for expanded trade with Russia should sanctions be lifted.? Trump’s first administration ended trade preferences with India, triggering tariff retaliation, but Prime Minister Narendra Modi’s personal diplomacy and Trump’s fixation on China may help avoid a re-run.

Japan’s trade surplus with the U.S. may draw less attention as long as its defense budget continues to rise, but brand-new Prime Minister Shigeru Ishiba will be looking for an early opportunity to visit Washington to reinforce security ties.? Trump has complained about the cost of defending South Korea, triggering questions about Asian defense cooperation and the risks of nuclear proliferation.

Mexico will face intense new pressures from Trump on immigration and may make common cause with Canada in the upcoming review of the USMCA trade deal that Trump concluded in 2020.? But Chinese investment in Mexico that seems intended to bypass tariffs will likely face increased scrutiny from Congress. ?

Trump’s unequivocal support for Israel may complicate relations with Saudi Arabia, but his promise to escalate pressure on Iran should help.? Turkey would welcome any steps to end the Ukraine war and fewer lectures on human rights.? Indonesia and South Africa share very little other than a desire to stay out of the line of fire as trade tensions escalate and will do what they can to keep on good terms with both Washington and Beijing.

While Argentina’s President Javier Milei was quick to meet Trump after the election, his country’s trade with China has been expanding.? Brazil’s Luiz Inácio Lula da Silva will embrace his role as host and his country’s long-standing desire to bridge the tensions among the world’s superpower rivalries.

At the very least, Trump’s victory likely shatters any further G-20 progress on aligning tax policies, bolstering climate commitments and coordinating financial regulation.? But the quiet conversations in between this summit’s formal sessions bear close attention for signs of what seems like the most significant shake-up of the global balance of power since the fall of the Berlin Wall – and maybe since the destruction of Hiroshima.

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