How Will Geopolitics Shape North American Relations in Trump’s Second Term?

Globalization and Geopolitical Shifts

Imagine a world where the once unshakable pillars of globalization are buckling under the weight of fractured alliances and resurgent nationalism. Trade routes, once symbols of shared prosperity, have become arenas of economic warfare. The steady rhythm of interconnected economies is giving way to a chaotic struggle for dominance. This is today’s reality, demonstrating that history‘s uncertainties are far from resolved.

Globalization emerged in the immediate aftermath of World War II in 1945 as part of a newly established international order. This carefully designed framework was built on two critical pillars: the security of the world’s oceans, ensured by the U.S. Navy — a role that expanded significantly in the late 1940s and 1950s — and a global financial system anchored by the U.S. dollar, solidified through institutions established under the Bretton Woods agreements beginning in the mid-1940s. These pillars served to anchor U.S. leadership in an interconnected world. While the Navy guaranteed maritime trade routes, the dollar became the linchpin of global finance, giving Washington significant leverage to dictate terms, impose sanctions, and marginalize dissenters.

China has emerged as a bold, disruptive challenger under President Xi Jinping, shifting from its “peaceful rise” doctrine to more assertive diplomacy. Far more than an infrastructure project, the Belt and Road Initiative (BRI) is a geopolitical counteroffensive. By building transport, energy, and digital networks, the BRI seeks to deepen many countries’ economic interdependence with China and reduce their reliance on U.S.-led systems. Through ventures such as the Asian Infrastructure Investment Bank, and its digital yuan push, Beijing aims to build an alternative to the dollar’s dominance and reshape the rules of global finance. If successful, this strategy won’t merely bypass American power — China is laying the foundation for an alternative global order.

For decades, economic integration promised prosperity through trade and interdependence. Today, geopolitical rivalries are rewriting that narrative. The U.S., once an architect and chief beneficiary of globalization, is not just revising the rules —America’s pursuit of dominance risks unraveling the very system that cemented its power.

At the center of this recalibration is President Donald Trump (Trump 47), championing a high-stakes strategy to redefine America’s global and regional role. His administration seeks to reassert the U.S. as both global leader and pivotal power in the Americas. Trump’s approach suggests that economic cooperation and soft power are secondary tools in advancing geopolitical priorities. This strategy, however, involves significant risk, betting that unilateral action and pressure-based tactics, such as tariffs, can sustain U.S. dominance in an increasingly divided world.

The deeper risk is evident: The very strategies designed to sustain U.S. dominance may accelerate fractures in the global order. As Washington pushes its agenda, it will fuel resistance from emerging powers eager to escape the grip of the dollar and its financial architecture. Meanwhile, if the U.S. takes a hardline approach to neighbors Mexico and Canada, this risks undermining regional stability and cohesion. The focus on dominance over cooperation may ultimately backfire, leaving the U.S. isolated and its leadership diminished.

What North America Stands To Gain — Or Lose

As Washington pivots to a new era of hard power and unilateral action, its neighbors will likely grapple with what this means for the region’s security, economy, and cohesion. The U.S. is redefining its priorities, and the implications for Canada and Mexico are profound.

Securing the southern border remains a top U.S. priority, as migration, drug trafficking, and regional instability are ongoing concerns for the U.S. government. Meanwhile, the Arctic frontier looms large, as climate change opens new shipping routes and Chinese and Russian ambitions demand a fortified U.S. presence. After these security imperatives come the economic goals:

• Strengthening regional supply chains and nearshoring industries.
• Ensuring North America remains competitive in an increasingly fragmented global economy.

The southern border stands out as a clear and achievable objective. Controlling migration flows and drug trafficking, while complex, is more feasible than tackling the complex challenges elsewhere. Even South America’s deepening ties with China present a thorny geopolitical puzzle, while countering China’s rise in Asia or managing Europe’s security dependencies will demand intricate strategies and greater resources. In contrast, border security is low-hanging fruit — a goal attainable with targeted strategies and North American cooperation.

