The resurgence of transactional diplomacy is reshaping the foundations of international cooperation. Under the second tenure of President Trump, the US resurrected the use of tariffs, withdrew from multilateralism, and made rhetorical territorial assertions. Global politics is still unfolding as NATO, other nations, and regional partnerships navigate the reorientation of international relations which revolve around the US. The question arises as to whether emerging and middle powers can fill the gaps while adhering to the core principles of global politics or if it will enter a period of controlled decline through increasingly nationalist pursuits.
Driven by a growing goods trade deficit of $235.6 billion with the European Union in 2024, Trump has intensified tariffs, arguing that trade imbalances, particularly in sectors such as automotive exports, justify protectionist measures. Other than China and Mexico, even a long-standing US ally, Canada, now faces tariffs. The responses have been marked by discomfort and disapproval. Consequently, the WTO is facing normative pressure in the wake of these trade wars, and new states have to choose whether to rely on a new US-leveraged global trade order or to seek economic alternatives in the face of deteriorating reciprocity.
In his recent remarks, Trump asserted that NATO member states “must pay or face non-defense.” At the 2014 Wales Summit, NATO pledged a 2% defense spending target, but it failed to meet it over the subsequent decade. NATO allies are now concerned that they may be abandoned, and the need for fair burden sharing has been reasserted by the statement. Taking this realist viewpoint, this appears to be a recalibration towards strategic efficiency rather than a retreat from institutionalism.
While commenting about taking over Greenland, Canada, and the Panama Canal, Trump has used a similar tone. Despite yielding no significant consequences and being dismissed by the affected states, such naivety towards international norms of respecting national sovereignty carries the risk of reputational damage.
Since becoming president, Trump has opposed the core tenets of liberal internationalism, which rely on international trade and multilateralism. The administration’s executive order mandates a comprehensive review of “all international organisations” of which the US is a member and “all conventions and treaties” to which it is a party, potentially leading to withdrawals. Under this policy, Trump sought to reexamine national interests, which led to discussions about how multilateralism survives in new global conditions.
The US is also drifting away from international development responsibilities and has decreased spending on basic humanitarian and healthcare programs by $54 billion. The budget cuts led to the release of 60,000 employees, resulting in struggles to deliver basic services worldwide. USAID budget cuts affect both job stability and services related to education, food security, disease control, and maternal healthcare. The United States is testing new limits on its responsibility to share resources with other nations. The WHO has reduced its operational capabilities due to an 18% decrease in US funding.
The United States stopped funding the Loss and Damage Fund, resulting in a $17.5 million reduction from a worldwide climate compensation program. It will negatively impact poor nations that had minimal responsibility for contributing to the climate crisis. Nonetheless, emerging and middle powers working together can draw a fair path toward the future despite these complex issues.
There are currently many examples of successful partnerships that have emerged above and beyond the US financial leadership, including China’s Belt and Road Initiative and India’s African digital initiative. Pakistan is also participating in building decreased US funding cross-border trade avenues to open the sea passage for the trade of goods and services for its Central Asian, Middle Eastern and Southeast Asian partners. States can build partnerships based on mutual benefits, economic complementarity and respect for sovereignty rather than old patterns of political influence and financial dependency.
Liberal institutionalism has regained attention in the milieu of American transactionalism in a progressively multipolar global order. The regional bodies can offer platforms of extended cooperation. As a starting point, forums such as ASEAN, SELAC, the African Continental Free Trade Area, and EU bodies can establish new multilateral principles. From establishing modern e-commerce trade rules to seeking consensus in developmental and humanitarian cooperation, the regional blocs can leverage strategic regionalism.
Summing up, the American realignment of its relationships with other states is based upon the need for strategic economic and diplomatic considerations. Apart from negotiating with the “America First” proponents, international institutions and nations can seize this sporadic opportunity to redefine their roles within the global system. The present situation creates a chance to transform multilateralism into an expanded and cooperative system despite active rivalries and diplomatic tensions between countries. While the path ahead is uncertain, the growing relevance of emerging and middle powers can be reimagined through distributed leadership grounded in mutual respect, regional cooperation, and effective contributions that strengthen global governance.
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