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In the second part of Global Finance’s conversation with former US Secretary of Commerce Wilbur Ross—who served during President Trump’s first term—the discussion shifts to the impact of Trump’s tariffs and trade policy on CEOs, CFOs, and key trading partners like Canada, Mexico, and India.

Global Finance: What would you recommend to CEOs and CFOs navigating this climate of uncertainty due to US tariffs and trade policy as they determine their near- and long-term strategies?

Wilbur Ross: Yes, reshoring and nearshoring were some things that would develop momentum in any event. President Trump is going to accelerate that.

Whatever plan people had for relocating production, it would be wise to accelerate it. Now, whether that means moving operations to Mexico or the US, that’s another question. But the days when a company could make one component in one country, a second in another, and a third in yet another—then bring them all to a fourth country for assembly—are ending.

Therefore, it should be more of a question of to what degree you relocate facilities and whether or not to do so, and to a degree where to relocate them. The rules of origin will be much more important to Canada, but particularly to Mexico, than before. So, as long as one incorporates that into their thinking, I think relocation is the wise move to make.

GF: Is the message different for CEOs and CFOs outside the US?

Ross: Yes, it could be if they adopt policies similar to Trump’s. We are moving toward an era where what has been called “protectionism” becomes much more of a centerpiece of everyone’s trade policy. But what Europe must do to be effective is to deregulate some. The regulatory burden that European governments impose on their companies is a real impediment to reshoring. Europe has become too intrusive in the business community.

Trump has also said he will require his cabinet members to cancel an even higher ratio of existing regulations relative to any new ones they implement—higher than what we had the first time. The first time, you were required to cancel two for each one you put in. He may be pushing for as many as eight, but certainly more than two. That’s one thing.

Tax policy is the other thing. You have to look at Trump’s trade activities in the context of what he is doing overall. Between deregulation and reducing corporate taxes, he’s changing the economic attractiveness of being in the U.S. regardless of tariffs. And then when you load on top of that, a bit sturdier tariff policy, you have a combination of factors that will prove very powerful.

GF: Which means that you also think this will be the outcome of the current situation?

Ross: Okay, well, there will naturally be a lag. You can’t build a new facility of any size in 10 minutes. There may be some near-term dislocation as we face higher tariffs, but we don’t yet have the increased production to offset them.

Now, that’s not a universal problem. Many of our industries operate at only 70–80 percent capacity. Therefore, not only will they be able to meet increased demand, but this will also help them absorb part of the tariff on imported components. When production increases from 70 or 80 percent capacity, the marginal costs are very small. You’ll have that factor and probably another factor—currency readjustment. How that plays out will have an important impact on how well industries do globally in each area.

To that end, if U.S. Federal Reserve Chairman Jerome Powell is slow to reduce interest rates while Europe moves at a faster pace, that will clearly have implications for currencies.

One of my concerns for Europe is that if they lower interest rates too quickly relative to the U.S., it could have real impacts on their currency. That would hurt imports but help exports. If I were a European manager, I would be more eagle-eyed than ever about the outlook for currency fluctuations.

GF: Looking at the various industry sectors, are there sectors that deserve tariffs? Are there also sectors that should not see tariffs in these negotiations?

Ross: Well, I have focused more on those who might need it than those who might not. However, pharmaceuticals are a big import to the U.S. Since U.S. drug prices are already higher than others, I don’t think hefty tariffs on pharmaceuticals would be particularly well-fitting to our economy.

But they’re going in on the really big item—the automobile. Automobile manufacturing has caused a fair degree of factory expansion here and in Mexico. In the automotive industry, you must look at the U.S. and Mexico combined because of the concept of rules of origin. In those areas, it’s inevitable. So, I think you’re right—it will vary somewhat by industry. But for the most part, most manufacturing businesses probably don’t expect there will be more tariff burdens.

GF: Would large U.S. exporters, such as technology manufacturers, be affected negatively by this?

Ross: Well, Europe doesn’t have the technological content we have so far. The giant companies in Europe are not comparable to what we call “The Magnificent Seven” over here. Europe’s response seems to have been antitrust and tax complaints, trying to hold back American companies rather than doing things that would effectively build up a European champion.

GF: What of those U.S. industry sectors geared more toward exports? Are they at risk because of tariff reciprocity in the near term?

Ross: Well, apparel is a significant import from Asian countries, and it wouldn’t surprise me if that were to continue. Some of those brands, such as the European brand Zara, have become very, very powerful players in the US. It’s a Spanish company, but it mainly produces its material in Turkey. Meanwhile, Vietnam and Mexico have become big competitors in what we used to call sneakers. So, some things will remain there that will not be affected by the tariffs.

But remember, the real purpose of the tariffs—and one that I hope will be achieved long term—is to let the rest of the world know exactly what they must do to bring our tariffs down, namely, to bring down their own tariffs. The unexpected result of the new US tariff policy could very well be lower tariffs in the long term.

