Counter/Consensus: Isolationism, Global Trust, and Trudeau's Resignation

Programming Note: The 2025 edition of our Year Ahead in Geopolitical Risk Report is now available. Morning Consult Pro subscribers can download it here.

1. Global Isolationism (Consensus)

American exceptionalism? As president-elect Trump prepares to take office, many have presaged the United States will turn inward both economically and geopolitically, seeking (for example) to raise trade barriers and extirpate itself from overseas conflicts like the war in Ukraine. Data from our just-published “year ahead” report suggests American voters are on board: Among their chief foreign policy priorities, inward-oriented concerns top the list, led by efforts to address terrorism, immigration, and drug trafficking. Outward-oriented issues — like preventing global economic crises and addressing U.S.-China relations and ongoing wars in Europe and the Middle East — rank further down the list.

Less discussed is the matter of whether the public in other major markets is similarly inclined to see their governments’ foreign policy platforms turn inward. Our data suggests the answer is largely yes. As shown in the chart below — which visualizes the 6-month change in public support for a variety of policy issues across 19 of the world’s largest markets by both population size and GDP — rising public support for isolationism is one of the few unifying trends we observe, with the United States and China in pole position, alongside Japan and Brazil (see top row in chart). By contrast, in only 4 of the 19 markets do we see declining support for isolationism equal to or exceeding 1 percentage point.

Led by the United States post-Inauguration Day, a renewed trade war and a quick settlement to the war in Ukraine that sees Kyiv cede some territory to Moscow will likely be among the earliest manifestations of the world’s inward turn. But we expect there to be other issues on the chopping block, such as coordinated climate change mitigation efforts. Highly variable cross-country sentiment on key aspects of domestic policymaking — covering issues ranging from local manufacturing to labor protections — will meanwhile further complicate global businesses’ risk management efforts.

If there’s a takeaway for global risk managers heading deeper into 2025, it’s that they should plan for a year of policy turbulence emanating from both sides of the ledger. See our “year ahead” report for more on this particular issue, and for a slate of companion forecasts.

2. Canada (Consensus)

Passing the puck. Long-serving Canadian Prime Minister Justin Trudeau announced on Jan. 6 that he would step down as both PM and as head of the Liberal Party in coming months. He also received approval to prorogate parliament, or end the current session and halt all lawmaking. Some worry the move leaves Ottawa with a leadership vacuum just as Donald Trump, who has threatened to levy 25% tariffs on Canada, takes office in Washington later this month. 

The resignation itself was not a total surprise, even if the timing was uncertain. Trudeau’s approval rating jumped during the worst of the COVID-19 shutdowns as Canadians welcomed his leadership, but steadily declined amid post-pandemic inflation and cost of living concerns. Canada’s policy rate climbed from .5% in March 2022 to a high of 5% in July 2023, coinciding with a sharp decline in views of Trudeau.

And while the recent resignation of Canada’s finance minister and Trudeau ally, Chrystia Freeland, was undoubtedly damaging, it was more symptom than cause.

We agree with consensus narratives that Trudeau is merely the latest victim of global discontent with political incumbents that saw long-serving leaders fall in France, the United Kingdom, Germany, Japan, and the United States. This discontent is apparent in the divergent paths of emerging and developed markets in our political risk ratings since mid-2022 and points in the direction of a Liberal Party defeat in elections later this year, even if average developed market risk may be on the verge of a plateau.

3. Global Trust (Counter)

Trust issues. As alluded to above, last year’s wave of incumbent ousters and political instability more broadly — largely concentrated in developed markets — drove a worsening average political risk profile for those markets (in turn bringing down the global average), and coincided with declining public trust in central governments the world over. Heading into 2025, however, we see some room for optimism: As of Q4 2024, tentative signs are visible in our data that a restoration of public trust may be in the cards, following a relatively secular decline over the past four years that saw the gap in the average share of adults saying they trust and distrust their governments rise from roughly parity to 10 percentage points.

When it comes to the newly emergent trust plateau, countries that have recently experienced government turnover are leading the charge, including Argentina, Mexico, South Africa and even the United Kingdom. Should the trend hold, it would potentially give governments more breathing room in 2025 to advance necessary policy reforms, particularly for those that are still in their honeymoon periods.

Per the H2 2024 edition of our Global Trust and Governance Outlook, trust in corporations similarly began to stabilize over roughly this same time period, likely reflecting global inflation moderation, among other factors. As we noted in that report, trust is essential for businesses to connect to investors, employees and consumers, and for government institutions to function. While the margins remain slim in the case of corporate trust, and while distrust in government remains more prevalent on net, we think the trends in our data are good news for both global governments and businesses heading into 2025, amid a year that we otherwise expect to be characterized by geopolitical and policy instability.

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