Four Guiding Insights

To navigate these challenging times, the following four insights offer practical strategies to guide policymakers toward effective solutions:

1. Economic Agenda Subordinated to Geopolitical Objectives

Economics is no longer the driver of policy — rather, it is a tool. Border control, immigration, and defense will likely take priority over trade deals and market efficiency, with economic decisions increasingly being shaped by broadergeopolitical considerations. Canada and Mexico should recognize that many of the Trump administration’s announcements — such as tariff threats or remarks framing Canada as the “51st state” — may reflect deeper geopolitical objectives. For Mexico, these tactics are likely aimed at exerting pressure to take stronger action on synthetic drug trafficking and illegal immigration. For Canada, they appear to be part of a broader strategy to assert influence over Arctic territorial sovereignty and resource access. Policymakers in both countries should approach these statements with seriousness, being prepared to engage in negotiations that address the underlying challenges they reflect while securing their national interests.

2. Trump’s Pragmatic Approach

Trump 47 is likely to repeat Trump 45’s transactional approach, as policies and agreements in his second administration are expected to be pragmatic and shaped by their alignment with U.S. strategic interests. Canada and Mexico should craft proposals that emphasize mutual benefits, showing how their cooperation advances U.S. priorities while safeguarding their own autonomy. 

3. Geography Shapes Uneven Priorities

Geography dictates these issues, presenting North America with uneven challenges. Mexico faces U.S. pressure to manage migration, drug trafficking, and border security, while Canada contends with emerging shipping routes and China and Russia’s competing ambitions to capitalize on its vast resources. A unified trilateral all-purpose framework seems unrealistic; instead, flexible bilateral agreements tailored to these distinct priorities are a better way forward. Policymakers should embrace pragmatic solutions, whether through enhanced Arctic defense cooperation or a revitalized Mérida Initiative that addresses hemispheric security challenges.

4. Global Priorities Drive Regional Objectives

The U.S. faces two critical imperatives: countering China’s global ambitions and maintaining its dominance in the Western Hemisphere. In this context, North America is its most straightforward front, compared to the complexities of managing issues in Europe, Asia, or even South America. Canada and Mexico should recognize this and align with U.S. priorities on migration, security, and economic decoupling from China. A functional North American alliance built on shared benefits offers the best path forward. The U.S. needs a strong North America to secure its global position, and that means more carrot, less stick.

Main Takeaway

Altogether, North America as a whole is key for U.S. global leadership, and the strength of this bloc will define its ability to compete in an increasingly divided world. Threats, and economic weaponization are not sustainable strategies: They risk shattering regional alliances and alienating the partners the U.S. depends on most. Mexico and Canada are not solely neighbors; they are indispensable allies for building a prosperous and resilient future. 

To secure its leadership on the global stage, the U.S. should pivot toward collaboration and shared gains, leveraging soft power, rather than defaulting to pressure-based tactics. A strategy of more carrot, less stick can strengthen regional ties, encouraging trust and cooperation. By fostering mutual benefits and prioritizing collective growth, North America can emerge stronger, united, and ready to thrive in the face of global uncertainty.

The stage is set for a seismic shift in global power dynamics. On one side, the U.S. clings to its postwar architecture, doubling down on protectionism and strategic containment. On the other, China challenges the status quo, embedding its influence across Eurasia and beyond with calculated precision. In the 1990s, President Clinton’s campaign famously used the slogan: “It’s the economy, stupid.” Today, decision-makers should leave behind outdated paradigms of economic integration and regional competitiveness, recognizing that global trade is not only about mutual benefit — “It’s geopolitics, stupid!”

For more on the critical issues addressed in this commentary, see the author’s working paper, “North America’s Geopolitical and Economic Playbook Under Trump’s Second Term.”

This publication was produced on behalf of Rice University’s Baker Institute for Public Policy. Wherever feasible, the material was reviewed by external experts prior to its release. Any errors are the responsibility of the author(s) alone.

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