‘Less predictable’: ANZ’s geopolitical expert on the end of the era of stability

ANZ head of geopolitical risk Cameron Mitchell says businesses need to shift their mindset around “uncertainty” as the world heads into a new, more unstable phase.

It’s less about dealing with the uncertainty we face and more about “tolerating the level of uncertainty,” he says.

“Because I think we are at the end of a decades-long stable geopolitical order.”

Mitchell, a former Australian intelligence worker, produces a geopolitical heatmap for the ANZ board of directors every quarter.

He was in New Zealand last week to brief the local executive team and clients on the geopolitical outlook.

“Things are going to get less predictable, and that’s not necessarily all a net negative,” he said.

“I think there are opportunities and risks for businesses in this new environment.”

Firms would need to have robust risk management processes in place and have the confidence to operate effectively in an environment where constant change was the norm.

“There are opportunities there if businesses are mindful of the risks and obviously bold enough to seize them,” he said.

What was happening with US trade policy and tariffs was the most pressing example of geopolitical risk right now, he said.

“I don’t want to make light of the tariff impact, of course it’s going to be material for a lot of a lot of customers both inside ANZ and for businesses outside, but I think we often get lost in the tariff narrative, so what we’re trying to do is sort of look up a little bit.”

Australia and New Zealand were really good examples of countries that relied on a free trading system, he said.

“From that standpoint, clearly tariffs are potentially going to be an impediment, but I think we have seen recently US and Chinese moves away from extreme tariff positions.”

“We saw those 145% tariff levels being reduced by the US and China. Some people have described it as a sort of heading towards mutually assured economic destruction and both sort of leadership groups deciding that that was probably not in their best interests.”

That was an important move, Mitchell said.

“I don’t think we’re going to see tariff positions at those extreme levels again, because of concerns that governments have over what the long-term impacts are.”

Some tariffs would probably stay in place, but they would be at lower levels than were feared.

 The US policy stance was creating new opportunities for trading nations, he said.

“We’re seeing at the same time other countries doubling down on free trade agreements. We’re seeing more engagement between the Europeans and the UK, Australia and India, New Zealand and India ... Japan, South Korea.”

“There are still a lot of trading partners.”

A recent OECD report warned that the US tariff policy would mean lower global growth.

But Mitchell noted there were also a lot of OECD nations looking to “redouble their commitments to free-trade” in response.

“That’s probably going to offset some of the impacts that other markets have when it comes to their tariff policies,” he said.

It was important to recognise that tariffs were a tool for the Trump administration to achieve a certain policy goal, he said.

“The way we’re looking at it is that the Trump administration has a sense that the US is spending too much at the moment and it’s producing too little, and it’s trying to address those imbalances.”

While talk of trade war has dominated geopolitical risk, Mitchell is well aware real war remains a threat.

However, with regard to the Pacific and tensions between the US and China, he is optimistic.

“I haven’t seen any indications that the US and China are looking to unravel their relationship in any concerning way,” he said.

“Clearly there are some sort of structural challenges within the relationship,” he said.

“They will disagree on a number of security issues, there are concerns around the economic space, but I don’t see either side looking to really unravel that relationship to the point of an uncontrolled deterioration in relations.”

Mitchell noted the willingness expressed last week on both sides for Donald Trump and Xi Jinping to have a conversation.

“I think that would suggest that both sides are looking to stabilise the relationship. So right now it’s reasonably promising.”

Liam Dann is business editor-at-large for the NZ Herald. He is a senior writer and columnist, and also presents and produces videos and podcasts. He joined the Herald in 2003.