Take India, for example. India’s tariffs are extremely high on most products. Prime Minister Narendra Modi wants to industrialize India. It’ is a logical place to be competitive with China if they can meet their infrastructure needs, because Indians have very good quality manufacturing skills, technological skills, and engineering skills. They have a large population base, so there’s no reason they can’t compete. What’s been holding them back has been the need for more roads and railroads. You need things like that in the way of transportation infrastructure to be much more highly developed for India to flourish. There’s a good chance that PM Modi will do that.

Vietnam has already benefited greatly from the pressures being put on China, which will probably continue. However, Vietnam has a much smaller economy and population base, so it can’t remotely replace China.

Read Part 1 of Global Finance‘s interview with Wilbur Ross:

Lenders are scaling up efforts to meet sustainable development targets, with capital directed toward healthcare, education, and essential infrastructure.

Major global banks and financial institutions are increasing their participation in the social bond market, strengthening the role of debt capital in addressing social challenges across the world.

Standard Chartered recently announced the issuance of its first $1.1 billion social bond. The proceeds are primarily earmarked to facilitate lending to small and medium-sized enterprises (SMEs), including support for women-owned businesses. Funds will also be allocated to healthcare, education, infrastructure development, and food security initiatives.

The transaction aligns with the bank’s Sustainability Bond Framework, which applies environmental and social standards across sensitive sectors. For instance, financial services are extended only to clients committed to reducing thermal coal dependence to below 5% of revenue by 2030.

In 2024, Deutsche Bank issued its first social bond, raising €500 million to expand its sustainable asset pool. The proceeds will finance affordable housing and essential services for elderly populations.

In January, the International Finance Corporation, part of the World Bank Group, raised $2 billion through its largest-ever social bond. The funds are aimed at supporting low-income communities across emerging markets.

Social bonds are structured similarly to conventional fixed-income instruments in terms of risk and return. The key distinction lies in the requirement for legal documentation specifying how proceeds will be allocated, ensuring transparency and accountability.

“The increase in the issuance of social bonds is aligned with the societal goals of both public and private entities,” says Conor Moore, Global Head of KPMG Private Enterprise. “While there are ebbs and flows in the political environment around sustainability initiatives, it will remain a priority for many institutions. This should result in further issuances across various regions and sectors.”

Mike Hayes, KPMG’s Global Climate Change and Decarbonization Leader, adds: “It should be noted that while the bulk of global investment will be directed toward sustainable energy and infrastructure, many of these projects involve a critical social dimension—referred to as the Just Transition.”

“In other words, unless social issues such as community and employee buy-in are addressed, projects are unlikely to move forward. This is one important role that social bonds can play in supporting infrastructure investment.”

According to the UN’s Financing for Sustainable Development Report 2024, the global financing gap for sustainable development remains vast—estimated at $4 trillion annually. While social bonds can help bridge part of this shortfall, they are unlikely to close it entirely.

Geopolitics is no longer just a threat—it’s a strategic variable. From great-power competition to technological shifts and a fractured trade order, today’s volatility is reshaping global business. Oliver Jones, head of EY-Parthenon’s Geostrategic Business Group, tells Global Finance how forward-looking companies are embedding geopolitical thinking into their risk frameworks, investment decisions, and long-term planning.

Global Finance: What are some of the most pressing geostrategic risk factors that companies should be concerned about in the next few months?

Oliver Jones: I think I would start by saying that many of the issues that are affecting companies are global in nature. So the way that I often see it is to understand the trends that underpin both the risks and the opportunities across multiple regions.

If you look at the outlook for 2025, we identify three really big themes. One is the shift from this election super cycle of 2024 into new government, and therefore new policy making.

Underlying trend two is the kind of reemergence or the strengthening of geopolitical rivalries, almost a type of old-fashioned geopolitics around who has the most energy, and the active conflicts/wars that sadly still exist and continue.

Thirdly, is a shift to economic competition. No longer is it just about near shoring, or friend shoring. There’s a real premium on industrial activity being onshore in one’s own domestic market. Now we see some of the more recent interventions, for instance, aimed at seeking to compete around things like the large language models and generative AI, and that’s seen as an area of economic competition.

GF: What does that mean for international business, and how they should plan for the future?

Jones: One of the features of this landscape is that geopolitical risk, but also geopolitical opportunity is to be found across almost all geographies at the moment. And so the interesting question for boardrooms and the C-suite is where the opportunities may lie. Where is the playing field becoming more level? How do I change my investment planning away from being almost in survival mode to being about thriving and taking the opportunities.

GF: So if we could think of geostrategic risk and opportunity analysis in terms of a framework. Where do we start?

Jones: It’s really important to professionalize your approach. The first thing to do is to scan the environment, and scan means to understand the outside world and understand the forces that are shaping your environment. It sounds very basic but we know that many companies really struggle to do this. It’s also really important to take a quantitative approach to this rather than simply a qualitative approach and to have a wide range of voices and evidence base in order to really understand what’s going on. The second is to focus, and what we mean by that is to focus on what it means for the business—the impact on future strategy. You have to really incorporate geopolitics into your existing risk management frameworks and it’s centrally important that those risk management frameworks have a voice at the Board.

