What to Expect From Geopolitics in 2025

In last week’s FP Live, I pressed Fareed Zakaria to look back at 2024—with all its elections and wars—and explain why the year turned out the way it did. In this week’s episode, we tried to cast ahead to 2025. Given the United States’ outsized influence in the world, much of our discussion focused on President-elect Donald Trump and how he might game out some of his more controversial policies, from tariffs to deportations.

As always, subscribers can watch the full discussion on the video box atop this page or follow the audio podcast. What follows here is a condensed and edited transcript, exclusive to FP Insiders.

Ravi Agrawal: So, let’s start with January. Jan. 20 is the first day of the World Economic Forum in Davos. But all eyes are actually going to be on the White House and the inauguration of President-elect Donald Trump. What do you see as the biggest difference that the world will be facing with the Trump White House?

Fareed Zakaria: The fundamental difference is that the United States, since 1945, has had an attitude towards the world, which has been one of generosity and of saying we’re trying to build this open international order. So, for example, Donald Trump is right when he says that most trade relationships the United States has are asymmetrical. We are more open to other countries’ goods than they are to our goods. That was done by design in the late ’40s, because the Truman administration believed that in order to get the world economy on its feet, they needed access to the largest economy in the world. And then he persisted, even though the differences became smaller, because there was always this sense that the United States was trying to make sure that everybody benefited from this world economy. That created political incentives for people to cooperate and created greater stability. It also helped us in the Cold War against the Soviet Union.

Eight decades later, the United States has done fantastically in this world. The U.S. economy in 2008 was the same size as Europe’s. Now, it’s twice the size of the Eurozone economy. U.S. wages almost double those of Europe these days. But Trump brings to it a very narrow, self-interested perspective. For example, can the United States squeeze Mexico or Canada and get a better deal? Can the United States squeeze the Europeans? And he’s right. You probably could. But you lose the goodwill, and you lose that systemic benefit of creating a system where everyone feels that they are invested and they are thriving. Other than that, the truth is he’s very opportunistic. The underlying reality is that he thinks if he hasn’t made you suffer, he didn’t win. There’s no win-win for Trump. There’s win-lose. He wants to win, and he wants you to lose, even if the losing side is Britain, or France, or Switzerland.

RA: One of the things that Trump sees as a corrective to help him win is tariffs. Even if you buy the economic argument for tariffs—which is that they generate a lot of revenue, encourage domestic production, and allow you to cut taxes—all of that is longer term. But the reality is that Trump is a short-term guy and tariffs are inflationary, which Trump won’t like. If there’s panic in the stock markets, Trump won’t like that either. So, what’s your sense of how this all adds up?

FZ: Trump is not stupid, and he has street smarts about all of this. Clearly, a lot of it is bargaining, and he’s trying to get people to cut better deals with him. But I do think there will be some imposition of tariffs, partly because he really believes in this stuff. He really believes that tariffs are good for America and are not a tax on the consumer. I don’t think it’s for show. He really just doesn’t get the conventional economic argument about tariffs. So I think there will be some imposition of it. And the truth is, they are not so expensive and inflationary in the short term, depending on how they are put in place. Tariffs right now in the industrialized world are averaging about 3 percent compared to the 1970s, when they were 15-16 percent. If you go from 3 to 4 percent, which is what is likely to happen on average terms, this is not a seismic shock. This is not a structural shift in the global economy. The danger is that they ratchet up and that you’re going to start seeing a tit for tat, and over 10-15 years, you suddenly realize you’re in a much less open environment than you were. But it’s quite possible that you have a bunch of these tariffs put in place that will bring in some revenue. It doesn’t seem likely to be enough that you can do major tax cuts, but it will pay for some tax cuts. If it’s a moderate imposition of tariffs, it’s not going to be as distorting and as inflationary as people think.

The other piece that Trump has talked about a lot is the deportation of illegal immigrants. That is likely to be inflationary, especially if it is done anywhere close to the levels that he’s talking about. He’s talked in the campaign about deporting 24 million people. Then he talked about the largest deportation in the history of the United States. That’s going to be tough. One of the reasons the United States is at a 40- to 50-year low in unemployment is because you have a lot of undocumented workers working. One of the reasons I think inflation went down as quickly as it did is that you have a lot of undocumented workers who are working at below or around minimum wage. That is likely to be much more difficult.

RA: Let’s jump to Ukraine as we look ahead to 2025 and what might happen. Kyiv actually wasn’t thrilled with Biden, and they felt like he was giving them enough to survive but not to win. How do you think Ukraine is thinking about Trump? And, more importantly, how do you think Trump is thinking about a solution?

