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Are we now in an era of commercial diplomacy?
President Trump’s tariff and trade policies have unsettled global markets and policymakers in recent years.
However, taking a longer view is important. Since the Global Financial Crisis, tariffs and other forms of protectionism have been rising higher, and the direction of travel does not appear to be reversing.
This isn’t just about America
Global protectionism rising post-GFC:
Number of import curbs in force
Source: Global Trade Alert. As at 31 December 2024. Includes tariffs, antidumping duties, import quotas and other restrictions
There is an argument that the US is leading the world into what we might call an era of ‘commercial diplomacy’.
There is a growing distrust from some in the West to many of the institutions and policies built in the post-World War II era. We see political and social challenge to things like overseas aid organisations, Nato, global trade policies and the United Nations.
In their place, tariffs, companies and trade deals are the tools being used for international tradecraft.
The US as an emerging ‘platform state’
One of Baillie Gifford’s private company holdings, autonomous drone company Zipline, is the clearest and most recent example.
Under its new State Department agreement, the Trump administration is funding $150m of Zipline equipment and infrastructure in Rwanda, Ghana, Nigeria, Kenya and Côte d’Ivoire, after having closed the US Agency for International Development (USAID).
The State Department releases funds only when specific delivery targets are met. After that, African governments pay Zipline for each delivery they receive in a pay-for-performance model that could unlock $400m if successful.
A similar model is emerging in the technology sector.
Nvidia and Advanced Micro Devices (AMD) have agreed to pay 15 per cent of their China AI-chip revenue to the US government, via the Commerce Department, in exchange for the export licenses required to sell restricted products abroad.
This arrangement is a commercial permission with a fee, distinct from bans or subsidies. Tariffs sit alongside these licensing rules, the idea being to steer supply chains by raising costs for strategic rivals and giving preferential access to selected partners.
Under the current administration, the US appears to be evolving from a donor state to what you could call a platform state – a government that procures services from private operators rather than running programmes directly and uses tariffs and export rules to influence where those operators invest.
Instead of wiring grants to the United Nations or USAID, it buys capacity from logistics and technology firms. Instead of prohibiting AI chip sales to China outright, it monetises the scarcity created by export controls. Tariffs and revenue-sharing frameworks push and pull factories, supply chains and capital toward preferred jurisdictions.
In practice, this is commercial diplomacy: foreign policy carried out through corporate capability.
What does this mean for the world and for US growth investors?
Zipline offers a glimpse of the positive potential.
Its drones already deliver blood and essential medicines across Rwanda and Ghana, turning hours-long journeys into minutes. In regions with weak infrastructure, that speed saves lives.
Estimated blood delivery times to Rwandan Hospitals (2017-2019):
Over a 12-month period, drone delivery reduced blood, platelet, and plasma expirations by 67 per cent.
Source: The Lancet
Crucially, governments pay for a service they can measure. If Zipline underperforms, they can theoretically change providers; if it succeeds, they gain durable infrastructure. This is aid delivered through service-level agreements (SLAs) rather than traditional grants.
These commercial tools also export culture. US companies shape expectations among suppliers and regulators wherever they operate. Once embedded, these companies influence how systems run, and could encourage alignment with a US ecosystem, much in the same way as US ‘exports’ of institutions of Bretton-Woods and beyond tried to do in the past.
From our perspective, this doctrine shift (if it is one at all) presents both opportunities and complexities.
The opportunity aligns with a familiar pattern: a handful of exceptional companies often generate a disproportionate share of long-term market wealth.
When Washington relies on Zipline in Africa or Nvidia in China, it supports these firms’ international expansion and importance as global infrastructure. Their addressable markets widen to include consumers, enterprises, and governments that shape trade rules and investment flows.
But the model introduces new risks. The checks and balances of formal intergovernmental and international institutions are weakened. This increases conflicts of interest and corruption risks.
Will cash flows now depend more on executive orders, export licences and evolving tariff schedules? Factors other than fundamentals could influence long-term share price returns.
Further, the revenue shares and tariff adjustments themselves are modest for large, diversified companies.
The real test is whether a company has the culture, resilience and adaptability to operate in a world where governments might increasingly use them as a foreign policy tool.
This is just a hypothesis
Commercial diplomacy is not a formal published doctrine.
However, some patterns are emerging and so our analysis of the resilience of companies to navigate the short term and adapt to the long-term, and of their cultures to not only have business intelligence, but an increasing level of political intelligence – feels more important today than ever.
Risk factors
The Funds are distributed by Baillie Gifford Funds Services LLC. Baillie Gifford Funds Services LLC is registered as a broker-dealer with the SEC, a member of FINRA and is an affiliate of Baillie Gifford Overseas Limited. All information is sourced from Baillie Gifford & Co unless otherwise stated.
As with all mutual funds, the value of an investment in the Fund could decline, so you could lose money. International investing involves special risks, which include changes in currency rates, foreign taxation and differences in auditing standards and securities regulations, political uncertainty and greater volatility. These risks are even greater when investing in emerging markets. Security prices in emerging markets can be significantly more volatile than in the more developed nations of the world, reflecting the greater uncertainties of investing in less established markets and economies. Currency risk includes the risk that the foreign currencies in which a Fund’s investments are traded, in which a Fund receives income, or in which a Fund has taken a position, will decline in value relative to the U.S. dollar. Hedging against a decline in the value of currency does not eliminate fluctuations in the prices of portfolio securities or prevent losses if the prices of such securities decline. In addition, hedging a foreign currency can have a negative effect on performance if the U.S. dollar declines in value relative to that currency, or if the currency hedging is otherwise ineffective.
For more information about these and other risks of an investment in the Funds, see "Principal Investment Risks" and "Additional Investment Strategies" in the prospectus. There can be no assurance that the Funds will achieve their investment objectives.
This communication was produced and approved in December 2025 and has not been updated subsequently. It represents views held at the time of writing and may not reflect current thinking.
This communication contains information on investments which does not constitute independent research. Accordingly, it is not subject to the protections afforded to independent research and Baillie Gifford and its staff may have dealt in the investments concerned.
As at December 2025, Baillie Gifford held NVIDIA and Zipline. A full list of holdings is available on request and is subject to change.
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