GF: Who should have the responsibility for understanding geopolitical risk and opportunities?

Jones: The evidence we have at the moment is that there’s not one specific governance format. Sometimes it is one individual being given responsibility. Sometimes it’s a committee given responsibility. But there’s a couple of things that are absolutely crucial, one of which is that a specific person or a specific body must have lead responsibility. This can’t be something that is distributed between three or four parts of the company. There must be a single entity that has ultimate responsibility.

The second crucial thing is that that entity—whether it’s an individual or a group—will have to span across the whole of the company. They need to be able to automatically see the picture across all the different functions because geopolitics is affecting all parts of businesses.

GF:  Where do you see the CFO and finance function best fitting in terms of the analysis of geostrategic risk?

Jones: I think the CFO and the finance function should be central to every stage, and the reason for that is coming back to the point that geopolitics is affecting so many different dimensions of your business. For someone like the CFO it’s crucial that they understand these issues, but that all the different aspects of the business are understanding these issues as well and are reacting in the right way.

I think the finance function, more generally can play an important role in quantitative modeling of these impacts—what happens to the cost base; what it does to potential revenues across all the different dimensions of the business and how to incorporate that into the strategic plan. Clearly that’s front and center of any CFO’s agenda.

More coverage of how corporate leaders are responding to tariffs and supply chain turmoil:

Dyslin, Global CIO and President of Global Investments, discusses managing yen exposure, the role of private investments in the insurance giant’s $100 billion portfolio, and big insurance M&As.

Global Finance: You oversee Aflac’s investment portfolio of about $100 billion, the bulk of which is in Japan, where the company has a large presence. What big changes have you seen there in recent years?

Brad Dyslin: Roughly three-quarters of all things Aflac are Japan-related, as it pertains to my world—earnings, cash flow and investment assets. The biggest change we’ve seen over the last few years in Japan has been interest rates. They had been extremely low for at least the last 25 years, even before the financial crisis. Ten-year government bond interest rates were below 2%, and then they went negative in 2016. That also happened in a few places in Europe, but Japan kept its interest rates very low for a very long time as it tried to stimulate the economy and to rekindle inflation.

Today, we’re finally seeing that happen. Inflation has reignited in many parts of the world, including Japan. That’s caused the Bank of Japan to start moving interest rates up for the first time in at least a generation. In just the last two years, the 10-year bond has gone from 0.4%, or 40 basis points, to about 1.5%. We have a large amount of our portfolio and a significant amount of cash flow denominated in yen, and it’s obviously welcome news to have higher yields.

GF: What asset-allocation framework do you use for managing the portfolio in Japan?

Dyslin: I’ll highlight two things we have done to update our asset allocation in the last few years. The first one is how we’ve utilized U.S. dollar assets for the Japan portfolio. The second, like much of the industry, is how we’ve utilized private assets in the portfolio, notably private credit and private equity.

For the U.S. dollar assets, this is driven by our strategic asset allocation and our approach to asset-liability management. You can think of our portfolio in Japan as consisting of two big pieces. The first chunk is the amount of capital we set aside for future policy claims. Those claims will be in yen for our Japanese customers. We back that liability with yen assets. Supporting that is the capital of our owners—the regulatory and economic capital to make sure there is a strong financial base to support those yen liabilities. That belongs to our U.S.- based shareholders, so we hold that capital in U.S. dollars

To sum up, the money owed to policy holders is in a yen portfolio. The money that belongs to our U.S. shareholders is in a U.S. dollar portfolio. It sounds pretty simple today, but it gets a little bit more complicated when you start factoring in things like regulatory capital and all the regulations an insurance company needs to manage.

GF: What’s the impact of the tariffs being levied by the Trump Administration?

Dyslin: Tariffs are an issue that many business leaders, political leaders and investors are all grappling with. Every indication we’ve seen suggests that they will be inflationary, but the magnitude remains to be seen. As yield-based investors, generally we like higher yields but not at the expense of an economy that could be dealing with higher inflation.

We’ve seen the market respond to tariffs with lower yields. The market is telling us it’s more concerned about a slowing economy than they are about inflation coming from tariffs. So that’s one area we’re watching very closely. At the security level, some companies will be more impacted than others. Some have more ability to adjust to a tariff regime than others, and that’s where our team of around 20 professional credit investors comes in. They focus on understanding these companies. That entails understanding their management teams, their capital structures, and their cash-conversion cycles of all these individual credits. That level of analysis really makes the difference for us.

GF: There’s been some notable M&A activity in which asset managers are acquiring insurers. For example, KKR acquired Global Atlantic Financial Group last year. What’s your take on this trend?

Dyslin: This has involved some alternative managers buying insurers outright, as well as creating strategic partnerships. I’ve been an insurance money manager my whole career, so I find this all very fascinating. It’s gratifying to see these alternative managers taking an interest in insurance company assets, and I expect this trend to continue. It’s exactly what Warren Buffett has done with Berkshire Hathaway—using the stable cash flows and long-term nature of insurance capital to support an investment platform. We’ve seen an explosion of growth that has created some very large managers focused on these various alternative assets.

