Tag Archive for: Donald Trump

Trump brings AI, not democracy, to the Middle East

US foreign policy no longer pursues strategic influence through ideological alignment but through advanced technological primacy and infrastructural reach.

When US President Donald Trump returned to the Middle East earlier this month, he did not arrive bearing promises of democracy, stability or shared values, unlike previous administrations. Instead, he brought semiconductors, AI data centres and tech CEOs.

The centrepiece of the trip was a sweeping deal to deliver hundreds of thousands of Nvidia’s most advanced chips to the United Arab Emirates and Saudi Arabia, backed by plans to construct the largest AI campus outside the United States. For decades, US foreign policy has sought to export freedom and democracy. Now, as one US official noted, Washington wants to ‘spread American AI’.

The abrupt reversal of Biden-era restrictions on chip exports to the Gulf shows that Washington is adjusting to a rapidly shifting geopolitical and geoeconomic terrain. In this situation, the Gulf can leverage its capital and strategic positioning, potentially changing the trajectory of US pre-eminence in the region.

This shift is being driven, in no small part, by China. In early 2025, Beijing unveiled DeepSeek’s R1 large-language model, reportedly trained at a fraction of the cost of US-based OpenAI’s ChatGPT. But its deeper significance to the non-Western world lies in the fact that AI power can now be scaled strategically, affordably and beyond the boundaries of Western infrastructure. In Gulf capitals, the emergence of Beijing’s AI was read as a geopolitical signal that China presented an alternative to dependence on the West, meaning it could also be used to hedge against potential US tech export restrictions.

Some Western narratives portray Trump’s willingness to share advanced technologies as a generous concession. But it is more likely an effort to entangle Gulf states in US-led technological ecosystems. This entanglement involves anchoring US cloud infrastructure in the region, supplying chips that require US servicing, and promoting platforms that lock partners into proprietary software environments. As the US’s petrodollar-enabled power is receding, this ultimately preserves Western influence by making access to critical infrastructure conditional and asymmetrical. Washington acted to bind the region to US systems only after China emerged as a viable alternative for the Gulf and before regional states thoroughly drifted into competing technological spheres.

The Gulf is not blind to this reality and is not waiting to be persuaded. DeepSeek is already integrated into ARAMCO data centres in Dammam. Closer integration with Chinese systems gives Middle Eastern states leverage and reduces the incentive to be a passive recipient of technology or a subordinate node in Western-led security frameworks. Instead, Gulf states are actively shaping their own roles as financiers, developers and brokers in the global AI economy. An understated dynamic is that much of Silicon Valley’s innovation pipeline is now being significantly bankrolled by Gulf sovereign wealth funds.

In 2025, Saudi Arabia’s Public Investment Fund increased its shares in Amazon by more than 50 per cent. Abu Dhabi’s Mubadala Investment Company, one of the emirate’s three major funds, has emerged as a major US tech backer. Through MGX, an Abu Dhabi-based AI vehicle, Mubadala co-invested US$30 billion alongside Microsoft and BlackRock, and joined OpenAI’s US$6.6 billion raise in 2024. These funds are now embedded in the very infrastructure that sustains Western tech innovation ecosystems.

In that light, Trump’s entourage of venture capitalists and platform CEOs offering access to cutting-edge technology should not be viewed as an end in itself. The advanced chips pledged to Emirati and Saudi firms are rather a means to an end; they are the cost of retaining access to Gulf capital.

This recalibration is particularly stark when contrasted with how the US engages its smaller partners. In the Pacific islands, for instance, Washington has offered subsea cable infrastructure on the condition that they reject Chinese terrestrial networks or risk disconnection from the broader system. But that logic fails in the Gulf because the Middle East’s economic situation gives it greater negotiating power.

Some might still believe that the US can reassert its model of AI exceptionalism. But the outcomes of this trip suggest the US accepts that this is no longer the case. Instead, Washington under Trump is showing that it will share, compromise and, when necessary, concede if it ultimately results in the ‘best’ deal for the US economy. Australia and other US allies should ensure that such deals are not just economically rewarding but also contribute to their security.

