To help you understand what’s going on in politics and what we expect to happen in the future, our highly experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts (Get a free issue of The Kiplinger Letter or subscribe). You’ll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here’s the latest…
With Donald Trump’s return as president, an overhaul of U.S. foreign affairs is afoot. The commander in chief wants to complete the shift to an “America first” policy started in his first term.
Ukraine
Ukraine has gotten most of Trump’s attention so far, much to Kyiv’s chagrin. The president is determined to end Ukraine’s three-year-old conflict with Russia, kicked off by Moscow’s 2022 invasion. So far, he has done that mostly by applying pressure to Ukraine, demanding big concessions in exchange for ongoing U.S. military aid, plus meeting with Russia.
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Trump ups the odds of some sort of cease-fire, and maybe a pact to end the ongoing conflict, at a time when Ukraine is faltering on the battlefield and Russia faces significant economic constraints. The question, as always, is what such an agreement will entail and whether it will prove durable. As things stand, Kyiv would have to concede some of its territory to Moscow for any sort of peace deal to stick.
The issue is exacerbating a rift with Europe, perhaps by design. As in his first term, the president is urging America’s European allies to spend more on defense, specifically the 2% of GDP that members of the NATO military alliance are required to budget for their armed forces, though most don’t. Unless Europe changes course, it will never be able to replace U.S. military aid to Ukraine.
China
By contrast, the White House continues to take a hard line on China, implementing new tariffs, investment restrictions and more. The administration has also notably taken a stronger stance in defense of Taiwan’s independence. Beijing views the island-nation as a runaway province and is planning an invasion, though its timeline remains unclear. The Pentagon expects China to act by 2030.
But Trump’s dealmaking tendencies could soon reassert themselves here. The tariffs, for example, appear to be a ploy to get Chinese President Xi Jinping to the negotiating table. Taiwanese officials are watching nervously and hoping for the best. (Taiwan’s being a chipmaking powerhouse works to its advantage.)
Middle East
In the Middle East, the president faces a major test with Palestine. Trump has proposed militarily occupying and forcibly relocating the population of the Gaza Strip, devastated by the recent conflict between Hamas militants and the Israeli military. While it’s unclear whether the administration could do this, other countries in the region — most notably Egypt and Jordan — take Trump seriously enough to propose their own peace plan, which the president seems to support.
Many countries have learned the risks of simply taking Trump at his word. In some cases, the president is open to changing his mind. In others, he intends to take an extreme negotiating position, hoping eventually to meet in the middle.
This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.
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