The global impact of Donald Trump's incoming administration in 2025 - war, Nato and trade tariffs

With entrenched conflicts continuing to rage in Ukraine and the Middle East, 2025 was already shaping up as a year of continued uncertainty and instability. The re-election of Donald Trump to the White House has only intensified that process, raising wide-ranging questions about how his administration’s actions will impact not just Scotland and the UK, but global economics and geopolitics.

From global security and international trade through to the clean energy transition and government deficits, Mr Trump’s imminent return to power in the US will have seismic knock-on effects around the world. Here are some of the things to look out for over the next 12 months.

An end to wars, but at what cost?

Mr Trump has repeatedly indicated that he will bring the conflict in Ukraine to a swift end once he enters office. But the means by which he intends to do so offers considerable cause for concern. There is speculation that his administration will seek to press Ukraine to accept territorial losses in order to bring the bloodshed to an end, but if that outcome leaves Kyiv vulnerable to further Russian offensives down the line, it will hardly bring reassurance for ordinary Ukrainians and indeed, the wider European community.

President-elect Donald Trump speaks during a news conference at Mar-a-Lago. Picture: AP Photo/Evan Vucci | AP Photo/Evan Vucci

The new US administration’s muscular approach to international diplomacy could also determine the short to medium-term future in the Middle East. But with multiple pro-Israel hardliners lined up in Mr Trump’s incoming cabinet, there are fears for how Palestinians will fare. Mr Trump’s nominee for national security advisor, Mike Waltz, has called for Israel to be allowed to “finish the job” against Hamas.

NATO conundrum

Mr Trump’s established ‘America First’ approach to ending the war in Ukraine is inseparable from the future of Nato, the transatlantic military alliance set up after the Second World War, and which serves as a key bulwark against Russian aggression. Mr Trump has been a long-standing critic of the extent of US funding the alliance receives, and has previously suggested the US would not protect Nato allies that were failing to spend enough on defence.

The prospect of the US pulling its funding is causing considerable consternation in Europe, and the new Nato secretary-general, Mark Rutte, has warned of the need for greater investment in the alliance, warning it is time to “shift to a wartime mindset”.

Trade tensions

One of the highest-profile pledges made by Mr Trump is to levy tariffs up between 10 to 20 per cent on all imported goods. There could be even steeper rates imposed on goods coming into the US from the likes of China and Mexico. The protectionist stance has long been heralded by Mr Trump as a way of protecting US business interests, but the vast majority of economists believe such a step would impede growth and push up prices.

The Scotch industry is braced for the prospect of punitive US tariffs. Picture: Peter Summers/Getty Images | Peter Summers/Getty Images

The repercussions of such a move would be widespread. On this side of the Atlantic, the Scotch Whisky Association is already working to ensure that one of Scotland’s most important export products is not subject to the kind of tariffs seen during Mr Trump’s first term, when the industry found itself caught up in a long-running trade dispute with the EU over state subsidies for the aircraft builders, Airbus and Boeing.

Building relations

If the Scotch industry is to secure an exclusion from any further tariffs, the key will be building and developing relations with the incoming government in Washington DC. First Minister John Swinney has already held a 20-minute telephone call with Mr Trump, describing it as a “warm and friendly” conversation. But the real groundwork will be done with the new US ambassador to the UK.

The good news for the administrations in Edinburgh and Westminster is the nominee for that position, Warren Stephens, is viewed as a relatively sensible and moderate figure, and one who has previously espoused the merits of free trade. Work is already underway to forge diplomatic links with Mr Stephens by Colin Gray, head of the Scottish Government’s USA office in Washington DC and his staff.

Fiscal fallout

Mr Trump’s promise of steep tariffs is not the only way that his administration could shake up the global economy. He is increasingly supportive of digital cryptocurrencies - it came as no surprise that Bitcoin prices spiked to an all-time high on the night of the US election. If he follows through by deregulating the industry, other economies around the world will have to carefully consider their response.

Similarly, if Mr Trump makes good on his election stump promise to slash taxes in the US, it runs the risk of higher long-term interest rates - another development that would have a direct impact on the UK economy and other markets around the world.

Green pushback

One of the Trump administration’s goals is to double down on the US position as a leading petroleum producer. That means freeing up the regulatory environment around oil drilling, gas exploration and coal mining, while also rolling back sustainable investments designed to meet the world’s climate goals. Given the importance of America in contributing to that global push, the impact cannot be overstated.

Indeed, things could get even worse if Mr Trump, as he did in his first term, pulls the US out of the landmark Paris agreement to limit global warming, a move that would jeopardise already fraught efforts to ensure international co-operation.

Political aftershocks

The return of Mr Trump will embolden far-right groups across Europe and the wider world. He already has allies in positions of power, such as Hungary’s Viktor Orban. But others, such as Austria’s Freedom Party and Alternative for Germany, will no doubt be buoyed by the US election results.

With other centrist mainstream parties adopting policies that would have been perceived as hardline only a few years ago, it is clear the increasing normalisation of far-right politics is a trend unlikely to go away any time soon over the next four years.