The recent developments in the chip domain do not necessarily indicate the collapse of US power, but they are nevertheless transformational. The US remains a formidable actor, but it is no longer the sole architect of a new world order underpinned by technological supremacy. And if the US must hand over the crown jewels of its AI economy to avoid being outflanked by emerging tech powers, and to stay relevant, so be it. That may be the price that needs to be paid.

Trump’s science cuts threaten public research data

US President Donald Trump’s cuts to scientific research create anxieties about the accessibility of research data. Scientists worldwide fear websites and data sets hosted in the United States will be deleted or decommissioned. While private initiatives in and outside of the US have emerged to transfer and archive data elsewhere, a more concerted approach is needed to safeguard globally relevant data holdings, especially when our strategic policy is meant to be data-driven.

The Trump administration has been repurposing US scientific research to help maintain the US’s economic, military and technological advantage. Trump’s team is relentlessly focusing on critical and emerging technologies to boost US defence, including AI, quantum information science, biotech, semiconductors and nuclear technology.

The administration has also started divesting from research it deems irrelevant, distractive or counterproductive, such as climate science and clean energy, diversity and gender equity, health and disease control, and environmental policy. Federally funded research groups, functions and programs are being closed. Continued and unhindered access to research and measurement data is at risk.

This new approach may be defensible domestically, although the dismissal of the national archivist and NASA’s closing of the Office of the Chief Scientist and Office of Science, Policy and Strategy are hugely concerning. Much of the world’s most important research, while conducted through US institutions and with data hosted on US soil, involves substantial contributions from global partners. It is shared international knowledge.

Many affected research outputs are important to the US’s most active and trusted science and technology partners, including Australia. These radical divestments risk ceding stewardship of significant research data to competitors. China already sees climate science, weather monitoring and space-based monitoring as an area it can step into.

The National Oceanic and Atmospheric Administration (NOAA) is now in the administration’s sights. The Heritage Foundation’s Project 2025 report accuses NOAA of creating the ‘climate change alarm industry’. The 2 May budget proposed suspending NOAA’s world-leading centres for research on climate, weather and marine resources. Instead, the agency is expected to manage the licensing for deep seabed exploration.

The agency is retiring some 20 data sources containing live metrics on earthquake, marine, coastal and estuary science. Global climate science relies on NOAA’s data for measurements, trend analyses, weather forecasting and disaster preparedness. The data is also important to national security, due to its use in crisis management and military operations in the Indo-Pacific and in Europe.

NASA is another agency in trouble. Three of its main Earth-observing satellites are in urgent need of replacement. This includes the Aura satellite that hosts the Ozone Monitoring Instrument (OMI), which measures changes to the ozone layer. The OMI project—a collaboration between NASA, the European Space Agency, European science and technology institutes, funding schemes, and national meteorological institutes—is an international undertaking. It’s now feared that 20 years of data-gathering will be discontinued and retired.

The US Centers for Disease Control and National Institutes of Health (NIH) are also affected. Almost two dozen repositories of research and public health data are marked for review. While other government datasets or webpages, including NASA’s and NOAA’s, could be transferred, NIH data requires a cumbersome disclosure review process.

Beyond raw data, there are concerns about aggregate databases such as NASA’s repository of Astronomy and Physics literature (hosted at Harvard but financed by NASA) and PubMed, a database hosted at NIH with millions of references for biomedical sciences.

This disconnection from scientific data will affect Australia. For instance, for Australia’s Bureau of Meteorology, ‘international partnership and cooperation is of critical importance […] in technology development and data exchange’ and involves US institutions such as NASA and NOAA. The bureau relies on ‘free access to data from around 30 satellites, operated by Europe, the US, Japan, India, and others.’ Similarly, the agency services assist the Australian Defence Forces and the Defence Science and Technology Group in weather forecasting, advanced defence science, and planning of land, aerial and marine operations.

AUKUS is also involved, given the partnership’s focus on the subsea domain for future operations and the joint development of defence tech capabilities.

Grassroots initiatives are already underway, aiming to safeguard research and data. Safeguarding Research & Culture, for example, was established in February after Trump signed a series of executive orders related to research agencies. The community seeks to create ‘an alternative infrastructure for archiving and disseminating of cultural heritage and scientific knowledge’. In Switzerland, the University of Geneva issued advice to staff to reassess the use of Open Science Framework, a commonly used platform, and to redirect data to servers outside of the US.

