- Geopolitical Strategist
Wellington Homepage
ChangeThe views expressed are those of the author at the time of writing. Other teams may hold different views and make different investment decisions. The value of your investment may become worth more or less than at the time of original investment. While any third-party data used is considered reliable, its accuracy is not guaranteed. For professional, institutional, or accredited investors only.
US Speaker Nancy Pelosi’s visit to Taiwan in early August precipitated a downward shift in US/China relations to a decades-long low. This friction is now a permanent feature of bilateral relations and will also continue to pressure Beijing’s relations with key US allies in Europe and across the Indo-Pacific. Here, I share my thoughts on the ramifications of the escalating tensions.
An increasingly divided global order
While Speaker Pelosi’s visit sparked a meaningful crisis in US relations with China, a worst-case military scenario has been averted, for now. However, geopolitical and policy risks remain elevated and will continue to reflect the great-power dynamics between the two nations as well as a sharper division of the global order. In this environment, governments will undoubtedly continue to value national security over economic efficiency. This incident is therefore also likely to increase policymakers’ focus on “strategic decoupling” in the industries that are now on the front lines of great-power competition with China (semiconductors, next-generation communications, space-related technologies, robotics/automation, biotechnology, artificial intelligence, and others).
Pelosi’s visit demonstrated the US’s unquestionable military and diplomatic support for Taiwan and its commitment to fellow democracies and allies (in the Indo-Pacific and beyond, given the Russia/Ukraine war), which is a driving force of foreign policy under the Biden administration. Such a high-level visit is also the most visible sign yet of US efforts to support Taiwan, particularly in light of Russia’s invasion of Ukraine and a more rapid fracturing of the world order into a “democracies versus autocracies” narrative.
In addition, the visit exemplified the current US approach to great-power relations, which has accelerated under the Biden administration. This includes ongoing “freedom of navigation” operations in the Taiwan Strait (an area claimed by Beijing), selling additional military arms to Taiwan, and closer trade and diplomatic relations with Taipei. It also extends to ongoing military exercises by the Quad, the AUKUS submarine alliance, a larger military role for Japan (in the East and South China Seas, as well), and other regional actions in support of Taipei. These coordinated actions are all very much about deterrence, and it’s much larger than just US/China relations.
Strong bipartisan support for Taiwan
Importantly — and this point may be lost on Beijing — the separation of powers is a real thing in Washington, DC, even among political allies like President Biden and the Speaker; over the years, Pelosi has been a strong advocate for the role of Congress as it relates to US national security. More broadly, the Russia/Ukraine war has hardened US policymakers’ hawkish direction toward China as well as the bipartisan approach toward institutionalized great-power competition — particularly in a US election year.
Support for Taiwan in Washington remains strong, and the Biden administration and Congress are keen to demonstrate full and public support to Taiwan and to US allies across the region. Notably, 26 Republican senators issued a joint statement backing Pelosi’s trip (significant given the fractured political climate right now), and while a handful of Republican voices remain critical of her actions, there are now more than 50 pieces of legislation on Capitol Hill — in varying stages of completion — that aim to support Taiwan; this is roughly a fourfold increase since the start of the year. Given this strong bipartisan agreement on China’s “near-peer threat” status to the US, these legislative and national security moves are more about policy than politics.
China will undoubtedly continue to respond to the US’s posturing, given the significant domestic political and national security dynamics at play, and a more assertive China will be the “new normal” of cross-strait relations with Taiwan.
Bottom line
Taken together, all the pieces are in place for a US/China crisis over Taiwan and we should remain extremely mindful about these risks, especially in today’s deeply challenged geopolitical environment, where surprises and policy missteps are more likely. We should also expect more reliance on existing regional security arrangements (including the Quad, AUKUS, and a new NATO focus on China), and increasing attention from policymakers to strategic sectors on the front lines of this deepening geopolitical tension.
While the Pelosi visit is a moment of extreme geopolitical tension between the US and China, it represents part of a much-longer trend of institutionalized great-power competition involving more countries than the US and China and reflects shifting market and macro dynamics that will continue long into the future.
Related content
- Mid-2022 Global Economic Outlook
Multiple authors, June 2022
Expert
Related insights
Showing
of
Insights Posts
The US equity rotation: Where have all the good vibes gone?
Continue reading
4
min
Article
2026-03-31
Geopolitics in 2025: Risks, opportunities, and deepening uncertainties
Continue reading
8
min
Article
2026-02-28
What an “America first” foreign policy may mean for markets
Continue reading
6
min
Article
2026-01-31
URL References
Related Insights
Stay up to date with the latest market insights and our point of view.
Read next
Showing
of
Insights Posts
Fiscal versus tariffs: what wins out for Europe?
Just as investors were starting to explore the potential for growth in Europe, Trump’s tariffs landed. To what extent is the case for Europe still intact?
3
min
Article
2026-04-30
The US equity rotation: Where have all the good vibes gone?
After riding into 2025 on a wave of post-election euphoria, the US stock market has struggled to find its footing so far this year. Global Investment and Multi-Asset Strategist Nanette Abuhoff Jacobson looks at what’s changed in the markets and what it might mean for investors.
4
min
Article
2026-03-31
Geopolitics in 2025: Risks, opportunities, and deepening uncertainties
Geopolitical Strategist Thomas Mucha outlines his structural, policy, and geopolitical outlook for the year.
8
min
Article
2026-02-28
Emerging markets under Trump 2.0: expect the unexpected
Portfolio Manager Dáire Dunne and Investment Director Irmak Surenkok discuss what Trump 2.0 entails for emerging markets investors and what useful lessons they can learn from his first term.
5
min
Article
2026-01-31
What an “America first” foreign policy may mean for markets
Fixed Income Portfolio Manager Brij Khurana explores the potential market impacts of President Trump's "America first" foreign policy. From regional hegemony to global economic dominance to tariffs applied for strategic geopolitical gain, discover how these shifts could affect investors.
6
min
Article
2026-01-31
Bond Market Outlook
Our fixed income experts assess how to capitalize on market volatility with a flexible and dynamic approach that leverages diverse high-yielding opportunities and manages risks carefully.
2025-12-31
A guide to investing in the age of anxiety
There's a long list of issues worrying asset owners, from geopolitical risk to high valuations. To help, Head of Multi-Asset Strategy Adam Berger offers coping tips for an uncomfortable investment backdrop and a world where investing rules of thumb may be broken.
15
min
Article
2025-12-01
Global Economic Outlook
Our macro strategists continue to expect that the interlinkages between countries, central bank policies, and market pricing will change, creating potentially attractive opportunities for active portfolio management and security selection.
Article
2025-11-30
Trump 2.0: US election market impacts
In the wake of the US election, macro strategists Juhi Dhawan and Michael Medeiros join host Thomas Mucha to discuss the market, policy, and geopolitical implications of Trump 2.0.
21
min
Podcast
2025-11-30
It’s different this time: Trump faces challenging geopolitical dynamics
Our expert explores how Trump may approach the heightened geopolitical challenges his second administration faces.
3
min
Article
2025-11-30
Unearthing the unseen in geopolitics
Unearthing the unseen in geopolitics. Watch Geopolitical Strategist Thomas Mucha delve into the investment impact of structural geopolitical shifts and share his latest take on the upcoming US election.
30
min
Event replay
2025-09-30
URL References
Related Insights