Trump’s return will transform US domestic policy and reverberate through the international system by up-ending trade, investment, and geopolitical risk patterns. These changes will affect private capital investors, including those operating in small-state international finance centres (IFCs), who must gauge their response.

They also provide the headline for five significant trends — Trump, Tariffs, Tax, Tech, and Trade – poised to take their place at the centre of the global investment stage through 2025 and beyond.

Trump: ‘America First’ And The Reconfiguring of Global Risk

The return of Donald Trump to the Presidency will herald a transformative pivot to a shifted global environment, now more nationalistic and protectionist. Trump’s “America First” agenda – built upon the principles of rewriting trade deals, breaking away from international accords and placing U.S. interests ahead of multilateralism – will bring geopolitical risks and opportunities back to the forefront of the 2025 agenda.

Trump’s presidency will make for a choppier investment environment for private capital investors. In his first term, we witnessed a transactional model of global relations manifested in trade wars, diplomatic tensions and bouts of financial volatility. If, in 2025, his policies are still focused on limiting foreign competition and combating global interdependence, investors should remain on guard for ripple effects.

On the upside, this political shift might be a boon for small-state IFCs. Countries with favourable tax policies, regulatory flexibility, and a track record of attracting capital in times of political instability will become ever more attractive to investors seeking safe harbours or alternative pathways into markets that are heavily impacted by shifts in U.S. policy.

Tariffs: We Are Still In The Age of Protectionism And Supply Chain Shocks

One of Trump’s most consequential legacies from his first term was his aggressive push to raise tariffs, including in his trade war with China. When he returns to office in 2025, tariffs will likely remain a significant tool of U.S. foreign policy. The immediate fallout will wash through international commerce, spanning matters as diverse as EVs, cell phones and agriculture, as Trump pursues more protectionist policies while limiting American reliance on foreign suppliers.

These developments will be a double-edged sword for small-state IFCs. Tariffs can disrupt global supply chains, rendering certain regions or industries less competitive and reorienting trade patterns. They can also boost inflation and prices in the short term, negatively impacting the cost of living. Still, investors could see new opportunities in jurisdictions playing a role as alternative manufacturing hubs or trade gateways. If manufacturing relocates, the investment that supports it will flow to the U.S., potentially via IFC conduits. Southeast Asian or African countries might also benefit as American companies seek to lessen their exposure to steep Chinese tariffs.

However, the spillover effects of tariffs – especially if they’re directed at a vital sector, like technology – could include market turbulence and price hikes. Private capital investors must brace for supply chain disruptions in sectors reliant on Chinese or other global suppliers and diversify their portfolios to minimise the fallout. Companies examining ways to move production away from tariff-heavy markets for their cost-effectiveness and efficiency will be in demand. At the same time, small-state IFCs with strong capital management and deployment capabilities can play a key role in meeting the growing demand for new investment capital flows as production shifts to new locations.

Tax: The New Global Tax Order And Its Impact On Investment Flows

Seismic change is underway on the global tax front, and Trump’s return will almost certainly challenge this process. Although the OECD’s promotion of a global minimum tax rate of 15% has been a strong theme over the last several years, Trump’s administration will likely re-examine the subject, particularly as he strives to keep U.S. businesses competitive internationally through a two-tier corporation tax system. Domestic ‘Made in America’ firms could benefit from a 15% CIT whilst foreign players may still have to bear the current 21% rate.

For small-state IFCs, Trump’s return may elevate interest in jurisdictions that offer favourable tax regimes for multinational corporations, low or no tax rates on capital gains, and/or more benign tax-neutral regimes. Small-state IFCs are well placed to offer both a capital-friendly tax environment and a robust and rich financial infrastructure to attract and channel capital flows from investors.

But Trump’s approach also risks forcing the U.S. into renegotiating tax treaties and pursuing more aggressive tax policies domestically. The great unknown is how markets will react to a perpetuation of the Tax Cuts and Jobs Act and a raft of new tax-cutting measures, adding to the steep tax cuts from the first Trump administration due to run out in 2025.

Much of the cuts, at least initially, will be funded by increased borrowing. Will the bond markets be prepared to bankroll the additional borrowing needed, given that the U.S. debt servicing is already set to exceed 6% of GDP? Interest payments will exceed military spending for the first time in U.S. history, and this will surely be a test for the mighty dollar.

