Geopolitical alignment essential in new era of tariff deals: Willis

Geopolitical alignment has now become essential for internationally exposed firms’ risk management strategies amid a new trade paradigm, Willis, a WTW business, argues in its latest Political Risk Index.

The global trade landscape has been fundamentally reshaped in 2025, driven by a wave of new US tariff deals that prioritise national security alignment over traditional free trade economics.

The report, titled ‘Mapping the new geopolitics of tariff deals’, argues that the era of “tariff geopolitics” has arrived. It details how the US is increasingly requiring trading partners to align with its national security interests – specifically regarding export controls and supply chain security – or face punitive economic barriers.

Drawing on research from Oxford Analytica, the Willis report suggests that 2025’s tariff agreements are effectively building a defensive “moat” around Western economies.

Access to this exclusive trade zone now comes with strict conditions: most frequently export controls (included in 13 deals) followed by supply chain security (10 deals), enhanced rules of origin and trans-shipment monitoring.

The report warns that as these measures take root, the common corporate strategy of simply re-routing supply chains to avoid tariffs will become increasingly difficult.

Furthermore, many deals contain “poison pill” provisions that could see signatories suddenly ejected from the trade bloc if they fail to maintain alignment.

The pressure to secure favourable trade terms is forcing significant, and sometimes surprising, geopolitical realignment across the globe.

Vietnam, Cambodia, and Ecuador have pivoted towards the Western bloc, agreeing to enforce US export controls to secure deal terms. Argentina has secured a bailout and an aligned partner deal following a political shift to the right.

The report noted that major economies including Brazil, India, and South Africa have yet to sign deals. It highlights that their future alignment remains uncertain, posing significant risks for foreign companies operating within their borders.

Contrary to fears of a global trade war, the report finds that retaliation against the 2025 tariffs has been limited. While China and Canada have launched significant retaliatory measures, they remain the outliners.

Instead, many nations have viewed the tariffs through a “competitive lens.” In countries like Brazil and Indonesia, initial diplomatic concern quickly gave way to race for competitive advantage.

Governments are now seeking deals that position their tariff rates below those of regional rivals in a bit to attract export-oriented investment.

One region where the West appears to be losing ground is Africa. The report notes that the non-renewal of key trade preferences and reductions in US aid are pushing many African nations to realign with Russia and other non Western partners.

According to the report, this shift presents major strategic implications for companies with frontier-market strategies.

Sam Wilkin, director of political risk analytics at Willis, said: “Companies have been astonishingly adept at adjusting their supply chains to fast-changing tariff rates. But companies also need to manage the geopolitics of tariffs.

“Our latest research highlights how tariffs can no longer be treated as a compliance or operational issue but need to be embedded at the core of strategic planning.”