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The writer is CEO of General Catalyst and author of ‘The Transformation Principles: How to Create Enduring Change’
If President Donald Trump’s first “liberation day” didn’t make it clear, his latest round of tariffs certainly did — the era of easy international business is over. Gone are the days of prioritising streamlined operations and low-cost supply chains. The winners of the next era will be determined by their ability to support national independence.
We are now living in a re-globalised world, where countries seek to balance the benefits of globalisation with the desire to build greater resilience in critical industries like healthcare, defence, energy, manufacturing and financial services.
From Covid-19 to the war in Ukraine, governments have realised that the interconnectedness of the global system can easily break down in moments of crisis. They have responded with protectionist policies — from German debt reform on defence spending to US tariff hikes.
Yet despite these stress tests, participation in the deeply interconnected global economy will continue — largely because it must. Global trade in goods and services accounted for nearly 60 per cent of global GDP in 2024. For countries like Mexico and Germany, that interdependence is even higher, with trade-to-GDP ratios around 80 per cent.
As the CEO of a US-based venture capital firm with operations and portfolio investments around the world, I’ve felt this pressure for my own company and the start-ups we build, advise, and invest in.
My advice is that in the midst of this ambiguity, collaboration between public and private partners is crucial. Policymakers — both abroad and at home — and international companies can serve as partners.
This doesn’t necessarily mean lobbying, campaign donations or public power plays. It means discussing how to design policy that accomplishes private and public goals. Anthropic, a company General Catalyst invests in, has done this — working with the UK’s Department for Science, Innovation and Technology to provide insights on the effects of artificial intelligence.
Trust can be built through investment in local economies too. BMW’s South Carolina plant has generated $26.7bn for the state, supporting the jobs of nearly 43,000 workers directly and indirectly. When the White House criticised BMW’s US presence, calling it bad for the economy and national security, state politicians, including Donald Trump ally and South Carolina Senator Lindsey Graham, came out in support of the company’s local operations.
There are also new rules of operation to consider. Where companies used to prioritise efficiency and cost-saving, they are now looking for stability and security. International partnerships made for pure cost advantages between global companies in economically strong nations and small partners in weak economies won’t work any more. Savings in the present risk being dwarfed by future charges, be they tariffs or relocation costs. Apple’s expanded partnership with India-based Tata demonstrates this sort of move.
The key is to build nationally, with replicability for international scale. Failure to do one can lead to failure in the other. In 2020, India banned 59 Chinese apps, including TikTok, on security grounds. Their failure to account for data sovereignty resulted in sudden market loss.
For long-standing companies, re-globalisation means redesigning operating models. Otherwise, they risk losing international market share and access to overseas supply chain partners. Amazon recently formed a European operating model as part of efforts to build a European sovereign cloud. The new structure entirely decouples European cloud operations from the US, with talent, technology, infrastructure, and leadership all sitting within EU borders. Microsoft and Google have announced similar sovereign European data programmes.
This new playbook isn’t only important for business leaders looking to appease shareholders — it is necessary for survival. In April, Chinese electric vehicle maker BYD sold more electric vehicles in Europe than Tesla for the first time ever, indicating that US leadership may be slipping in certain sectors.
The US accounts for only 26 per cent of global GDP. US companies rely on profit opportunity abroad. More importantly, America’s economic strength relies on the ability of its companies to lead overseas. Business leaders need to think critically about security and resilience and forgo their old patterns of ease and low costs. It is the only way they will survive in a re-globalised world.