Tech-tonics: Jump-starting Investment In Technology Will Raise Geopolitical Friction

With technology increasingly shaping the global economy, a China vs U.S. tech standoff will almost surely speed up the trend toward a technological decoupling of the two major global economies, one that will probably be most pronounced for China. The technological ‘Cold War’ that started during Trump’s first term — focused on AI, 5G and semiconductors — will continue through 2025, altering the flow of global investment and the nature of innovation ecosystems.

The changes could create a unique opportunity for private investors to ride the tech-driven growth wave, especially in the future mega-sectors such as artificial intelligence, quantum computing, biotech and its supporting infrastructure. The geopolitical and market risks of tech investments will also increase. Corporate adoption still lags personal consumption (75% of all ChatGPT subscribers are personal) and investment to date of $1.5trn shows lots of promise but little by way of tangible near-term profits. AI remains an exciting but nascent and rapidly evolving technology that still has, for many, to prove its real-world impact.

Among the things to keep an eye on will be the rise of tech startups and venture capital in smaller-state IFCs. A proactive approach by jurisdictions such as Singapore and the Cayman Islands has made them attractive destinations for fintech, blockchain and other technologies. These smaller centres could strengthen their positions as key players in the global tech investment firmament amid geopolitical tensions.

Trade: Increasingly Regional, National And Protectionist

Global trade winds will blow differently in 2025, beset as they are by fractured trading blocs and regional alignments. Bilateral trade deals – instead of multilateral agreements – may take precedence, increasing export tensions between the West and other powers, including China and Russia. In this environment, the future of the WTO is not assured.

Disruption may open new avenues for small-state IFCs to play an intermediation role in leveraging regional trade agreements. Traditional financial systems might find it challenging to meet the needs of the new economy. The rise of digital trading hubs in smaller IFCs will be a boon for investors as these hubs are gaining traction in regions such as southeast ASIA, Africa and the Middle East, where emerging markets are making inroads into conventional trade routes.

2025 will also see further evolution in trade finance. The shift towards digitised trade and persistent political friction will drive demand for more secure, transparent trade finance solutions, which small-state IFCs are well-placed to offer. The remainder of this decade will be critical for the embedding and establishment of all things crypto, with the tailwinds of a supportive U.S. president and a more benign regulatory environment. Understanding how these new trade routes and financial instruments will develop will be a key to accessing growth areas in an increasingly fragmented global marketplace for private capital investors.

Wrap-Up: The Times They Are A-Changin’

2025 will be a year of significant change in global events, trade and investment. The re-entry of Donald Trump into the White House will bring back his brand of nationalism, protectionism and a more transactional approach to foreign relations, all of which will have significant implications for the shape of investment markets. Private capital investors, including those operating through small-state IFCs, will have to alter their strategies in a world redefined by geopolitical risk, technological disruption, and new tax and trade paradigms.

Small-state IFCs offer a unique blend of regulatory flexibility, tax advantages, relative political stability, and investment potential. These make them an attractive option for investors looking for alternatives to larger, more volatile markets. Still, private capital investors will need to know how to prosper in an altered world of Trump, Tariffs, Tax, ‘Tech-tonics’ and Trade.

Adaptability, foresight and strategic diversification will be the keys to success in 2025.

By Geoff Cook, chair of Mourant Consulting

In its latest precious metals update, revealing recent trends in global consumer precious metals investing, it said that in 2024, gold prices rose 28% in GBP (27% USD), while the price of silver was up 23% in GBP (22% USD).

This ongoing price momentum, driven in the fourth quarter by a combination of ongoing geopolitical uncertainty and falling interest rates, has fuelled demand for precious metals, with revenues from gold bullion sales at The Royal Mint – this includes coins, bars and digital gold – up 153% year-on-year.

Across 2024 as a whole, the total number of customers buying bullion from The Royal Mint’s website hit a record high, rising 9%, while the total volume of online bullion transactions was up 12% compared to 2023.

New data from The Royal Mint demonstrates a continuation of the trend of UK investors turning to CGT-exempt products, such as bullion coins, in growing numbers. Sales of bullion coins on The Royal Mint’s website surged to another record high in the fourth quarter, with revenues up 56% on the previous quarter, and up 197% when compared to the same period in 2023.

This has primarily been driven by a surge in gold bullion coin sales. Between October and December 2024, revenues from gold bullion coin sales rose 206% when compared to the same period in 2023. Across 2024 as a whole, revenues from the sale of gold bullion coins from The Royal Mint’s website rose 49%.

Alongside growing investor appetite for CGT-exempt products, a significant increase in sales of The Royal Mint’s VAT-free Digital Metal products also demonstrates the growing focus on tax-efficient investing. Revenues from sales of Digital Silver were up 51% in 2024. Looking specifically at the fourth quarter, revenues rose 848% year-on-year.