FZ: You’d have to be worried, if you were in Kyiv. Trump doesn’t like Ukraine. Ukraine was the topic of his first impeachment. He tried to blackmail the president of Ukraine. Ukraine has all these bad memories for Trump. I can’t believe that that means nothing to him at all. That said, I think Trump is a smart enough dealmaker to understand that if you’re going to get a deal and if you’re going to do what he keeps saying he wants to do, which is end the war, the key issue is how do you get [Russian President Vladimir] Putin to stop, not [Ukrainian President Volodymyr] Zelensky. He has leverage with Zelensky. He can just say to Zelensky, “I’m going to stop sending you weapons.” That is very powerful leverage. What leverage do you have with Putin? He’s going to have to figure that out.

I would think there’s two ways to think about it. One, you can increase sanctions. You can send more weapons to Kyiv. You can do all kinds of things that make Putin’s life much tougher. And you can talk about relaxing sanctions. He’s got sticks, and he’s got carrots. If he thinks about it in a smart way, you’d increase the pressure on Putin. You’d promise some carrots if he would turn course, you bring him to the negotiating table, and then you pressure Zelensky. It seems to me the deal is obvious. The battle lines stay where they are. Nobody accepts the territorial reconfiguration in legal terms. The Ukrainians say those parts of Ukraine that were annexed by Russia are illegal annexation. The Russians say they’re legal annexation. The rest of the world, including the West, will not accept the annexation. Some other countries might, though it’s worth pointing out that even India has not accepted those annexations. And then, in return for accepting the de facto partition of his country, Zelensky gets security guarantees. You try to square the circle with the Russians and say it’s not a NATO membership, it’s a security guarantee from NATO, which is different. That’s what diplomacy is all about—finding these formulas in which everyone can claim to have gotten some face. Trump would be the dealmaker who could make something like this happen. But he has to get over his aversion to Ukraine and understand that the key is pressure on Putin, who is the guy who can stop this more than anyone else.

RA: And I hope he’s listening. When you look at the personnel who have been named to key positions—Marco Rubio for secretary of state or Mike Waltz for national security advisor—what is your sense of how they might move the needle on U.S. foreign policy? Or will fealty to Trump be so paramount in this next White House that whatever Trump thinks will be a good guide to what will actually happen?

FZ: The nature of Trump and of his victory means that everyone is cowed into submission. So I wouldn’t expect any heroics from any member of his cabinet or his White House staff. They are going to be slavishly subservient to Trump. That is just the nature of this MAGA movement and of the Republican Party. It’s a very top-down, hierarchical setup.

Within that, what’s striking to me is that in economic policy and foreign policy, mostly it’s sane, sensible people—Tulsi Gabbard being the one exception, but the director of national intelligence is actually not a very important job. The director of the CIA is much more important, and, in that position, he’ll most likely have John Ratcliffe, who’s, again, a sane, sensible person.

What’s interesting is that the places where he has the real ideological warriors are the Justice and Defense [Departments]. In some ways, that’s where the hard power of the state is wielded. It’s the law, and it’s the guns. But maybe it’s also the place that he wants most ideological control because of the experiences he had with lawfare. And that’s why I always thought it was a terrible idea for the Democrats to engage in that lawfare.

RA: If you were China, how would you manage relations with the Trump administration? One school of thought argues they should look at the next four years as a write off, as four lost years. There’s another school of thought already intimating that they’re not going to take U.S. tariffs lying down, that they will retaliate. They’re likely saying this to deter Trump from doing the worst that he can. But what is your sense of how they’re likely to game out and respond to Trump?

FZ: Well, they’ve already begun to respond to tariffs and to the chip bans. They’re being very intelligent about it. They’re not responding with tariffs. They want exports there. They even need some American imports. What they’re doing is restricting certain kinds of critical materials and minerals that are particularly needed in the technology sector in the United States And so that’s their counterpressure.

The Chinese are likely to do two things. They may put on a brave face and resolve to counter pressure with pressure. But they’ll also be looking for bilateral deals. Trump loves the idea of a big deal that he could make with [Chinese President] Xi Jinping where, say, Xi agrees to buy a whole bunch of American products or Chinese firms set up shop in the U.S. to avoid tariffs.

Trump, interestingly, is opportunistic, so he’s able to do something Democrats would have been too scared to do, which is to say, “I invite Xi Jinping to my inauguration.” Imagine if [President Joe] Biden had done that, right? You would have had all this talk about how Biden was soft and loved the Chinese Communist Party. Trump is inured from all that, and he uses it. The X factor in all of this is how much of this Trump pragmatism on China is a product of Elon Musk. Because Musk is in a very different place with China than most of the hardline, hawkish Republican Party—particularly the very hawkish MAGA movement.

RA: And he has a huge Tesla factory in Shanghai.

FZ: To put it very simply, for Tesla to be worth anything close to what its market cap is right now, Musk needs both the largest market in the world—the United States—but the second largest market, as well. And, by the way, the largest market in the world for automobiles may already be China, but if not, will certainly soon be China. So, China is absolutely pivotal to Musk’s ambitions for Tesla and probably for some of his other companies, like Neuralink. So I suspect that Trump will be surprisingly pragmatic on China and try to make some kind of a deal. That, by the way, would stabilize the relationship in a way that might be good for America and good for the world.

