For much of the past three decades, American companies operating overseas benefited from a powerful assumption: that despite periodic political turbulence at home, the US remained a predictable and broadly reliable commercial partner. 

That assumption is now under growing strain in Europe, and the consequences are likely to extend well beyond the transatlantic relationship.

President Donald Trump’s increasingly aggressive foreign policy posture is doing more than unsettling markets or complicating diplomacy. It is reshaping how European policymakers assess American business as a whole. US companies are finding themselves exposed to political risk that originates not from their own conduct, but from Washington’s treatment of allies.

For European policymakers, the Greenland episode reinforced a broader concern that US trade and foreign policy are becoming more openly transactional, less constrained by established norms, and more willing to use economic leverage to pursue geopolitical goals. 

And now, there is the conflict in Iran.

Exclusive research conducted by Penta in late 2025 illustrates the scale of the reputational impact already underway before the most recent flare-up.

Among European Union (EU) policymakers, favourability towards US business fell sharply over the course of a year — declining 28 percentage points, from 72% to 44%. In Brussels, American firms dropped from the fourth most favourably viewed business community to ninth, ranking only marginally ahead of companies from China, Saudi Arabia and Russia.

For global businesses accustomed to viewing the EU as a stable and rules-based market, that shift should not be underestimated. Policymaker sentiment matters. It influences regulatory discretion, enforcement priorities, procurement decisions and, ultimately, the ease with which companies can operate across borders.

Malaysia sits at the intersection of these dynamics. As a regional headquarters for many US multinationals and a critical node in global supply chains linking Europe and Asia, it is especially exposed to changes in how jurisdictions assess political and reputational risk.

What is striking is not just the speed of the decline, but its breadth. US companies are increasingly being viewed through a political lens, regardless of sector or corporate behaviour. The distinction between American policy and American business, long taken for granted in Europe, is eroding.

The implications extend well beyond tariffs. While trade measures attract immediate attention, the more enduring risks are structural: heightened regulatory uncertainty, slower decision-making, supply-chain disruption and a more politicised environment for cross-border investment. 

For firms with long planning horizons, these factors can weigh more heavily than any single policy announcement.

Less visible, but equally important, are second-order effects on markets and consumers. As political tensions rise, public sentiment can shift quickly. A deterioration in brand perceptions, whether of US companies in Europe or European firms in the US, can affect demand, partnerships and pricing power even in the absence of formal trade barriers. Reputational headwinds are often harder to diagnose and slower to reverse than regulatory ones.

There are early indications that this process is already underway. Penta’s monitoring shows a marked increase in negative commentary about the US across European media channels in recent weeks. That matters because media narratives shape the broader information environment in which policymakers, investors and corporate stakeholders operate.

For Asean economies, the moment is particularly delicate. Many depend on deep commercial ties with both the US and Europe while seeking to avoid entanglement in great-power disputes. As economic relationships become more politicised, that balancing act grows harder and more consequential.

European institutions are now weighing their response. EU ambassadors convened an emergency meeting to assess options ranging from renewed diplomatic engagement to retaliatory tariffs. 

At the more forceful end of the spectrum lies the EU’s Anti-Coercion Instrument. Originally a mechanism designed to counter economic pressure from Russia and China, it is now increasingly discussed as a potential option in disputes with Washington.

The issue loomed over discussions at the World Economic Forum in Davos last month, where executives and policymakers did strike a conciliatory tone in private even as public confidence continued to erode.

For Malaysia and other highly open, trade-dependent economies, these developments warrant close attention. The global trading system depends not only on formal rules, but also on trust — trust that economic ties will not be routinely weaponised, and that businesses will not become proxies in geopolitical disputes. When that trust weakens among major economic blocs, the spillover effects are felt worldwide.

For American companies, the strategic lesson is increasingly clear. Political risk can no longer be treated as an external variable managed solely through government affairs or contingency planning. It is becoming a core reputational issue with direct commercial consequences.

Boards and senior executives should be asking three questions.

First, are they treating geopolitics in Europe as a reputational risk, or still primarily as a policy issue? US government actions are increasingly being attributed, fairly or not, to US companies themselves, with implications for trust, access and influence.

Second, do European stakeholders clearly understand who these companies are, and are not? Firms that have not articulated their independence from US foreign policy and their long-term commitment to European markets should assume others are shaping that narrative in their absence.

Third, are companies prepared for sustained friction rather than episodic retaliation? Even without new tariffs, firms may face slower approvals, tougher scrutiny and reduced goodwill. Over time, these frictions can quietly but materially affect performance.

For Asia-based leadership teams, this raises an additional question of how exposed regional operations and reputations are to political decisions made far beyond the region. Firms managed from Malaysia may feel the effects of European scepticism even when their Asia businesses remain commercially sound.

None of this suggests that Europe is disengaging from American business. The transatlantic economic relationship remains deep and mutually reinforcing. But the era of automatic goodwill is fading. In its place is a more conditional, more sceptical posture. One that demands active management.

For global businesses watching from Asia, the message is sobering. In a world where geopolitics and commerce are once again tightly intertwined, reputational capital is becoming as important as market access, and far harder to restore once lost.

Shawn Balakrishnan is a partner at Penta Group, a global advisory firm specialising in stakeholder intelligence and geopolitical risk. He works with multinational companies and policymakers on managing political and reputational risk.