I expect alternative asset managers to continue forging partnerships with insurance capital. It’s much easier to invest when you’ve got regular, recurring insurance money from premiums and portfolio cash generation, as opposed to having to keep raising new funds. With an insurer, you’ve got an underlying business that generates recurring cash.

GF: How do you incorporate shifting macroeconomic factors into running the portfolio?

Dyslin: We don’t actively reposition the portfolio based on macro conditions like interest rates or currency fluctuations. The way we’ve tried to neutralize our yen exposure is by setting up these two portfolios. So, it’s a yen portfolio for yen liabilities and a dollar portfolio for dollar liabilities, or dollar surplus, which I view as a liability to our shareholders. That’s how we do it in our organization. Every investment manager is managing some sort of liability. It could be to perform against a benchmark. It could be a pension obligation. In our case, it’s future insurance claims. So, investing to meet or exceed the expectations of that liability is the key, and that’s what we really focus on when we set up our strategic asset allocation and making allocation decisions.

I know you’ve asked about how we change the portfolio based on movements in the yen or interest rates. If we’ve done our job correctly—and we have good, solid asset-liability management in place—a lot of that doesn’t matter, or doesn’t matter much. It’s not going to have a big impact on our portfolio. You’re not going to suddenly see the portfolio just shift around because interest rates are 50 basis points higher.

We do make tactical decisions, and aim to be opportunistic, but that’s done more at the security level than at the broader asset-allocation level.

GF: Are most of your holdings government bonds?

Dyslin: We do own a significant portfolio of Japan government bonds, or JGBs. Going back to that yen portfolio I mentioned earlier, we would prefer more yen-denominated credit holdings, but it’s very difficult to find acceptable investments that meet our needs. So we own a lot of JGBs, in part because we need an outlet for yen investments. JGBs also provide liquidity, and they are very long maturity assets, often 30 years. That helps us match our long liabilities against long assets. We also have a very significant corporate public bond portfolio, which provides not only liquidity but also additional U.S. dollar-based income.

GF: Do you have any exposure to high-yield bonds?

Dyslin: It’s about 1% of the portfolio. Most of our high-yield exposure is through private middle-market direct lending, which we believe provides much better value for the risk.

As far as maturity ranges of the securities we hold, it really is across the board and varies by asset class. For our primary outlet for below investment grade—middle market loans—those are generally shorter, often with maturities of five to seven years. Our JGBs tend to be longer, 30-year bonds. Our A-focused investment-grade credit portfolio typically has maturities of 10 to 15 years.

In the second part of Global Finance’s conversation with former US Secretary of Commerce Wilbur Ross—who served during President Trump’s first term—the discussion shifts to the impact of Trump’s tariffs and trade policy on CEOs, CFOs, and key trading partners like Canada, Mexico, and India.

Global Finance: What would you recommend to CEOs and CFOs navigating this climate of uncertainty due to US tariffs and trade policy as they determine their near- and long-term strategies?

Wilbur Ross: Yes, reshoring and nearshoring were some things that would develop momentum in any event. President Trump is going to accelerate that.

Whatever plan people had for relocating production, it would be wise to accelerate it. Now, whether that means moving operations to Mexico or the US, that’s another question. But the days when a company could make one component in one country, a second in another, and a third in yet another—then bring them all to a fourth country for assembly—are ending.

Therefore, it should be more of a question of to what degree you relocate facilities and whether or not to do so, and to a degree where to relocate them. The rules of origin will be much more important to Canada, but particularly to Mexico, than before. So, as long as one incorporates that into their thinking, I think relocation is the wise move to make.

GF: Is the message different for CEOs and CFOs outside the US?

Ross: Yes, it could be if they adopt policies similar to Trump’s. We are moving toward an era where what has been called “protectionism” becomes much more of a centerpiece of everyone’s trade policy. But what Europe must do to be effective is to deregulate some. The regulatory burden that European governments impose on their companies is a real impediment to reshoring. Europe has become too intrusive in the business community.

Trump has also said he will require his cabinet members to cancel an even higher ratio of existing regulations relative to any new ones they implement—higher than what we had the first time. The first time, you were required to cancel two for each one you put in. He may be pushing for as many as eight, but certainly more than two. That’s one thing.

Tax policy is the other thing. You have to look at Trump’s trade activities in the context of what he is doing overall. Between deregulation and reducing corporate taxes, he’s changing the economic attractiveness of being in the U.S. regardless of tariffs. And then when you load on top of that, a bit sturdier tariff policy, you have a combination of factors that will prove very powerful.

GF: Which means that you also think this will be the outcome of the current situation?

Ross: Okay, well, there will naturally be a lag. You can’t build a new facility of any size in 10 minutes. There may be some near-term dislocation as we face higher tariffs, but we don’t yet have the increased production to offset them.

Now, that’s not a universal problem. Many of our industries operate at only 70–80 percent capacity. Therefore, not only will they be able to meet increased demand, but this will also help them absorb part of the tariff on imported components. When production increases from 70 or 80 percent capacity, the marginal costs are very small. You’ll have that factor and probably another factor—currency readjustment. How that plays out will have an important impact on how well industries do globally in each area.

