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Some have attributed the unexpected wins for progressive-leaning candidates in Canada and Australia to the “Trump Effect” — where policies and approach from U.S. President Trump have inadvertently galvanized electorates to non-populist electoral victories. While it may be too soon to call it a definite trend, corporate boards should evaluate key elections in 2025 to determine where there might be more political turbulence than anticipated. What additional surprises will 2025 hold?
Key takeaways:
- YTD election results have yielded surprising results in left-leaning parties winning, many citing the “Trump-effect” in action
- With 2025 hosting a number of elections germane to U.S. multinationals, corporate boards should evaluate their geopolitical outlook, strategy, and assess national security implications
- With so much increased geopolitical tensions, boards will have to improve internal capability to assess a growing portfolio of enterprise risks: regulatory and policy, geopolitical instability and nationalism, currency and economic volatility, legal and operational risk, reputational risk, and critical mineral access
2025’s surprising electoral outcomes – the Trump effect?
Electoral surprises have shown up globally and here in the U.S. A quick view of electoral surprises in the first four and a half months of the year:
- Canada’s Liberal Party, under the leadership of Mark Carney, secured a minority government and managed to retain power. President Trump’s threats of annexation and trade tariffs created a rally-around-the-flag moment for Canadian voters. Ultimately, this secured the Canadian Liberal Party’s retention of power.
- Similarly, Australia’s center-left Labor Party, led by Prime Minister Anthony Albanese, achieved a historic victory in securing at least 92 of 150 seats in the House of Representatives. This landslide win has been partly attributed to voter backlash against global instability linked to President Trump’s policies
- Some have gone so far as to say that even the Vatican’s pick of American Cardinal Robert Francis Prevost, now Pope Leo XIV, will influence international relations and U.S. politics. With his years of work on social justice globally, the selection of Pope Leo may have originated from a need to counter the rise of nationalist agendas in 2024
- Omaha elected its first Black mayor, some already calling it a potential bellwether for broader Democratic gains in Nebraska
- The Supreme Court of Wisconsin retained its progressive majority when it held elections last month
Arguing that these outcomes were influenced by the surge of a disliked U.S. administration or isolationism is not the goal, but corporate boards should anticipate that other countries may have surprise election outcomes in 2025 and even into early 2026.
Consider that U.S. multinationals employ about 43.3 million people worldwide. But their power is measured as much by the total dollars spent overseas as the number of workers. U.S. multinationals’ worldwide expenditures for property, plant, and equipment were $826.1 billion, and expenditures by majority-owned foreign affiliates were $196.7 billion in 2022. As such, U.S. businesses are in the world and of the world.
Where to look next in 2025?
Last year saw large-scale policy upheaval and the displacement of an incumbent globally. The year has earned recognition as the “ultimate election year,” as more than half of humanity (at least sixty-five countries and the European Union) voted in national elections. This year, we see a number of countries having important elections that may be most likely to turn out a surprise outcome:
- Poland – May 18
- Early polling: At the time of writing, Warsaw Mayor Rafal Trzaskowski leads with 31-35% support; he advocates for judicial reforms, enhanced EU integration, and support for LGBTQ+
- Romania – May 18
- Early polling: This presidential runoff election is expected to be close, with a far-right nationalist and leader of the Alliance of the Union of Romanians (AUR) ahead in the first round. His competitor, centrist mayor of Bucharest, advocates for pro-European Union policies
- South Korea – June 3
- Early polling: With internal conflicts following President Yoon’s impeachment, the ruling party (PPP) has faced a wide swath of opposition and weakened its electoral prospects. Lee Jae-myung, the leading candidate of the Democratic Party, is campaigning on a platform of political reform, economic revitalization, social welfare enhancements, and strengthening ties with the EU and the Global South
- Italy Referendum – June 8
- Early polling: Italy’s referendums on citizenship laws and labor reforms are occurring alongside the second round of local elections, potentially influencing voter turnout. Polling data is limited, however, the political climate suggests a divided electorate across Center-Right and Center-Left parties
A host of others will be following, at this point, data is limited to provide accurate predictions.
