By Elise Donovan, CEO of BVI Finance
Navigating the turbulence of the current geopolitical and macroeconomic environment has become a daily challenge for businesses operating internationally. Global dynamics have fundamentally shifted, creating significant moments of uncertainty.
The recent changes to US trade policies are a prime example of how global relations can shift in the blink of an eye. Under President Donald Trump’s new administration, a transactional approach to international collaboration has come to the fore.
With no promise of the temperature cooling down soon, business leaders are looking for ways to cut through the flashpoints and navigate the market turbulence, shifting global trade capacity and retaliatory tariffs. With rising costs, disrupted supply chain, greater administrative burdens, more tax complexity and uncertainty about traditional trade relations, this precarious environment is threatening to stifle innovation and inhibit the growth of businesses.
Resolutions are being sought as a priority and most importantly, businesses need solutions for stability.
Rise of economic nationalism and protectionist policies
The US taking an insular approach to cross-border trade is causing a more compartmentalised global economy as nations erect tariff barriers in retaliation. Needless to say, this makes international investment and managing global supply chains very difficult for businesses. Instead of focusing on how to grow their businesses, many leaders are fire-fighting, simply spending each day looking for solutions on how to keep their business practices moving.
In light of these changes, businesses must bring pushing for growth back into focus through finding opportunities in new markets and engaging with cross-border trade experts. With this, there is an increasing need for offshore advisory and support services which can meet the needs of businesses in both emerging markets and established economies. Businesses need partners that have regulatory agility, are innovative and hold strong strategic positioning in order to navigate the turbulent waters of today.
Events of late have also led to governments to reflect on their current geopolitical and trading relationships and further develop business opportunities with new markets. For example, the UK is looking to China for new trading opportunities, including ways to work towards a more sustainable future.
And IFCs have the experience to facilitate these changes to trade policy. Take the BVI, where 57% of business now originates from the Asia-Pacific region, including 44% from Mainland China, Hong Kong and Macau. It has been a long-term trend but is indicative of the shifting geopolitical order businesses find themselves in today.
The strengthening of relationships with Asia
Amid shifting US policies, China and other markets across Asia are strengthening relationships with other countries. As an example, Asian investors are strategically investing in IFC’s infrastructure and the financial services sector.
The strategy, at this critical geopolitical flashpoint, could shape financial flows for decades to come. And this shift presents further prospects for IFCs to support Asia-based investors with access to global markets as they search for stable, well-regulated jurisdictions to manage and improve their international financial operations.
This is not to say US businesses are close to being cut off from the rest of the world. The instability presents significant opportunities to work with IFCs, particularly in facilitating cross-border investments, providing neutral platforms for global business and leveraging advanced financial technologies to remain competitive. Yes Trump’s policies may create volatility, but they also present new avenues for investment and capital flows.
Traditional trade routes are disrupted and new investment corridors are emerging, offering IFCs an opportunity to play a critical role in structuring and facilitating international transactions. The rise in global protectionist policies could drive a more diverse range of investors to IFCs that offer well-regulated and tax-efficient structures to facilitate business continuity across multiple jurisdictions.
It’s not just about the tariffs
All global businesses are reconsidering their financing and trading strategies in light of geopolitical instability, with tariffs being just one of many issues multinational corporates must contend with.
The picture is complicated further by US’s diverging stance on Russian sanctions from the rest of the world as it is reportedly considering easing sanctions while other countries maintain their original position. This not only creates a source of tension between the US, EU, UK and other allies in the implementation of export controls targeting Russia since 2022, it makes legal complications for businesses operating across the Atlantic.
As is the case with other recent developments in international politics, this change in policy has encouraged multinational businesses to consult with legal experts to navigate these compliance complexities. Increasingly, they are prioritising working with jurisdictions with robust legal systems, as found in IFCs, which can bridge differing nation’s trade policies with ease.
With the ever-changing geopolitical tides, businesses need to be working with jurisdictions which have the ability to adapt to the heat of current macro conditions. It is the IFCs in the Caribbean which stand out as the crucial facilitators in global finance, offering stability and regulatory prowess amidst geopolitical flashpoints, making it a particularly attractive destination for international business.