To that end, if U.S. Federal Reserve Chairman Jerome Powell is slow to reduce interest rates while Europe moves at a faster pace, that will clearly have implications for currencies.

One of my concerns for Europe is that if they lower interest rates too quickly relative to the U.S., it could have real impacts on their currency. That would hurt imports but help exports. If I were a European manager, I would be more eagle-eyed than ever about the outlook for currency fluctuations.

GF: Looking at the various industry sectors, are there sectors that deserve tariffs? Are there also sectors that should not see tariffs in these negotiations?

Ross: Well, I have focused more on those who might need it than those who might not. However, pharmaceuticals are a big import to the U.S. Since U.S. drug prices are already higher than others, I don’t think hefty tariffs on pharmaceuticals would be particularly well-fitting to our economy.

But they’re going in on the really big item—the automobile. Automobile manufacturing has caused a fair degree of factory expansion here and in Mexico. In the automotive industry, you must look at the U.S. and Mexico combined because of the concept of rules of origin. In those areas, it’s inevitable. So, I think you’re right—it will vary somewhat by industry. But for the most part, most manufacturing businesses probably don’t expect there will be more tariff burdens.

GF: Would large U.S. exporters, such as technology manufacturers, be affected negatively by this?

Ross: Well, Europe doesn’t have the technological content we have so far. The giant companies in Europe are not comparable to what we call “The Magnificent Seven” over here. Europe’s response seems to have been antitrust and tax complaints, trying to hold back American companies rather than doing things that would effectively build up a European champion.

GF: What of those U.S. industry sectors geared more toward exports? Are they at risk because of tariff reciprocity in the near term?

Ross: Well, apparel is a significant import from Asian countries, and it wouldn’t surprise me if that were to continue. Some of those brands, such as the European brand Zara, have become very, very powerful players in the US. It’s a Spanish company, but it mainly produces its material in Turkey. Meanwhile, Vietnam and Mexico have become big competitors in what we used to call sneakers. So, some things will remain there that will not be affected by the tariffs.

But remember, the real purpose of the tariffs—and one that I hope will be achieved long term—is to let the rest of the world know exactly what they must do to bring our tariffs down, namely, to bring down their own tariffs. The unexpected result of the new US tariff policy could very well be lower tariffs in the long term.

Take India, for example. India’s tariffs are extremely high on most products. Prime Minister Narendra Modi wants to industrialize India. It’ is a logical place to be competitive with China if they can meet their infrastructure needs, because Indians have very good quality manufacturing skills, technological skills, and engineering skills. They have a large population base, so there’s no reason they can’t compete. What’s been holding them back has been the need for more roads and railroads. You need things like that in the way of transportation infrastructure to be much more highly developed for India to flourish. There’s a good chance that PM Modi will do that.

Vietnam has already benefited greatly from the pressures being put on China, which will probably continue. However, Vietnam has a much smaller economy and population base, so it can’t remotely replace China.

Read Part 1 of Global Finance‘s interview with Wilbur Ross:

Global Finance: Do you see a significant difference in how the second Trump administration approaches tariffs, compared to its first term, when you were Secretary of Commerce?

Wilbur Ross: The biggest difference is that we were charting uncharted waters in the first term. Namely, nobody really knew if [President Trump] had the statutory authority to put in steel tariffs, aluminum tariffs, refrigerator tariffs, or washing machine tariffs. So, we dredged up old legislation, some from 1976 and some from 1972, which were tested in court and upheld by and large.

The first thing was that it took a lot of time in the first administration to ensure we had the power to do some of the things he wanted. Now that that’s been established and he was happy with the results, the President is using tariffs much more broadly. He’s using them as a revenue measure, a diplomatic measure, and for all sorts of other purposes, such as trying to control fentanyl smuggling and controlling the border. That’s the first difference.

The second difference is that he has much more public support in general and with the Republican Party. The last time around, he was much more controversial at inauguration than this time. You saw that in the popular vote. But even more importantly, last time around, he had relatively little control over the Republican Party. There were a lot of free traders still in, particularly the Senate among the Republicans. Most of them have now retired. So that’s a big difference. And you’ve seen his ability to control the Congress in some of the notions he’s been able to force through this time, now by very skinny votes. Still, essentially this time the Republican Party in the Congress is pretty well unified behind the Trump agenda. They were not the first time.

And the last factor that’s different is back when he was in his first term, there was still the global perception that free trade was the big objective, and the business community still was very much of the view for more internationalization, more globalization of supply chains. Now, particularly because of COVID-19, there’s a rethinking of that. At this point, many business executives recognize that every time they add another country to their supply chain, they’re adding a point of vulnerability.

There was the beginning of a shift from globalization to localization, making factories closer to their consuming markets. That was coming even independently of Trump.

GF: Do you feel the administration has an overarching plan for tariff implementation, or is it being far more reactive to the situation? What did President Trump not get from the United States-Mexico-Canada Agreement (USMCA) that he wants now?