- Japan House of Councillors – July 31
- Norway Parliamentary Election – September 8
- Ireland – November 11
- Chile – November 16
- Honduras – November 30
- Hong Kong Legislative Council – December 7
Why does this matter to multinationals?
The host of national elections will influence corporate enterprise risk analysis for countries in terms of their openness to trade, ease of doing business, sanctions regimes, corporate tax policies, regulatory regimes, and more.
- Regulatory and policy uncertainty. Be it questions of shifting trade policy, tax policy changes, sector-specific regulations, far-right parties could lead to tighter regulation on foreign ownership or stricter labor laws. In India, for example, a shift in leadership could affect U.S. tech companies facing data sovereignty rules
- Geopolitical instability and nationalism. Potential far-right electoral gains in Europe in 2025 (e.g., Poland, Romani) may lead to greater scrutiny or resistance to U.S. brands. Anti-US sentiment may grow as leaders campaign on anti-Western platforms. Finally, if countries like South Korea or Iraq lead to governments less aligned with the U.S., it may affect defense, tech, and energy interests
- Currency and economic volatility. Surprise election outcomes can lead to abrupt currency devaluations or capital flight, which may impede the economic performance of U.S. companies and asset values in those regions. Additionally, new governments might impose restrictions on currency conversion or profit repatriation
- Legal and operational risks. Nationalist governments may seek to renegotiate or revoke deals with U.S. companies, especially on agreements related to infrastructure, energy, or telecommunications. Whenever companies see rapid changes in law, typically, compliance costs and legal exposure increase
- Supply chain. With trade policy in upheaval and regional conflicts emerging, the rapid onboarding of suppliers invites unexpected risks
- Reputational risks. Companies may be pressured to take political stances, especially in elections with human rights or democratic integrity concerns
- Critical mineral access. Depending on potential favorability to U.S. regimes, countries rich in mineral wealth may limit or resist U.S. trade deals, which would stifle supply chains (assuming export bans from China remain) and increase the cost of production
Major U.S. companies exert global power and influence because they are themselves global. With trillions of dollars in market capitalization, millions of employees, and state-of-the-art digital infrastructure, many U.S. companies have considerable sway and command a broad network of value chains worldwide. Even with an America-first agenda now squarely in place at the White House, the largest U.S. companies live and breathe by global issues.
Actions boards can take:
- Improve risk monitoring and scenario planning in politically sensitive markets
- Localize operations where applicable (supply chain, data housing and management, hiring) to mitigate exposure to risks
- Engage in proactive public affairs engagement and stakeholder diplomacy to maintain long-term access and influence
- Evaluate supplier optionality in politically sensitive markets and enhance your know your supply chain program to avoid operational, economic, and reputational risks in the supply chain
- Evaluate national security risks in any jurisdiction with rising anti-U.S. sentiment
Questions for the boardroom:
- Where do we have most exposure for policy, currency, economic, and reputational risks with leadership changes globally in 2025?
- What impacts will we have to our business globally if 2025 sees a surge of progressive candidates?
- What will be the impact to our business globally if 2025 continues the trend of isolationism and nationalist policy agendas?
- When have we last evaluated the robustness and dimensions of our know your supplier program? What is the appropriate cadence to do so?
- Of all the potential risks factors when we evaluate new suppliers, what will matter most to our organization’s short-term viability and profitability? What about for the long term?
Additional Telesto resources:
- Board Series: Know Your Supplier – Diversification risks amidst escalating trade wars
- Board series: How can companies stay ahead of Political Risk under Trump 2.0?
- Board series: The CEO confidence gap – How can boards step up in a context of global uncertainty?
- Atlas, equips your organization’s corporate directors and leaders with the insights and knowledge necessary to stay up to date, mitigate risks, and seize business opportunities associated with sustainability, climate, and ESG
- Prism, our ESG benchmarking tool, helps your organization to rapidly strengthen its sustainability, climate, and ESG performance and disclosures through in-depth benchmarking of industry peers and identification of gaps and areas of distinction
- Recently released by Telesto Strategy’s CEO & Founder, Alex Kruzel, The Courage to Continue: Stay the Course on Sustainability to Secure our Future, explores the connection between corporate priorities and President Trump’s national security agenda