The data also shows an increase in sales of platinum, with the total weight of platinum sold between October and December 2024 up 117% on the previous quarter. Sales of The Royal Mint’s VAT-free Digital Platinum product also rose 194% year-on-year.

Stuart O’Reilly, market insights manager at The Royal Mint said: “A combination of economic uncertainty and geopolitical volatility have led gold prices to hit multiple all-time highs in 2024. At a time when interest rates are gradually subsiding, investors have been drawn in by the capital growth gold has delivered as an asset class, and the protections safe- haven assets provide.

“Tax efficiency has also driven investment decision making, with a second consecutive record quarter for sales of bullion coins from The Royal Mint website. The surge in demand for our VAT-free Digital Metal products also reinforces the idea that investors are adopting a proactive approach.”

TTFW seeks to track the performance, before fees and expenses of the BNP Paribas Rolling Futures W0 TZ Index (the ‘Index’). The Index is designed to provide investors with exposure to gas traded on the Dutch Title Transfer Facility (TTF), which is the most liquid European gas trading hub and the benchmark for European gas prices. The Index measures total return performance based on the underlying ICE Dutch TTF Gas Futures contracts.

Nitesh Shah, head of commodities & macroeconomic research, Europe, WisdomTree, said: “The Russia-Ukraine war that started in 2022 profoundly changed the natural gas markets of Europe. Pipeline flows of natural gas from Russia to Western Europe, which used to be the main source of natural gas for the region, are now negligible. Western Europe is far more reliant on Norwegian pipeline flows and global liquified natural gas (LNG) imports.

“As the European Union navigates an energy transition, it will still be reliant on natural gas. With that in mind, there will be periodic sharp increases in European natural gas prices as the fuel is used to make up shortfalls in renewables. The Dutch Title Transfer Facility is the most representative and liquid natural gas benchmark in Europe and thus the best tool for tactical exposure to these price jumps and for hedging purposes.”

WisdomTree has an 85% market share in unleveraged natural gas exchange-traded products (ETPs) in Europe. WisdomTree European Natural Gas (TTFW) complements WisdomTree’s range of natural gas products which offer exposure to US Henry Hub natural gas, representing the most widely known gas trading hub in the US. This includes the WisdomTree Natural Gas (NGAS), a euro currency hedged alternative, as well as short and leveraged exposures. These products allow investors to express both short-term tactical and long-term strategic views.

Alexis Marinof, head of Europe, WisdomTree, added: “We have a rich heritage of innovation and launching ‘first to market’ exposures across asset classes. Investors expect WisdomTree to deliver the exposures they are unable to find elsewhere, and that’s exactly what we have done with this ETC. This launch strengthens our market-leading position in commodity ETPs and gives investors an extra tool at their disposal to navigate a dynamic market environment.”

It is generally considered an investment style but, according to David Jane, manager in Premier Miton’s macro thematic multi-asset team, it can be reframed as an ‘output’.

In a commentary note, Jane explained this approach involves shifting the focus from the assets that are the fund’s inputs to the actual income it outputs.

“Most fund managers running income strategies conceive of income as an investment style, they believe that by favouring higher yielding shares, that may give them an investment edge over time,” he said.

“That has certainly been true for various periods in the past, although in recent years growth has been the dominant style.

“With growth outperforming income for an extended period, even income managers tended towards a greater growth bias, and the Investment Association obliged by reducing the income requirement on the income sectors.”

Jane said that in running the firm’s Cautious Monthly Income fund, the team avoids the typical bias towards higher yielding shares and bonds.

“We certainly do not target a yield for the fund,” he said. “We see income as the output on the fund not an input. The output we are seeking is not yield per se but an income stream that grows in line with inflation over time.

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“This allows us the flexibility to invest in any asset class or region to meet the fund’s overall objective, so long as the income and risk requirements are met,” Jane continued. “We do not even limit ourselves to equities and bonds and are happy to include such assets as commodities, even though they do not pay any income.”

Jane said this way of working is part of a wider aspiration to engage in ‘flexible thinking’ while managing money.

“Over the past decade or so this flexibility has served us well as growth as an investment style has been performing well, while income has lagged.”

He explained that having flexibility to invest in growth sectors and themes has enabled positive capital returns while still generating income. It is difficult to grow an income stream over time if the capital value of the fund is not also growing, he noted.

