This week, President Donald Trump’s unveiling of reciprocal tariffs, including ones targeting China, Taiwan, the EU, and Southeast Asia, sent global markets falling and drew strong worldwide condemnation. Washington expressed frustration at Moscow’s unwillingness to end the war in Ukraine, as both Congress and the White House proposed sanctions and tariffs against Russia. In the Middle East, Israel deployed additional troops to Gaza, while the U.S. deployed a second aircraft carrier near Iran and renewed its threats to bomb Iran if it refuses to discuss a nuclear deal. In the Indo-Pacific, China conducted large-scale military drills around Taiwan and struck an agreement to deepen economic ties with South Korea and Japan.
Weekly Forecast Monitor: April 4, 2025
The Geopolitical Hotspots Monitor examines the outlook for key geopolitical hotspots around the world.
1 Russia/Ukraine Conflict
Summary
The Russia-Ukraine war trended toward hybrid escalation as progress on peace talks stalled and Trump expressed frustration with Russian President Vladimir Putin, saying he was “pissed off” at the lack of progress in negotiations to date, and threatened to impose secondary tariffs of 25% to 50% on buyers of Russian oil. A bipartisan group of 50 U.S. senators proposed legislation that would impose 500% tariffs on nations importing Russian oil, gas, uranium, and other products if Russia failed to negotiate in “good faith” for a peace deal in Ukraine. Meanwhile, Kirill Dmitriev, a close Putin ally and manager of Russia’s sovereign wealth fund, met in Washington with U.S. Special Envoy Steve Witkoff to discuss Ukraine peace talks and a potential U.S.-Russia critical minerals deal. Russian Foreign Minister Sergei Lavrov announced that the next round of U.S.-Russian negotiations over Ukraine and normalization of relations between the U.S. and Russia will take place in Istanbul, without specifying a date. The Kremlin ordered a draft of 160,000 men for the Russian army.
2 Middle East
Summary
Conflicts in the Middle East trended toward military escalation as Iran rejected the possibility of direct negotiations with the U.S. but kept the possibility of indirect negotiations open as the two sides exchanged military threats. Israel ordered the mass evacuation of civilians and deployed additional troops into Gaza while expanding its ground campaign with the objective of capturing additional territory and creating a “second Philadelphi” corridor. Israeli airstrikes in Lebanon targeting Tyre and the Beirut suburbs killed at least four people, and Hezbollah fired rockets into northern Israel. Israel also carried out airstrikes and a ground raid in Syria. The U.S. redeployed an aircraft carrier from the Indo-Pacific to the Middle East and intensified its air campaign in Yemen against al-Houthi fighters, who claimed to have shot down a U.S.-operated drone.
3 U.S./China/Indo-Pacific
Summary
Tensions in the Indo-Pacific trended toward hybrid escalation as the Trump administration unveiled sweeping reciprocal tariffs, including levies against China, Taiwan, Japan, and Australia, drawing strong condemnation and retaliation as Asian markets tumbled. China ordered firms to halt plans of investment to the United States. The Chinese military conducted large-scale live-fire exercises around Taiwan, drawing strong condemnation from the U.S. and the European Union. South Korea, Japan, and China agreed to deepen economic cooperation while coordinating a response to incoming U.S. tariffs. Myanmar’s military declared a ceasefire to allow adequate disaster relief operations to take place following this week’s earthquake.
4 Other Hotspots
United States
- Trump unveiled reciprocal tariffs targeting a wide range of trading partners, which include the EU, Taiwan, and China. The announcement drew strong condemnation and vows of retaliation from U.S. allies and adversaries alike, while the U.S. and Chinese markets were the strongest affected. Forecast – hybrid escalation
France
- A French court found far-right leader Marine Le Pen guilty of embezzling EU funds, barring her from running for public office for the next five years, which include the next presidential election. The decision has drawn several appeals, while leader of Le Pen’s National Rally party Jordan Bardella has called on his supporters to rally this weekend. Forecast – political destabilization scenario
Armenia
- The Armenian Foreign Ministry stated it will not sign the Collective Security Treaty Organization’s budget resolution or participate in financing its activities, drawing criticism from Moscow. Forecast – hybrid escalation scenario
Myanmar
- The country’s military government has announced the imposition of a ceasefire, effective until April 22, to allow rescue operations to take place in light of the earthquake that killed over 3,000 people. Forecast – security stabilization scenario
Hungary
- Prime Minister Viktor Orban announced Hungary will withdraw from the International Criminal Court, shortly after Israeli Prime Minister Benyamin Netanyahu landed in Budapest. Forecast – hybrid escalation scenario
The Global Connectivity Tracker examines the impact of geopolitical dynamics on key themes like trade, technology, and energy/climate.