But if Trump’s administration continues at the same speed and relentlessness, these actions may be too little, too late. Mitigating the most dramatic consequences will require coordinated effort from like-minded governments.

In its 2030 cybersecurity strategy, the Australian government committed to the protection of ‘datasets of national significance’. This policy initiative should be expedited and should include overseas datasets.

But this will take time to come into effect. In the short term, the government should check in with federal, state and territory agencies, as well as universities, and do a stocktake of current dependencies on US and US-hosted scientific data. It should establish a point of contact to which researchers can report issues, concerns or rescue initiatives. Australia could also work with the US’s other science and technology partners to negotiate a transition period with the Trump administration, developing a handover plan through which Australia could become a data safe-haven.

Mike Copage, head of ASPI’s Climate program, and ASPI data scientist Jenny Wong-Leung contributed to this article.

Stress-testing US soft power

The father of soft power and smart power has died, just as the United States has been giving those concepts a deathly stress test.

Whereas US President Donald Trump thinks hard power is all he needs, Joseph Nye broadened the world’s understanding of power.

Nye, who died last week at the age of 88, wrote that hard power rested on command, coercion or cash—‘the ability to change what others do.’ Soft co-optive power, Nye wrote in 1990, shaped what others wanted through attraction.

Soft power persuades volunteers and believers, while hard power issues orders. Nye stood with Talleyrand, who advised Napoleon: ‘You can do anything you like with bayonets, except sit on them.’

Trump has taken to heart Machiavelli’s advice that it’s better for a leader to be feared than loved. Nye believed it was best for a leader to be both.

Nye always said that good foreign policy needed both soft and hard power, and he combined them in the concept of ‘smart’ power: ‘If a state can set the agenda for others or shape their preferences, it can save a lot on carrots and sticks. But rarely can it totally replace either. Thus, the need for smart strategies that combine the tools of both hard and soft power.’

The Harvard University professor despaired at how Trump was ‘liquidating’ US soft-power reserves. The major elements of a country’s soft power, Nye argued, were its culture (‘when it is pleasing to others’), its values (‘when they are attractive and consistently practiced’), and its policies (‘when they are seen as inclusive and legitimate’).

Trump attacks on all three fronts. In the words of The Economist, the president leads ‘a revolutionary project that aspires to remake the economy, the bureaucracy, culture and foreign policy, even the idea of America itself’.

US alliances are shaken by Trump’s cavalier coercion. He zig-zags on Ukraine, often leaning towards the Russian strongman he admires. US foreign aid is smashed. The nation that set the model for free and independent journalism with its First Amendment now guts its international broadcaster and threatens its own journalists.

Trump’s international view is imperial, seeking to carve the world into spheres of influence. His raw realism has no veneer of manners—the Mafia Don makes demands that others can’t refuse. The US’s tariff campaign is driven by the Don’s demand for a deal that delivers profit.

Wielding US hard power, Trump imposes a huge stress test on US soft power and the values America has long expressed.

With an experiment, you draw conclusions from the results. The early returns from the Trump test are negative. Certainly, he is good at smashing things, but Americans can’t see much being built, as Sam Freedman notes:

Donald Trump has the lowest approval ratings of any President after 100 days. He’s even beating his own woeful first term numbers. His signature tariffs policy has been a disaster, and polls terribly. Confidence in the economy has collapsed. Even on immigration he has negative numbers.

The Trump effect on Australian opinion is similar. Previews of the 2025 Lowy poll show that Australians’ trust in the US to act responsibly has fallen by 20 percentage points, with only one third of Australians having any level of trust in the US—the lowest in the history of the survey. While having no faith in Trump, Australians still cling to the alliance, with 80 percent saying the alliance is ‘very’ or ‘fairly’ important for Australia’s security. Maybe Australians got the memo about the difference between hard and soft power.

Donald Trump’s actions prove he’s no conservative. He has no understanding of how a foreign policy realist sees the mix of forces and interests, capabilities and ambitions, or the way values and morals shape what a nation does in the world. For such thoughts, turn to Nye. A good place to start is The Strategist, which published 100 of Nye’s columns during the last decade. They’re all here.

