The Far-Right Surge: A New Era of Geopolitical Risk and Trade Uncertainty

The global political landscape is shifting under the weight of far-right movements, and investors need to recalibrate their strategies. From 's Hungary to 's Italy and the (AfD), nationalist agendas are reshaping trade policies and inflating geopolitical risk premiums. These shifts aren't just political theater—they're rewriting the rules of international commerce and financial stability.

The Far-Right's Trade War on Globalization

Far-right governments are weaponizing protectionism to prioritize domestic interests over global cooperation. In Hungary, has openly challenged the EU's Green Deal, arguing that stringent climate policies hurt industrial competitivenessCharting the Radical Right’s Influence on EU Foreign Policy^[1]. Similarly, Italy's has called for a rollback of the EU's 2035 ban on internal combustion engines, creating uncertainty for automakers like Fiat ChryslerRise of the Far Right in Europe: Political and Economic Implications^[2]. Germany's , while not in government, has amplified Euroskeptic rhetoric, pushing for stricter immigration controls and a reorientation of trade toward “friendly” nationsThe Rise of Far-Right Parties in Europe: Causes, Trends, and Implications^[3].

The result? A fragmented EU struggling to maintain a unified trade front. For example, , but this reflects a broader trend of localized supply chains over global efficiencyHungary: OECD Economic Outlook, Volume 2025 Issue 1^[4]. Meanwhile, Italy's automotive sector faces a double whammy: EU climate mandates and Chinese competition, both exacerbated by far-right skepticism of multilateral agreementsMapped: Europe’s Rapidly Rising Right^[5].

Tariffs, Trade Wars, and Market Volatility

The U.S. under 's 2024-2025 administration offers a cautionary tale. . Bloomberg Economics estimates these tariffs could reduce U.S. , but at a steep cost: Mexico's auto industry, , .

The financial fallout is equally stark. , . Gold, the traditional safe haven, . These shocks highlight how far-right-driven protectionism isn't just a policy shift—it's a market destabilizer.

Geopolitical Risk Premiums: The New Normal

Geopolitical risk premiums have surged as far-right policies introduce unpredictability. The shows that industries like aerospace and rubber face steeper declines during crises, while agriculture benefits from reduced foreign competitionThe Fed - Measuring Geopolitical Risk Exposure Across Industries^[9]. In Europe, the ECB warns that far-right fragmentation could weaken the EU's ability to respond to crises like the Ukraine war or Gaza conflictsGlobal Risks to the EU: A blueprint to navigate the year ahead^[10].

For investors, the message is clear: diversify and hedge. Safe-haven assets like gold and U.S. Treasuries are gaining traction, while sectors tied to global supply chains—automotive, energy, and tech—face headwinds. .

Strategic Recommendations for Investors

1. Hedge Against Volatility: Allocate to defensive sectors (utilities, healthcare) and safe-haven assets.
2. Monitor Trade Policy Shifts: Watch for reshoring incentives in the U.S. and EU, which could boost domestic manufacturing but raise costs.
3. Diversify Supply Chains: Prioritize regions less exposed to far-right-driven protectionism, such as Southeast Asia.
4. Leverage Geopolitical Risk Tools: Use indices like BlackRock's GPR to assess sector-specific vulnerabilities.

The far-right's rise isn't a passing trend—it's a structural shift. Investors who ignore this risk do so at their peril. As the world fractures into trade blocs and ideological silos, adaptability will be the key to survival.