1
Global
Energy
Despite renewables being the fastest-growing electricity source in 2024, the world may miss the COP28 objective of tripling renewable sources with 11.2 terawatts of renewable installed capacity by 2030. To meet that goal, the capacity of renewable energy sources around the world must increase by 16.4% annually.
What Happened
The International Renewable Energy Agency reported that 92.5% of all new electricity generation capacity brought online in 2024 came from renewable or clean sources.
Significance/Outlook
The report said renewable electricity generation was up 15.1% from 2023, with 46% of electricity generated coming from green, non-nuclear sources. This rise is considerable, but it is not sufficient to satisfy the international goal of tripling the amount of energy that comes from renewable sources between the years 2023 and 2030 to combat climate change and shift away from fossil fuels like coal, oil, and natural gas. China added eight times more renewable power than the U.S. and five times more than Europe in 2024.
2
U.S./Venezuela
Petroleum
After Chevron and PDVSA’s other foreign partners wind down operations in May and secondary tariffs targeting Venezuelan oil customers kick in, oil production and exports, the chief source of Venezuelan revenue, can be expected to drop significantly. However, the country could continue to sell through intermediary countries or use transshipments to attempt to bypass the tariffs.
What Happened
After the United States suspended Chevron’s license to operate in Venezuela and announced tariffs targeting the country’s oil and gas customers, export volumes of fossil fuels from Venezuela dropped by 11.5% in March.
Significance/Outlook
Pressure tactics from the White House, including the imposition of a 25% blanket tariff on imports of U.S. goods on any buyer of Venezuelan fossil fuels and the revocation of purchasing licenses for foreign partners of state-run oil company PDVSA, could further dampen demand for oil, gas, and refined petroleum products from the OPEC+ member. The licenses to import oil produced through joint ventures with PDVSA had been granted by former U.S. President Joe Biden to French company Maurel & Prom, Italy’s Eni, and Spain’s Repsol. Trump has directed the campaign targeting PDVSA after accusing Venezuelan President Nicolas Maduro of failing to do enough to halt unauthorized migration to the United States and of not advancing electoral reforms.
3
U.S./Russia
Critical Minerals
What Happened
Putin’s top envoy for international economic and investment cooperation said Russian and U.S. officials are discussing developing rare earth metal reserves in Russia.
Significance/Outlook
The proposed projects are linked to efforts to end the war in Ukraine and Ukraine’s attempt to back out of a rare earth metals deal with the United States. Russia’s rare earth reserves are the fifth largest in the world, but Russia produces only 1% of the world’s rare metals and has limited processing capacity. Through this collaboration, Russia may use U.S. expertise to increase production.
4
U.S./Taiwan
Energy
Although deeper Taiwan-U.S. energy cooperation could enhance long-term energy resilience in Taiwan and limit China’s ability to exploit this vulnerability, its impact on Taiwan’s short-term energy security is limited. Some LNG imports from the U.S. are already underway, and state-level partnerships are supporting renewable collaboration. However, major projects, such as the Alaska LNG deal, are still in early stages, with exports not expected until around 2030.
What Happened
The American Institute in Taiwan (AIT) announced that the U.S. is prepared to offer Taiwan a broad range of energy solutions, including nuclear, geothermal, and advanced grid technologies. The Taiwanese government responded positively, expressing openness to exploring these options as part of future cooperation.
Significance/Outlook
The announcement comes as Taiwan prepares to decommission its last operational nuclear reactor next month. While the phase-out continues, Premier Cho Jung-tai recently stated that Taiwan is willing to pursue international nuclear collaboration under certain conditions. These developments underscore Taiwan’s recognition of its 97% energy import dependence and the need to build long-term resilience. This also follows Taiwan’s recent move to deepen energy ties with the U.S., including a letter of intent to import liquefied natural gas from Alaska.
5
China
Electric Vehicles
While this presents an opportunity for BYD consumers through lower costs and enhanced features, it highlights the technology gap between U.S. and Chinese EV manufacturers. The rapid advancement of Chinese EV firms like BYD, particularly in pricing and innovation, represents a growing strategic concern for the U.S. in the context of technological competitiveness.
What Happened
China’s BYD surpassed Tesla in 2024 electric vehicle sales and revenue, selling nearly 100,000 more vehicles than Tesla in the last quarter of 2024.
Significance/Outlook
This development highlights BYD’s expanding advantage in scale, affordability, and innovation in the global EV market. BYD generated $107 billion in revenue for 2024, a 29% increase from the previous year, delivering 4.27 million vehicles, including both electric and hybrid models. In contrast, Tesla reported $97.7 billion in revenue and delivered 1.79 million all-electric vehicles, a 1.1% decline from 2023. The performance gap is especially stark in China, where BYD held 32% of the new energy vehicle market in 2024, while Tesla’s share declined from around 7.8% in 2023 to 6.1%. Similar trends can be seen in Europe, where BYD is outpacing Tesla in market share, consolidating its lead in key strategic markets.