2024 starts tomorrow. What’s the worst that can happen… and how can you use global diversification to prepare yourself for it?
There’s no way to answer that question without entering the dreaded territory of “politics.”
I pride myself on avoiding politics in my work. That’s because, in my experience, talking about politics always backfires. As soon as people see certain words in print, their eyes go red, and logic deserts them.
But there’s no way to avoid the fact that 2024 is shaping up to be one of the most momentous political years in our lifetimes. And it’s all because of Donald J Trump.
My views on the ex—and possibly future—president are irrelevant. What matters is how people around the world feel… especially foreign governments.
Mark my words—if Trump is reelected in November, there will be consequences… and they could be far-reaching, indeed.
If American voters choose to return Trump to the White House, other countries will assume major changes to come. Some of them will be internal to the U.S. Others will affect foreign relations, trade, diplomacy, and even warfare.
Given the candidate’s statements and those of his closest supporters, a Trump administration would put the U.S. at odds with much of the rest of the planet.
Here are some speculations based on my analysis of the likely geopolitical response to a second Trump administration:
The U.S. has long used sanctions to pressure other countries to bend to its will. If a Trump administration pursues the sort of domestic and foreign policies the candidate is promising, I predict retaliation. This could include restrictions on travel, investment, and residency rights for Americans.
Europe is the biggest concern. Trump’s proposals imply a serious challenge to the civil and human rights ethos behind the European Constitution. The Europeans obviously aren’t perfect, particularly when it comes to immigration. But if a Trump administration implements his proposals on that front, it will force the Europeans to reconsider its relationship with the U.S., at a cost to ordinary American citizens.
This is compounded by Trump's threats to leave NATO and abandon Ukraine to Russia. Since World War II, the U.S. security umbrella has justified European tolerance of American policies they don’t like. With the U.S. out of NATO, there would be no reason to do that. This is compounded by Trump’s protectionist plans, which would wreak havoc with the European economy.
We can expect a similarly negative response from many countries in Latin America. Although some countries will welcome a Trump administration, others will recoil at his proposals to use the U.S. military to attack drug cartels in Mexico, to repatriate millions of immigrants, and to tolerate extreme right-wing authoritarian administrations in the region. Given the numbers of Americans who have obtained residency and invested in real estate and other assets in the region, this could have enormous repercussions.
The reaction of other regions is unpredictable. Many Middle Eastern countries will welcome a Trump presidency, since he opposes any attempts to limit fossil fuels. In Africa, some countries will reject him, while others will approve of his pro-Russian sentiments. In Asia, Narendra Modi of India is likely to welcome Trump back to the White House. But other countries—especially those threatened by Chinese expansionism—will be deeply concerned at Trump’s approach to China.
On that score, if Trump continues his antagonistic approach to Beijing, we can expect the blowback to be primarily financial and economic. At worst, Beijing could limit exports to the U.S. causing chaos in supply chains and significant inflation in the U.S. economy. An even more serious blow would be if the Chinese decided to stop buying U.S. Treasury bonds, and or dumping them on to the market, driving up their yields and therefore the U.S. interest rate.
The impact on the U.S. dollar is unpredictable. On the one hand, high U.S. inflation would tend to devalue it. On the other hand, higher treasury yields due to Chinese dumping, potentially from other countries as well, would attract some investors. Whatever happens, the dollar will be unstable.
How can you prepare for this? Whether you love Trump or hate him, these changes could affect you. Here are some suggestions:
If you are contemplating any type of international diversification, whether in terms of residency, investment, or business, bring the timeline up. After November, conditions could be vastly different.
Consider investing in hard assets outside the U.S. That includes both residential real estate and farmland, which has one of the highest yields of any asset class over time. Ideally, you want to target countries whose currencies are likely to remain strong relative to the dollar.
If you have the potential to get a second passport, whether through ancestry or investment, I’d recommend taking steps to do so as early as possible in the new year.
Time will tell how things work out, and I might be wrong about a lot of these things. But as a student of history and a keen observer of politics, my bets are on big disruption later on in 2024.
As they say, there’s no time like the present to get ready for it.