Ross: Oh, well, that’s a very good question. To answer this, we need to look at the two parts of USMCA. As you know, Mexico has been a huge beneficiary of our moves against Chinese exports to the US. Because the peso has been struggling as a currency and Mexican wage rates haven’t increased much, they are quite competitive with China when you factor in shorter shipping distances, lower in-progress inventory costs, and reduced transportation expenses.

However, Mexico hasn’t really lived up to the free trade agreement we made with them. It has not liberalized its oil and gas sector as it was supposed to, and it hasn’t made its courts more impartial—an important component of the deal. Third, with the rise of electric vehicles and digital manufacturing moving to Mexico, we need to modify the rules of origin somewhat.

You’ll remember that under USMCA, 60%–70% of the content had to come from countries with a wage rate above $15 an hour. That rule was meant to ensure that the benefits of trade shifting to Mexico would be shared between Mexico and the U.S. Now that the types of products moving there have changed, we need to refine the rules of origin accordingly. So, those adjustments were needed anyway when it comes to Mexico.

What’s new is the fentanyl issue. Trump has been pressing Mexico on fentanyl and border security for a long time. But if you recall, during his first administration, he got Mexico to deploy 20,000 troops to the border by threatening tariffs. So that strategy isn’t new—he’s just actually implementing it this time.

In terms of Canada, things are a little different. Until now, he hadn’t needed to push Canada on fentanyl and border security. The Canadians made a big mistake in how Prime Minister Justin Trudeau responded. Trudeau’s initial reaction was, “Well, it isn’t that big a problem. It’s only a few kilos of fentanyl.”

Two kilos of fentanyl coming in from Canada can kill a lot of people. Second, we believe that as Mexico cracks down on cartels, those operations may shift to Canada. That’s why we want Canada to be prepared to address the issue.

Similarly, Trump had been pressing Canada on dairy products and softwood lumber since his first term. But for the first time, he’s decided to take a step further on softwood lumber by opening up the U.S. Forest Reserve. We have plenty of milling capacity for home building and other purposes, but the supply of stumpage (harvestable timber) has been somewhat limited. Now, that restriction is being lifted. That structural change led him to conclude that Canada’s share of softwood exports should be reduced. So, the factual situation has changed, and his response to it has evolved accordingly.

GF: What lessons did you learn from President Trump’s negotiation style when first negotiating the USMCA? To remove some of the tariffs, he’s asking for the end fentanyl smuggling, cessation of illegal immigration and Canada to become the 51^st state. How much of this is negotiation and how much is trolling?

Ross: I met President Trump by representing his creditors in the Trump Taj Mahal. I was in a very adversarial position against him. His style is very aggressive and very strong in negotiations. You see that coming through in the trade. It wasn’t quite as aggressive last time, partly because he has done a lot of business, including some real estate development in foreign countries.

Last time, he was not an expert in the more intricate aspects of trade. He’s learned a lot from the interactions that we have had with other governments then and now.

His style of negotiating is one of pushing for things very, very hard and being willing to take punitive action if he doesn’t get what he wants. You saw that with Ukraine.

With Panama, he was able to create an environment where all of a sudden, Hutchison Whampoa, turned over control of not just the two key Panamanian ports, but many other ports that it was operating. He would never have thought through that level of detail in Trump 1.0. Now he knows more about potential targets. And every time he succeeds, like with the Panama Canal, which as you remember, didn’t get that much press because it was accomplished without much hooting and hollering. Hutchison made a very good commercial decision to sell those ports to a syndicate organized by BlackRock.

One way of responding to Trump’s new policies is asking, “Well, okay, here’s something that he wants. Maybe I can turn that to my immediate commercial advantage.” Given that Hutchison did pretty well with the port sale, that’s not a bad role model for other companies.

GF: You seem very optimistic overall regarding the new administration’s trajectory and its trade policy.

Ross: Well, I am, but with one big caveat: It has to be coupled with enactment of his tax and deregulation policies. Remember, if Congress doesn’t act, the tax cuts that he enacted in his first administration will automatically go away, which would amount to a tax increase on corporations. Coupled with the tariff policy, it would be a heavy burden. That’s why it’s important that this happens.

It’s also quite important to bring down the cost of government. I’m a big fan of what Elon Musk and Trump are doing, even though I’m sure they will go too far in some cases because they’ve been moving so quickly. In some cases, they’ll have to recalibrate their course, but it’s important that Trump’s overall policies are brought to bear. It would be much better for our economy if his whole package were to go through rather than just the trade package.

In the defense sector, one of his big objections to Europe, and to a degree Canada, is that they haven’t been paying their fair share of NATO. And that’s put an undue burden on the US.

That’s changing. Indeed, some Europeans are talking about going well beyond the 2% of GDP for defense that had been NATO’s target.

You have to look at the whole set of programs. Cutting down on the ability of able-bodied people to get big [government] benefits, in many cases getting more compensation than when they were working. That will go away and will be a constructive thing for our economy because we need a higher degree of workforce participation. To grow more rapidly, we need the workforce participation rate to rise above 63%.

