Geo-Economics and Politics

Davos 2025: Analysing a political ‘vibe shift’ as US President Trump takes office again

As the US president continues to lay out his plans, it’s clear the world could look very different in a year, experts said at the 2025 Annual Meeting Davos. Image: Reuters

Pauline McCallion
Writer, Forum Stories
This article is part of: World Economic Forum Annual Meeting
  • As US President Trump begins a second term, his administration has announced changes that will affect climate action, the global economy and international trade.
  • Experts believe Trump could help end major conflicts, but say he might struggle to combine tariffs with a domestic agenda that includes reducing the cost of living.
  • As the US president continues to lay out his plans, it’s clear the world could look very different in a year, experts said at the 2025 Annual Meeting Davos.

Less than 24 hours after Donald Trump was sworn in as the 47th president of the United States, a panel of experts at the 2025 Annual Meeting in Davos, Switzerland, discussed how the global reception to the new president runs the gamut from excitement to fear.

Indeed, President Trump signed a raft of executive orders aligning with his campaign promises as soon as he took office. His plans cover topics ranging from immigration to climate and diversity. Legal challenges against some of the more ambitious policy shifts, such as ending birthright citizenship, have already been mounted, indicating the divisive nature of many of the new administration’s plans.

The Annual Meeting 2025 convenes global leaders to address key global and regional challenges. These include responding to geopolitical shocks, stimulating growth to improve living standards, and stewarding a just and inclusive energy transition. The experts convened for the 47th US Presidency, Early Thoughts panel agreed that – whether afraid or excited at the prospect of a second Trump term – people should be aware that it represents a significant change in the global post-war economic order. In fact, "vibe shift" was the term Allison Schrager, Senior Fellow at the Manhattan Institute for Policy Research, used to describe Trump's inauguration day.

Image: World Economic Forum

The new administration’s ambitious policy shifts will affect both national and international interests but, perhaps most of all, the electoral success of Trump shows how dissatisfied people were with the previous political class, according to panel members. "Something new and strange is happening," said Graham Allison, Douglas Dillon Professor of Government at the Harvard Kennedy School of Government. The fact that Trump has staged "the greatest comeback in political history" means the new US president "thinks he can do anything," he said.

So, what will that mean for the major issues of the day – from conflicts in the Middle East and Ukraine, to relations with China and the EU?

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Changing China-US relations

With major details about his promised programme of tariffs yet to be announced, Trump’s economic policy remains in the "wait and see" stage, according to Schrager. But she believes his first move on China will probably relate to tariffs – both keeping Biden-era measures and enacting new ones. She said his previous suggestion of a 60% tariff on goods from China is likely to be a starting point for negotiation.

Indeed, a trade war is looming between China and the US, warned Ian Bremmer, President and founder of the Eurasia Group. He said that US-China relations have stabilised recently due to "enormous efforts" through a complex network of bilateral relationships, but added: "Getting to a deal with China will require a level of execution or implementation that’s far more complicated, across the Trump administration, plus the GOP and Congress."

As such, the coming months will see a dramatic shift in the US-China relationship. "That’s the one [issue] on the foreign policy side that everyone should be paying attention to," Bremmer said. However, panellists disagreed over whether the US-China relationship would be better or worse in a year.

Regardless, Allison said China could play a role in Trump’s plan to end the Russia-Ukraine war. The conflict could be over in as little as six months, he predicted, settled "roughly at the current line of division". Trump wants to be "not only a dealmaker, but an international dealmaker who is a peacemaker,” Allison said. And while a deal could include sanctions on Russia, any agreement supported by Trump and Chinese President Xi Jinping is likely to attract co-operation from Putin, he said.

On the other hand, the Middle East peace deal struck days before Trump’s inauguration may not lead to lasting peace in the region. Walter Mead, Ravenel B. Curry III Distinguished Fellow in Strategy and Statesmanship at the Hudson Institute, explained that there has been a paradigm shift in relations in the region, particularly in relation to Iran, but that won't necessarily translate into a sustained end to the conflict. "Peace in the Middle East remains a beautiful but maybe distant dream," Mead said.

Domestic affairs

Trump has also pledged to deal with economic pressures at home, including a promise to tackle inflation and cut the cost of living for US citizens. His extensive tariff plans could complicate this plan, however.

Tariffs on goods from countries like Canada, Mexico and China would likely increase prices for consumers, Schrager said, at least initially. The world is also potentially experiencing a new "equilibrium" when it comes to inflation, she argued, which could come to rest at 2.5% or 3% from now on. This would boost bond yields, increasing borrowing costs for governments like the US.

On the other hand, Trump’s cabinet of self-made billionaires could be just the team to tackle such issues, according to Allison. When combined with efforts to cut regulations in areas like diversity and climate – Trump is already clearing the way for more domestic energy production, for example – many businesses are excited about a more positive growth environment.

Bremmer warned that US remains politically polarized, however. He said Trump shouldn't be treated like "another president – he’s not", he added. "It’s a very unusual time to have an individual that is in no way concerned or constrained by the rule of law," Bremmer said. "Many of us will find a way to get on with this, but it doesn’t mean it’s normal."

A new normal for politics

Similarly, the panellists agreed that Trump’s flip flop on banning social media platform TikTok and his recent cryptocurrency launch certainly don’t signal business-as-usual for US politics. And these moves show Trump realises that technology is also driving change globally. It’s no longer correct to assume that "tomorrow will be like today" according to Mead. In the past, change happened in incremental shifts, but the pace is speeding up – not least due to the tech transformation affecting the global economy.

"Fundamentally, we are seeing something as earth-shaking as the industrial revolution, but instead of being extended over several generations, it’s happening on a much more rapid time scale," Mead said. "And while the industrial revolution started in a few places and gradually spread across the world, the information era has moved much more quickly." Now, governments all over the world must come to terms with a massive shift in public expectations around issues like the economy and social institutions.

As the Trump administration continues to unfold its plans for the next four years over the coming weeks, the implications for both the US and the rest of the world will become more apparent. For now, however, the panellists agree that Trump’s second term in office represents the start of a very new and different political era for the entire world.

Watch the full session ‘47th US Presidency, Early Thoughts’ below:

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