RA: So, Fareed, let’s jump to the Middle East. In last week’s conversation, we looked at the last year of U.S. policy in the Middle East, and we separated the situation in Gaza from everything else that’s going on, like Iran being weakened, the Axis of Resistance being decimated, regime change in Syria. Now, with Trump coming to power, what will change on that front?

FZ: The first and most obvious thing is that he’s very pro-Israel and the people around him are very pro-Israel. So to the degree that Israel has been restrained, which has not been that much, it will have even greater flexibility in Gaza and in Syria around the Golan Heights. I don’t think that he will, for example, provide Israel with bunker buster bombs if they decide they want to take out Iran’s nuclear facilities. He would regard that as potentially too provocative because he also likes the idea of being a dealmaker or peacemaker. He said this often. And so, I do think he will press [Israeli Prime Minister Benjamin “Bibi” Netanyahu] to declare a cease-fire. An interesting challenge is that Bibi Netanyahu faces his own problem: He can’t end the war in Gaza because he cannot agree to the terms under which the hostages will be returned, which requires negotiating with Hamas. Hamas will want to retain their ability to operate in Gaza afterwards. That is probably a bridge too far for his right-wing coalition, and particularly Itamar Ben-Gvir and Bezalel Smotrich. If they resign, does his coalition start to fall apart? In the last month, Bibi has shored up his support, so he can lose those two people, but just barely.

The longer-term challenge for Trump is how to change the relationship with Iran. Trump’s entire approach is maximum pressure. But the Iranians need some reason to moderate. There has to be some upside in it for them. And the Trump approach assumes that Iran will either moderate, even though it is going to continue to face the same blizzard of sanctions and maximalist military pressure from Israel, or the regime will collapse. You can tell that Bibi Netanyahu thinks that the Iranian regime is going to collapse. He’s put out several videos appealing directly to the Iranian people. I myself think that’s unlikely. I’m happy to be proven wrong. It’s a nasty regime, but it’s fairly institutionalized. They do a lot of patronage. They hold these elections, which serve as an escape valve for some public discontent to be aired. They have several centers of power, with the president, the legislature, the mullahs, the [Islamic Revolutionary Guard Corps]. So I’m not sure that this regime is ripe for collapse. If it’s not, what incentive do they have to moderate their behavior? What incentive do they have, for example, to put back caps on their nuclear program? That’s a hard question for the Trump administration. Beyond the rhetoric, beyond the bravado, how do you give Iran a path out?

RA: The other big question for the Middle East in 2025 will be whether the Abraham Accords can be expanded or not. Before Oct. 7, [2023], Saudi and Israel normalization seemed imminent; it now seems less so. Part of the challenge here is that public opinion, in as much as the crown prince cares about public opinion, has dramatically shifted against Israel, in part because of how imagery from Gaza spreads around the Middle East, especially the Gulf, through the internet, and smartphones, and social media. How do you think the Saudis are gaming out the next few months and years, especially with Trump in power?

FZ: Saudi Arabia really wants normalization with Israel. Under [Mohammed bin Salman], the Saudis have undergone a very interesting, seismic shift in the way Saudi Arabia looks at its foreign policy. They’re not trying to be the leader of the world of Islam. They’re not trying to be the leader of the Arab world. Mohammed bin Salman is trying to be the leader of Saudi Arabia, the man who transforms Saudi Arabia into a modern country. That is clearly his vision. And in that context, being allied with the richest country in the Middle East, being allied with the most technologically, economically, and militarily dynamic country in the Middle East makes a lot of sense for him. But the price for that has gone up as Palestinian suffering has gone up and as public sentiment in Saudi Arabia has become more pro-Palestinian and anti-Israel. But I think, fundamentally, he wants to do the deal. He thinks about the question of the Palestinians, as what is the minimum I need to do to get this deal going? And this question goes squarely in Bibi Netanyahu’s lap—can he accept whatever minimum the Saudis want, which I would guess will be a clear declaration of movement towards a Palestinian state but without any concrete steps, timeline, or endpoint being necessary, just a clear affirmation that it is the goal of Israeli policy.

Now, that would break Netanyahu’s coalition. If I were the Trump administration, I would go to Bibi and say, “Look, do a cease-fire deal, which would bring the hostages back. We will make the Saudi deal happen really fast. And yes, your government will fall, but you go to the polls as the guy who won the wars against Hamas and Hezbollah, decapitated Iran, and got a Saudi deal.” That’s a pretty powerful campaign platform to run on. If the Trump administration can convince Bibi to do that, which might be easier because Trump and Bibi have a better relationship than Biden did, you might actually get a kind of new peace in the Middle East.