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Home»Economic News»Smaller countries learn to hedge their bets in the age of Trump
Economic News

Smaller countries learn to hedge their bets in the age of Trump

February 14, 2025No Comments2 Mins Read
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Under normal circumstances, the Cook Islands typically attract honeymooners, environmental activists, and diplomats from New Zealand. This is due to the country’s security agreement with New Zealand and its picturesque beaches that are under threat from rising sea levels.

However, the current geopolitical landscape, shaped by US President Donald Trump’s actions, has brought attention to the Cook Islands. Recently, Cook Islands Premier Mark Brown entered into an investment agreement with China, much to the dismay of the New Zealand government.

As Trump disrupts the established global order, it is evident that American leaders prioritize US economic growth above all else, often disregarding environmental, social, and diplomatic concerns. This approach involves leveraging various forms of power—military, financial, technological, and trade—to assert dominance.

Amidst this shifting geopolitical environment, nations are faced with the choice of aligning themselves with US hegemony, forming alliances with rivals such as China and Russia, or adopting a more neutral stance akin to the Cook Islands.

Some countries have already made their decisions. For instance, Nicaragua recently made constitutional changes to facilitate the construction of a new waterway, signaling its alignment with China. On the other hand, Japanese Prime Minister Shigeru Ishiba has expressed admiration for Trump and pledged significant investments in the US.

Similarly, Indian Prime Minister Narendra Modi has committed to increasing imports from the US, while the UK has sided with America on key issues such as artificial intelligence.

As leaders navigate the uncertain terrain shaped by Trump’s policies, there is a growing trend towards making symbolic gestures of allegiance while maintaining a degree of independence—a strategy reminiscent of the Silk Road merchants’ approach to dealing with rulers.

This balancing act has implications for global trade, supply chains, and the expansion of Chinese influence. Despite Trump’s efforts to contain China’s influence, his unpredictable behavior may inadvertently contribute to the strengthening of Chinese global presence.

While Trump’s tactics may seem counterproductive in the long run, his administration continues to prioritize unpredictability and assertiveness as tools of leverage. As nations seek to navigate this complex landscape, diversifying economic relationships becomes crucial for ensuring stability and security.

In the midst of these geopolitical uncertainties, one thing remains certain: the need for countries to hedge their bets and adapt to a rapidly changing world order.

gillian.tett@ft.com

age bets Countries Hedge Learn smaller Trump
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