Today’s more volatile political environment is reshaping the operating landscape for multinationals, creating unprecedented levels of policy uncertainty and significant legal and regulatory change. For those that are nimble enough to navigate the period ahead—or are just plain lucky—these developments present enormous possibilities.
Public listing rules, sustainability frameworks, data regimes, foreign direct investment rules, economic sanctions, export controls, financial regulations; all are evolving at speed as governments pursue simultaneous reforms in a bid to boost growth, safeguard national security, foster energy resilience, and establish “sovereignty” in a fragmenting world.
In some areas, this change is creating new barriers to the cross-border flow of goods, capital, information, and people.
But with policymakers generally focused on cutting red tape to encourage investment and innovation, opportunities are also emerging for organizations that can take advantage of new incentives and recalibrate their footprints, supply chains, and product strategies around more open rules in certain jurisdictions.
Why is policymaking increasingly volatile?
The United States’ determination to forge a new path outside the international system it has led since the end of the Second World War has been a major driver of uncertainty for business, impacting everything from multilateral institutions to cross-border trade and international security alliances.
The U.S. administration’s policy program is designed to ensure America “wins” on the global stage. As an example, the America First Investment Policy aims to bolster the United States’ position in artificial intelligence and other emerging technologies, inviting financial support from historic allies while seeking to disadvantage China via inbound and outbound investment restrictions.
The America First policy is just one manifestation of a profound and ongoing U.S. transformation, with President Trump launching a series of measures designed to rewire a political system he believes has been captured by a hostile establishment. These include steps to deconstruct an “overbearing and burdensome administrative state” and exercise greater executive authority over federal enforcement agencies.
As part of this new approach, the Trump administration is taking a more active interest in strategically important businesses through direct investments (as is the case with Intel, MP Materials (one of the only rare earths producers in America) and potentially prime defense contractors); and revenue-sharing in return for export licenses (Nvidia, AMD). This political focus on sectors deemed critical to U.S. resilience offers an opportunity for revenue creation, with major financial institutions launching dedicated investment initiatives in response.
The ability of businesses to keep up with the U.S. administration’s policy reforms has been challenged by the President’s extensive use of executive orders (EOs), which have accelerated the pace of change. While concerns have been raised over the increasing concentration of power in the White House, this approach is perhaps no surprise for an administration determined to carve a new path; Congressional productivity is in sharp decline, with Congress more divided than at any point in the past 50 years. Just 27 bills were passed in 2023, down from more than 700 in the late 1980s.
Aided by a Supreme Court ruling that limits the ability of federal courts to issue nationwide injunctions against presidential actions, EOs are set to remain a mainstay of U.S. policymaking for the foreseeable future. To thrive in the period ahead, boards and management teams need new decision-making structures to navigate the volatility they create.
The U.S.’s new muscular, power-oriented approach to foreign affairs (as demonstrated by its actions in Iran and Venezuela and its designs on Greenland), are driving rapid and dramatic shifts in international alliances and markets that will produce winners and losers. Again, businesses that can adapt quickly, or that happen to be in the right place at the right time, will be best positioned to seize the opportunities that emerge.
Why nationhood has re-emerged as a pre-eminent political goal
The turbulence we are seeing today is not solely driven by events in the U.S. The same currents reshaping American policy are impacting the political landscape globally.
Rising wealth inequality, persistent inflation and fears over the consequences of mass migration have caused voters to turn their backs on the administrations that held power during the pandemic years.
Societal divisions are growing and zero-sum thinking now guides many people’s political choices. A host of domestic challenges have been pinned at the door of globalization, with nationhood taking its place as the pre-eminent political ideal.
One notable consequence of these dynamics has been a decline in support for closer international integration. We are also seeing greater political instability at domestic level, particularly in Europe where support for centrist parties is faltering (not least in major economies such as the UK, France and Germany) and fewer governments now serve their full terms. Significant swings in policy direction between administrations are more frequent as voters turn to parties promising action but give them little latitude if they fail to deliver.
The age of “globalization without guardrails” is over
If the past 25 years were the age of “globalization without guardrails” we are transitioning to an era of greater economic competition that is increasingly shaped by industrial policy.
Governments across the world are using a range of levers to boost economic output, encourage domestic investment, safeguard local champions and protect national security.
The U.S. government’s attempt to impose sweeping global tariffs via EO under the International Emergency Economic Powers Act (IEEPA) only to see them struck down by the U.S. Supreme Court (sparking a wave of claims for refunds), is one of the most obvious examples of the trend.
Even though the approach was blocked, it’s likely that tariffs will continue to be a focus of U.S. government policy in the future. Legislation such as Section 232 of the Trade Expansion Act of 1962 offers another route via which the administration can impose new tariffs outside of the Congressional process. In order to proceed with confidence, boards and management teams must therefore build their capacity to understand how these and other regulatory changes interact across borders.
A more combative U.S./China relationship has global ramifications
The current U.S. administration’s new approach on the global stage has proved as challenging to America’s historic allies as it has to its long-standing rivals. But with the U.S. proving an increasingly unpredictable partner, it is opening opportunities elsewhere—the EU/India trade deal is a good case in point, with both sides looking to increase cross-border ties as a hedge against transatlantic volatility.
As far as Beijing is concerned, the U.S. government has taken a more openly combative approach than many of its predecessors, introducing new investment restrictions, seeking to reduce China’s influence in Latin America under the “Donroe Doctrine”, and clamping down on student visas, cross-border data transfers and more.
Following months peppered with ever-higher tariffs and the threat of restrictions on the export of rare earths, the two countries signed a trade and economic deal in October 2025. While it provided some respite for business, it remains to be seen how long the détente will last.
The U.S. and Chinese economies are deeply intertwined, with America buying more Chinese goods than any other country and China holding vast quantities of U.S. debt (despite steadily selling off its holdings in recent years). This closeness means any volatility in relations has far-reaching consequences.
In this environment, “structural segmentation”—optimizing the global footprint of a business to foster resilience to macro developments and reduce the risk of interruption—is critical.
The legal and regulatory aspects of these decisions are complex. As an example, choosing whether to shift elements of an R&D or manufacturing supply chain out of a market in response to geopolitical developments may involve analysis of everything from national security screening regimes to export controls, data protection regulations, and employment law.
Protecting valuable intellectual property is key, as any sudden moves risk leaving behind disgruntled business partners or employees who may have had access to valuable trade secrets and other forms of know-how. Existing joint venture, collaboration, or research agreements may not provide adequate safeguards, and local employment laws may be untested or insufficient to compensate. It is essential to weigh all of these factors against the commercial impact of geopolitical developments in order to make informed decisions.
