Trump Is Ushering In a More Transactional World

Pundits reflexively see Trump’s nakedly transactional nature as an attribute that might terrify other global stakeholders. The reality is more complicated. States that have come to rely on U.S.-backed alliances will certainly need to recalibrate. Global markets will experience turbulence. But countries and companies will also sniff out opportunities. The ones with the means to do so will look to exploit the president-elect’s tendency to prioritize his self-interest. As Trump begins a second term, world leaders and corporate executives are more prepared than they were in 2016. They have not only learned lessons from his first stint in the White House but also since pored over abundant reporting about Trump’s non-traditional leadership style, his what’s-in-it-for-me mindset, and his reliance on family members for dealmaking.

Trump may retain his ability to shock, but the world is no longer surprised by an opportunistic United States. The post-World War II order that managed the globe for seven decades had already begun to fray before Trump’s first term. Countries that aspired to abide by an equal, rules-based international system have watched as Washington has resisted sharing power in multilateral bodies such as the United Nations, the World Bank, and the International Monetary Fund. China’s unprecedented rise, along with a growing global disillusionment with free trade and globalization, has turned the United States toward protectionism and made it less likely to privilege norms and professed values when they conflict with interests. This trend was already underway, perhaps most visibly since the start of the Iraq War two decades ago. Trump’s return will only accelerate a move toward a more transactional global system.

Either way, Europe must respond to a changing relationship with the United States. Beyond encouraging European armies to beef up their militaries, Brussels is already preparing to buy American to make Trump feel as though he’s winning. In a recent interview with the Financial Times, European Central Bank President Christine Lagarde affirmed this plan by suggesting that Europe should employ a “cheque-book strategy,” in which it increases purchases of U.S. exports. Similarly, Ukrainian President Volodymyr Zelensky has proposed giving U.S. firms special access to the country’s rare minerals to appeal to Trump’s quid pro quo mentality.

The larger the economy, the more touchpoints for give-and-take.

While countries in Europe are making the best of the circumstances presented to them, there’s little doubt they’d rather deal with a different president in the White House. According to a poll of 30 countries and territories conducted by the Economist in July and August, resounding pluralities in Britain, France, Germany, the Netherlands, and Spain preferred a Democratic winner over a Republican one. And it’s not just Europe. Respondents from two other countries that have signed U.S. defense treaties—Japan and South Korea—also marked a preference for a candidate other than Trump.

In contrast, a plurality of respondents from emerging markets such as Egypt, India, Indonesia, Nigeria, Saudi Arabia, Turkey, and Vietnam expressed a preference for a Republican candidate over a Democratic one. This shouldn’t be surprising. First, none of them have defense agreements that Trump could threaten to abandon. And second, while these countries acknowledge the risks under a Trump presidency, they also see abundant opportunities. Many of these rising economies have grown tired of Western lectures on human rights and democracy and are instead itching to deploy their growing clout to strike the best deals for themselves.

“Republicans place more importance on a convergence of interests than coalescing values,” said Syed Akbaruddin, a former Indian diplomat who served as New Delhi’s ambassador to the United Nations during Trump’s first term. “As a neo-realist power, India feels it can deal with a transactional Trump. If it’s a question of give-and-take, we know we can give some and take some.”

The larger the economy, the more touchpoints for give-and-take. One element of Trump’s style that seems to lend itself to transactions is his inclination to pick family members in official roles. Daughter Ivanka and son-in-law Jared Kushner played significant roles in domestic and foreign policy in Trump’s first term. Trump has now named Jared’s father, Charles Kushner, as his ambassador to France and Massad Boulos, father-in-law to Tiffany Trump, as his Middle East advisor.

There’s a track record of countries reaching out to family members to draw closer to Trump himself. Six months after leaving the White House, Jared Kushner’s private equity firm received a $2 billion investment from a Saudi sovereign wealth fund controlled by the country’s crown prince, Mohammed bin Salman. The seed money was approved despite objections from the fund’s due diligence committee, according to documents seen by the New York Times. One way of interpreting the decision is as an investment in a member of the future U.S. president’s inner circle.