GF: Do you have any other concerns?

Ross: Well, there’s always the danger when you’re trying to change a lot of things in a lot of geographies all at the same time. There’s always the danger of overextending and making real mistakes. He needs to move rapidly and on all fronts for a domestic political reason: Anything requiring congressional action that isn’t completed by September will be difficult to pass, because by then, everybody in Congress will be focusing on the midterms, and they’re going to be less inclined to do anything that’s controversial.

GF: Are there any issues in which you part company with the current administration?

Ross: There are areas where we do disagree. For example, as you’re probably aware, I wrote an editorial in The Wall Street Journal supporting the Nippon Steel takeover of U.S. Steel, which is directly antithetical to US government policy. So, while I’m broadly in sync with what they’re doing, there are some very specific parts where we naturally disagree—very much.

The oil giant cut its dividend to balance shareholder payouts with rising capital investments amid lower crude prices and evolving market conditions.

Saudi Arabian Oil, better known as Aramco, is recalibrating its dividend strategy as it navigates weaker oil prices and rising capital investment demands. The world’s largest oil and gas producer plans to distribute $85.4 billion in dividends this year—down about 30% from $124.3 billion in 2024—reflecting a shift in financial priorities.

The company reported a 12% decline in net income, falling to $106.2 billion from $121.3 billion the previous year, citing “lower prices, lower production volume, and weaker downstream margins.” Against this backdrop, Aramco is directing more resources toward long-term growth, particularly in natural gas expansion and infrastructure investment.

Brent crude oil, for example, was recently trading at around $70 a barrel, reflecting a prolonged slide in prices. Three years ago, it was approximately $100 a barrel.

For Aramco and other energy companies, dividend payments must be carefully balanced against factors such as energy prices, global demand, geopolitics, and financial obligations—particularly capital expenditures that support future growth.

Aramco said it plans to invest between $52 billion and $58 billion in capital expenditures in 2025, compared with $53.4 billion last year. A key focus of its capex strategy is expanding natural gas opportunities. The company’s financial guidance underscores that capital investment remains a top priority.

Aramco’s dividend structure consists of two components: a base dividend and a variable dividend tied to performance. The company plans to pay a base dividend of $84.6 billion this year, while the variable dividend is expected to be $880 million—down significantly from around $43 billion in 2023, according to Reuters.

Other energy companies have adopted similar dual-dividend frameworks, providing flexibility when oil and gas prices decline.

At the same time, Aramco said it plans to boost its first-quarter base dividend by 4.2% to $21.1 billion. However, with the variable dividend dropping so sharply, total shareholder payouts will decline compared with last year.

During the company’s fourth-quarter conference call with analysts on March 3, Aramco executives highlighted its substantial dividend distributions in recent years.

“We have paid more dividends than any other listed company over the past five years, with around $440 billion distributed,” President and CEO Amin Nasser said, according to a transcript of the call.

The company’s variable dividend is linked to performance, paying out 50–70% of free cash flow after subtracting the base dividend and external investments. The first-quarter dividend will be at the high end of that range.

The dividend cut doesn’t just impact shareholders—it also affects Saudi Arabia, which holds a majority stake in Aramco and has used dividend proceeds to help fund the country’s economic development.

Additionally, the lower dividend will reduce the stock’s dividend yield.

In a research note this week, Morningstar analyst Allen Good wrote that he had anticipated Aramco would slash its performance-linked dividend “given rising debt, lower oil prices, and increased capital investment.”

However, he added that the lower payout means “Aramco’s yield is much less competitive with American and European global integrated energy companies.”

Aramco executives will undoubtedly be keeping a close eye on this.

As US investment declines, China and India are rapidly expanding their presence across Latin America’s key industries. 

With US investment in Latin America shrinking, China and India are seizing the opportunity to expand their economic reach in the region.

The US remains the largest foreign investor, but its stake dropped nearly 10% in 2023 alone, to 38% of the $224.6 billion total, according to the UN Economic Commission for Latin America and the Caribbean. Meanwhile, China has firmly established itself as Brazil’s top trading partner, increasing its foreign direct investment (FDI) to nearly $601 billion by 2023, while India is gaining ground in sectors ranging from energy to pharmaceuticals.

This growing influence signals a broader geopolitical shift, as the two Asian giants strengthen ties with Latin America’s resource-rich economies.

Connecting With China

China’s trade with Latin America surged from $12 billion in 2000 to $450 billion in 2023, according to the International Monetary Fund, and it is now as a primary regional trading partner and investor.

“The increase in Chinese investment stock in Latin America follows a logic of complementarity,” says Larissa Wachholz, senior fellow at the Brazilian Center for International Relations (CEBRI).

Chinese FDI stock grew from $126.3 billion in 2015 to $600.8 billion in 2023, according to data from Statista. India, despite operating at a smaller scale, has also deepened its ties with Latin America; while its contribution to FDI peaked at $49 billion in 2014, it still reached $16 billion in 2023.

