Geopolitical Risks: US Government Actions Expected to Be More Active in 2026

■ In the 2026 financial markets, the likelihood of economic conglomeration (segmentation) becoming increasingly apparent due to geopolitical risks is rising.  

■ While stability in parts of Central and South America is improving, attention needs to be paid to the US government's response to its Asian allies. 
 
From a financial market perspective, events such as the US military intervention in Venezuela at the beginning of 2026 are expected to increase market focus on geopolitical risks significantly. This article will analyze the current geopolitical risk situation based on the Trump administration's foreign policy. It can be expected that distinctions such as the "US economic sphere," the "European economic sphere," and the "China-centric economic sphere" will gradually gain market attention. 
 
In Central and South America, with the US government returning to the "Monroe Doctrine," the region's tendency to be included in the US economic sphere will strengthen. Countries like Argentina and Chile, governed by right-wing governments with a high affinity to the US government, may be more favored in the financial markets. Brazil will hold its presidential elections this October, and the market is focused on whether the right wing can regain power or whether the left wing can maintain its rule. If Mexico, like Argentina and Chile, returns to right-wing rule, its improved affinity with the US government could be beneficial; conversely, if the left remains in power, concerns about fiscal expansion could create headwinds. Mexico, another major country in the region, is currently governed by the left, but there were no national elections this year, and the current Scheinbaum government maintains high approval ratings. Furthermore, the current government intends to raise tariffs on imports from several Asian countries, including China, demonstrating a desire to deepen friendly relations with the US government. Therefore, if the USMCA (United States-Mexico-Canada Agreement) is successfully signed (or extended), the positive factors are expected to strengthen further. 

 
On the other hand, cooperation with the European economic bloc, which the US government demands the annexation of Greenland, is expected to gradually weaken. The EU believes that the US presence is indispensable for achieving peace in Ukraine, and from the perspective of trade imbalances with China, it does not want to rapidly escalate confrontation with the US. However, since last year, the EU has indicated a policy of increasing fiscal spending, emphasizing economic autonomy, actively promoting the application of a free trade agreement (FTA) with Mercosur, and strengthening cooperation with other regions. If peace is achieved in Ukraine this year, developments related to reconstruction could boost the European economy. However, the coordination between the US and Europe during the peace process will be a crucial test of future relations. 
 
Against the backdrop of the ongoing US-China rivalry, the US response to the Indo-Pacific region needs close attention. The US National Security Strategy (NSS), released last December, called on US allies near China's envisioned first island chain (Japan, South Korea, Taiwan, the Philippines, Indonesia, etc.) to strengthen their defense capabilities. However, from a financial market perspective, whether the US will further deepen economic cooperation will be a key point of observation.