Turning to the outlook for the near term, Jane said his team believes now that bond yields are at more normal levels and inflation is back to stay, income as a style may again perform well.

“The previous decade or so was highly abnormal, particularly post global financial crisis. Rates were held abnormally low, and inflation was not an issue. This led to an environment where bonds and equities became negatively correlated and yields consistently fell.

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“Portfolio construction in this environment was relatively straightforward: combine growth equities with long duration bonds and all is well, during weak equity environments your bonds might bail you out.”

A different approach is now required though, according to Jane.

Under a ‘more typical regime’, equities and bonds are positively correlated and weak equity markets are more likely to be associated with periods of higher inflation, rather than deflationary recessions. In this environment a different approach may be required to construct an income portfolio, he said.

With bonds no longer a hedge to equity, a better hedge would be inflation beneficiary assets such as oil and commodities, as well as hard asset-based businesses in equity and property.

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Combining these with equity may be a less volatile strategy going forward than the 60/40 equity bond mix.

“History would suggest that if current conditions persist that not only may a growing income be an important demand from clients as inflation bites, but that income strategies may perform well compared to the recently favoured 60/40 and growth biased approaches,” Jane said. “Portfolio constructions may need to adapt, but this could very much favour an unconstrained income style.”

Having reached an all-time high at the start of December, briefly surpassing $2,100, Eric Strand, manager of the AuAG ESG Gold Mining ETF, recently forecast the price of gold will close the year with at least at 20% increase in price, in dollar terms.

“We believe that central banks will shift away from rate hikes and adopt a more accommodative policy stance in 2024, which will catalyse a substantial upswing in gold prices for the foreseeable future,” he said.

For James Penny, chief investment at TAM Asset Management, the recent strength of gold in both rising and falling markets has bolstered the credentials of the metal as a “true-blue” alternative for investors’ portfolios at a time when many are searching for just that.

“Gold certainly is an interesting investment in current market conditions,” he said. “In a world where rates and real yields are rising and bond investors are finally getting an income again, one can see this as an environment where a zero-yielding asset like gold suffers.”

Indeed in the rally of November in which bond and equities rose, Penny said the fact that gold also hit an all-time high would suggest the yellow metal not only remained resilient against rising interest rates, but also benefitted from them coming back down again, giving the asset class a “nice convexity”.

“Whilst there could be some short-term weakness in gold as investors potentially take a step back from the strength, we see continued stability from the metal; as real yields continue to look high and set for a more sustained lower to the benefit of this zero yielding asset,” he added.

David Coombs, head of multi-asset investment at Rathbones, sees the use of gold as tactical rather than strategic and despite the forecasts of jumps in the price of gold explained his fund’s gold positions remain very modest.

“As is well known, not having an income stream means valuing the metal can be an art rather than a science,” he said. “I think it is important to acknowledge that, rather than to try and post-rationalise its price movements.”

For Coombs there are two scenarios in which gold is attractive, the first, and he said most obvious, is stagflation.

“The problem is you need this to be a concern across most developed markets and in particular the US for this to impact the price positively,” he said. “But it is the dollar that is working not gold and you would be better off in US treasuries and cutting the coupon.”

He added: “The second scenario is a weak US dollar, either caused by falling interest rates (and therefore a falling opportunity cost) or a lack of demand for US assets. During these periods it is best for a sterling investor to buy gold and hedge the dollar.”

However Coombs said at any other time gold is an insufficient store of capital and that right now, government bonds are “potentially a better diversifier” to equities given the risks of a global recession and the fact investors are being paid 4-5% even if the recession is averted.

“This is why our gold positions are very modest and we have been actively adding duration,” he said.

James Sullivan, head of partnerships at Tyndall Investment Management, said the decision to hold gold simply comes down to investor risk appetite and mandate.

“When I observe that a FTSE 100 benchmarked fund manager has 6% in Shell versus the stock’s index weighting which is greater than 8%, I assume in peculiar fashion they are wanting that position to fall in value, so they outperform in relative terms,” he said. “This is something that has always interested and bewildered me in equal fashion.

“Holding gold is not too dissimilar,” he added. “Essentially an allocation to gold means less capital deployed elsewhere, potentially into equity markets. It is essentially a bet against markets going higher, and more some form of insurance against broader macro events, which are notoriously hard to predict.”

He added: “The opportunity cost of holding an asset with no earnings or yield is not to be overlooked in a fast-moving, upwardly mobile market, yet I am sympathetic to those who, on occasion, need something of a comfort blanket to help them sleep better.”