The US is quickly losing ground to China, which since 2009 has become Brazil’s largest trade partner, according to both the IMF and the World Bank. As of 2023, China was the destination of 30.7% of Brazilian exports (approximately $104 billion) and was responsible for 23.7% of Brazil’s imports ($64 billion), according to the Brazil-China Entrepreneurial Council (CEBC). The US, traditionally Brazil’s top trading partner, was a distant second and is now responsible for just 18.6% of Brazil’s imports and 10.9% of its exports.

Many of the larger Chinese companies were homegrown in the years China was aggressively expanding its own infrastructure and services, notes Wachholz. While development is still growing domestically, the world’s second most populous country behind India, has reached a comfort level that allows for local companies to look outward.

“China has one big similarity with Brazil that makes investments in energy and oil attractive here,” says Wachholz. “Both are vast countries with an important hydroelectric and renewable energy matrix potential which requires long transmission lines to reach its population centers.”

Like Brazil, “China had to contend with the issue of having to transmit energy generated in distant corners through ultra-high voltage lines. This made the Chinese very efficient in all parts of the electricity cycle: generation, transmission, and distribution, which is a key necessity in Brazil. The level of complementarity in this segment alone justifies the increased appetite for Chinese investments in Brazil.”

Despite China’s renewed focus on energy in Brazil, the initial stages of the relationship date from the 1980s, when China’s State Grid first made inroads in the country, notes Mauricio Santoro, author of Brazil-China Relations in the 21st Century: The Making of a Strategic Partnership (2022).

China’s investment in Latin America goes beyond Brazilian energy projects, says Túlio Cariello, CEBC’s director of content and research.

“It’s true that China has nearly $73 billion in investment stock in Brazil alone, which,” he notes, “corresponds to one-third of its total investment in Latin America. And 75% of that amount in Brazil is indeed invested in the energy and oil sectors. But China is diversifying its portfolio in Brazil and expanding into building plants to produce electric cars via both BYD and Great Wall Motors (GWM).”

The two companies focus primarily on the Brazilian market, Cariello adds, but recognize that regional trade agreements like Mercosur will eventually serve as a platform for simplified exporting to neighboring countries.

China’s Latin American portfolio also includes commodity prospecting and purchasing while Mexico serves as a base for consumer-product plants that can more easily export into the US and Canada. And Peru attracts about 20% of regional Chinese FDI, mostly in mining: specifically, lithium and molybdenum.

“Peru has attracted an enormous amount of investment through China’s Cosco, which is building the port of Chancay north of Lima,” says Wachholz. “The port will cut maritime voyages between South America and Shanghai by roughly one week and is essential in China’s Belt and Road project.”

India’s Investments

India is increasingly augmenting its investments in Latin America, with Brazil most frequently the lauching pad, according to Leonardo Ananda, CEO of the Brazil-India Chamber of Commerce (BICC).

“Seventy percent of Indian FDI in Latin America happen in Brazil, with some sporadic investment also in Argentina, Uruguay, or Mexico,” he notes.

Says Wachholz, “India’s investments are more market driven and propelled by the natural growth and capabilities of the country’s own enterprises. It is a little different than what we see in China’s case, where there is a strategic push since Deng Xiaoping to expand its abilities to reach further corners of the globe.”

India’s investments gained traction after Brazil opened itself to the world in the 1990s, Ananda says, and tend to focus on Information technology, pharmaceuticals, oil and gas, energy, and automobiles, with a special focus on motorcycles.

“The fact that India is, along with many Latin countries, part of the BRICS, IBAS, and G20 groupings also facilitates the flow of investment,” says Ananda. “The investments in Brazil are so significant that some Indian corporations already obtain roughly 50% of their share of revenue in the Brazilian-Latin market rather than from within India itself.”

UPL, a Mumbai-based agricultural chemicals and pesticide producer, has invested $1 billion in São Paulo state, according to Ananda, where it has operations almost equivalent to those at home, while the Vedanta Group’s Sterlite Power has invested R$7 billion ($1.25 billion) in acquisitions and operations across Brazil, where half of its operations are now concentrated.

Tata, one of the largest Indian groups, gained its initial foothold in Latin America through a joint venture with Brazilian IT group TBA, but has since acquired the entire operation and now offers consulting services focused in technology, and outsourcing in Brazil but also in Uruguay, Argentina, Chile, and Mexico.

Tata acquired the global operations of Jaguar-Land Rover in 2008 and now produces Land Rover vehicles in Rio de Janeiro. Other Indian manufacturers followed. Royal-Enfield now produces its famous motorcycles in northern Brazil, a few kilometers away from competitor Bajaj Motors. Meanwhile, Mahindra has expanded production of its tractors and distribution to all of Brazil, with an eye to export the vehicles to other Mercosur countries.

“We foresee Indian investments in the region will increase significantly,” says Ananda. “The number of bilateral delegations visiting each country has grown exponentially since the pandemic. India and Mercosur currently have a preferential-tariffs agreement covering about 400 products that is under review since last year and will hopefully be concluded soon to allow more frictionless trade and investment between South America and India in the very near future.”