Business leaders increasingly view geopolitical tensions as the top risk to economic growth, signalling a shift from past decades.
Companies should build in-house geopolitical teams to anticipate and respond to global shifts to position themselves to seize opportunities.
US business must simultaneously pursue growth while implementing defensive measures to manage volatility and ensure resilience.
세계경제포럼, 2025년 7월 29일 게시
Matt Watters
Partner, McKinsey & Company
For most of the last 30 years, geopolitics has been an ancillary consideration for business leaders, taking a back seat to macroeconomic, strategic and technological concerns.
Not anymore.
In late 2024, a McKinsey & Company global survey of 900 executives found that they considered geopolitical tensions the single greatest risk to economic growth. They’re not wrong. As the United States and China change the norms of trade and economics, a new era beckons.
Yet, disruption, whether it be from geopolitics or technology, brings opportunity as much as it brings challenges. Turning a blind eye or solely a protectionist eye to any disruption is how executives and the companies they lead miss the boat.
Across industries, we are seeing forward-thinking leaders ask how to thrive in the face of new market dynamics driven by geopolitical shifts.
Here are three actions that can help businesses create value in the face of global changes.
Have you read?
- The US has ushered in a new era of globalization. How are businesses adjusting?
- Geopolitics and trade policy are becoming intertwined. Here’s how it’s impacting the global economy
- Tracking tariffs: Key moments in the US-China trade dispute
1. Prepare for the moment
To stay ahead, businesses need to build dedicated, in-house geopolitical teams that provide input into high-level decision-making.
These teams should not only assess what could happen but also how to react, with an eye toward both value creation and risk mitigation.
These units should run scenarios and develop playbooks with event-based triggers and strategies that enable organizations to capitalize on potential policy shifts – such as new industrial policies or trade agreements. As Roman philosopher Seneca said: “Luck is when preparation meets opportunity.”
2. Identify opportunities for commercial acceleration
Using a dedicated geopolitics unit, businesses should identify opportunities for commercial acceleration across all geopolitical drivers, including tariffs, trade agreements, export controls, investment restrictions, sanctions or evolving domestic policies. Here’s how these can manifest:
Tariffs
While tariffs will affect everyone, their impact on margins and the cost of goods will be greater for some than for others due to varying supply chain footprints and cost structures.
Organizations with relative advantage may want to pursue targeted growth opportunities by scaling in advantaged markets and aligning operations with shifting trade priorities. They may also be able to strategically optimize pricing to capture market share from their more impacted peers.
US President Donald Trump delivers remarks on tariffs in the Rose Garden at the White House in Washington, DC, US, April 2, 2025.Image: REUTERS/Carlos Barria
Industrial policy
Industrial policies, such as tax credits and subsidies, used to promote domestic industries have grown almost fourfold since 2017.
Organizations may be able to capitalize on these policies to accelerate value creation and capital investments. Incentives in the 2022 US CHIPS Act altered the return on capital for several semiconductor companies that prioritized US manufacturing.
Tech multinational Intel, for one, saw an opportunity, announcing $100 billion in investment to expand commercial semiconductor manufacturing in several states. Because these policies can change, it’s important to consider whether such investments remain viable in their absence.
Free trade agreements and trade deals
New trade agreements expand the total addressable market for businesses, creating opportunities to enter new, potentially untapped trade corridors. While multilateral trade agreements may be struggling, regional trade agreements have increased by roughly 30% since 2017.
These agreements also often lower trade barriers and simplify customs procedures, creating more favourable conditions for businesses to invest and scale. Additionally, organizations may consider entering markets where demand is proven and competitors face more exposure.
Export controls
As governments increasingly apply export controls in key sectors (such as emerging technologies including especially quantum, nuclear fusion, satellites, chips), foreign businesses can move to fill resulting market gaps and consolidate market share.
Such expansion, however, should be weighed against the loss of foreign technology transfer.
Investment controls
As governments increasingly apply investment controls to safeguard national security, domestic investors can move to capitalize on the lack of competition from foreign capital. This will enable them to consolidate domestic market share and expand margins.
3. Propel your organization
Businesses should take a proactive approach, aiming to capture strategic opportunities and secure a first-mover advantage. These actions should, however, be balanced with “no regrets” defensive actions to reduce exposure and reinforce supply and cost stability.
For example, businesses should diversify supply chains to geographies with lower tariff volatility, secure inventory buffers to guard against short-term disruptions, lock in pricing with key suppliers and implement dual-sourcing and multi-plant strategies. Importantly, the defensive and the proactive should occur concurrently; they are not mutually exclusive.
The only certainty is that the future is uncertain. In the past, distant and recent, American business has proven adaptable to new world orders – a trait critical to US economic preeminence. To maintain US prosperity, American companies must seek opportunities amidst shifting market dynamics caused by geopolitical shifts.
Shubham Singhal, Senior Partner and co-lead of McKinsey’s geopolitics practice, also contributed to this article.