India tried a different approach during Trump’s first term as it scrambled to get on an inside track. In November 2017, Prime Minister Narendra Modi rolled out a red carpet to welcome Ivanka Trump to Hyderabad for a business summit focused on empowering women. No expense was spared: Roads were repaired, pavements cleaned up, and curbsides painted as the city put on a charm offensive for the president’s daughter, with adoring TV reports on the country’s government-friendly cable channels. The entire operation was designed to catch the transactional Trump’s eye, a leader known to enjoy not only pomp and circumstance but also favorable media coverage.

Brian Stauffer illustration for Foreign Policy

Tariffs are likely to play an outsized role in Trump’s negotiating tactics; he has already deployed them in the past as a tool to bludgeon China and has more recently described “tariff” as “the most beautiful word in the dictionary.” What is unclear is how they will serve U.S. interests. In the short term, tariffs function mostly as a sales tax, with immediate inflationary impacts that are likely to affect lower-income families more acutely than richer ones. Economists linked to Trump argue that over time, tariffs could raise immense amounts of revenue, funding tax cuts and encouraging businesses to produce locally, thereby correcting some of the key problems they diagnose in the U.S. economy. Even if those assessments have merit, they are inherently longer-
term projects. Yet, in the short term, tariffs are likely to cause two things Trump loathes: inflation, as mentioned, but also panic in the stock market. Paradoxically, Trump’s favorite tactic is likely to be the one he may not have the patience to see through. And by all accounts, Beijing has a sophisticated understanding of this dynamic and is therefore unlikely to react passively to tariffs designed to damage its economy. If China can contribute to a stock market downturn, it likely will, knowing how much Trump will dislike it. And while Beijing has reduced its exports to the United States, it retains significant leverage over key U.S. companies such as Apple and Tesla, which continue to run large manufacturing operations in China.

Countries from the Maldives to Mauritania lack the size, strength, or salience to lobby for preferential treatment in the event of blanket global tariffs.

Spare a thought for a final group of countries that stands to lose the most in the likely scenario where Trump shuns multilateralism and prioritizes bilateral transactions: the more than 100 nations with populations under 10 million. Countries from the Maldives to Mauritania lack the size, strength, or salience to lobby for preferential treatment in the event of blanket global tariffs or the Trump team’s search for favorable deals on the global stage. A majority of these countries are developing economies spread out across the global south, generally flying under the radar of great-power politics.

“Smaller countries—by their very definition—would like a world with more rules. They don’t have the leverage larger countries have,” said Akbaruddin, the former Indian diplomat. And in many ways, smaller and lower-income countries have never needed more leverage. After the peak years of free trade and globalization in the latter part of the 20th century, and the China-led commodities boom at the start of the current century, there is no longer a rising tide lifting all boats. Instead, there’s the existential threat of climate change, which smaller countries do not have the funds to build defenses for; a world that has become more protectionist, prioritizing large-scale industrial policy and domestic production, and in which smaller countries lose out; and growing global conflict, leading to mass migration and instability in the food and commodities markets, which tend to generate the biggest disruptions for the tiniest nations. In each of these cases, a more transactional global order re-creates the scenario Thucydides once described: The strong do what they can, and the weak suffer as they must. If the law of the jungle dominates statecraft, where does that leave the art of diplomacy?

Yet while he was fond of promising that his White House would defend freedom and uphold universal rights, Biden found himself in the awkward position of visiting Jeddah in the summer of 2022 and fist-bumping Mohammed bin Salman, whom he once branded a “pariah” for his role in the murder of the dissident Jamal Khashoggi. Riyadh’s muscle in the oil markets turned out to be more valuable than Biden’s idealism. More recently, Biden’s seemingly blind support for Israel’s war in Gaza—a lonely stance in the very multilateral organizations the United States helped create—furthered a global sentiment that Washington had one set of rules for friends and another for everyone else.

Biden was also not immune from nepotism. After repeatedly denying he would pardon his son Hunter for his three felony convictions, Biden did just that after his final family Thanksgiving dinner as president. Once again, Biden’s lofty words had come back to bite him.

Trump won’t have these kinds of problems. Global expectations of him are lower to begin with. Having won a popular vote while making clear he will put America first—at all costs and unconstrained by concerns about human rights, values, the climate crisis, or migration—Trump will assume he has a free pass to pursue what he sees as being in Washington’s brazen interest. For much of the rest of the world, this won’t feel like a massive course correction. Instead, it’ll confirm a collective instinct that the old world order is no longer fit for purpose.