Start with Nye’s March column, a meditation on how empires and states need both soft and hard power. The state needs legitimacy as well as legions.

The column touches on the fear Nye expressed in the memoir he published last year: that domestic change in the US could endanger the American century. Even if US external power remains dominant, a country can lose its own virtue. As Nye concluded in his column on Trump’s threat to the international system:

If the international order is eroding, the US’s domestic politics are as much of a cause as China’s rise. The question is whether we are entering a totally new period of US decline, or whether the second Trump administration’s attacks on the American century’s institutions and alliances will prove to be another cyclical dip. We may not know until 2029.

Sri Lanka holds its own amid economic uncertainty

In recent months, Colombo has faced two sharp blows from its Western partners. First was the surprise cut to USAID funding, amounting to approximately US$53 million. Then came a 44 percent tariff on apparel exports to the United States—Sri Lanka’s largest export market. Both moves came without warning and show the US not separating friends from foes, damaging the bilateral relationship and the US’s reputation.

Sri Lanka is discovering that even its most trusted partners can act unpredictably when domestic politics take precedence. Its experience with opaque Chinese loans was one kind of risk, but the recent moves by its democratic partners are another.

As Sri Lanka absorbs the shock of steep new tariffs, the US has carved out exemptions for certain Chinese electronics, highlighting how trade decisions are often shaped more by domestic cost concerns than by supporting partners. This sends a troubling message. The US urges countries, including Sri Lanka, to reduce their dependence on China but then withdraws its support and imposes trade barriers. If Washington wants alignment in the Indo-Pacific, it must act like a consistent partner, not an erratic one.

To its credit, Sri Lanka is not passively absorbing the fallout. Since the 2022 economic crisis, the government has moved to diversify partnerships and reset foreign policy. The current administration, elected in late 2024, has taken a more pragmatic and reform-oriented approach to diplomacy. For example, Sri Lanka and Thailand recently signed a free trade agreement. Colombo has also signalled its intent to join the Regional Comprehensive Economic Partnership and has deepened ties with India, Japan and the Middle East.

These moves follow a broader recalibration that began after years of dependency on China for post-war infrastructure financing, a relationship that eventually triggered a debt crisis. Colombo has since completed important debt restructuring, restored modest growth and brought inflation under control.

Crucially, it is doing this while maintaining a non-aligned posture. Sri Lankan President Anura Kumara Dissanayake has reiterated that Sri Lanka is ‘not pro-Indian or pro-Chinese’ but firmly focused on protecting its own interests. That philosophy has translated into action. Colombo has paused military visits from Chinese research vessels to ease Indian concerns while still welcoming Beijing’s investment in more commercially viable, equity-based projects. The government is now prioritising transparency and risk mitigation over opaque mega-deals.

India, meanwhile, is expanding its presence with its own strategic interests in mind. For example, Indian Prime Minister Narendra Modi’s visit to Colombo in April brought renewed momentum to the long-stalled Trincomalee energy hub.

India is also backing a 120-megawatt solar power plant in Sampur, on a site once offered to a Chinese-backed coal venture that was later shelved due to environmental and strategic pushback. This clearly shows a shift in the energy landscape that Australia should consider, given its pursuit of solar power almost entirely relies on China.

Sri Lanka-India defence ties are deepening too, through joint patrols, training and Sri Lanka’s participation in the Colombo Security Conclave.

These developments don’t mean Sri Lanka is decoupling from Beijing. China remains a key creditor and infrastructure partner, though its role is evolving. Due to its experiences with the Belt and Road Initiative and Hambantota port, Colombo realises it cannot depend only on China. And Beijing is now favouring smaller, commercially viable projects and equity-based investments over the debt-heavy megaprojects of the past, in part because of public and private criticism.

Crucially, India is a close neighbour and a bridge to other Indo-Pacific powers. The US remains relevant, but its recent unpredictability—cutting aid, raising tariffs and exempting China—is eroding trust.

What’s different this time is that Sri Lanka isn’t just reacting. It’s acting. The government is rolling out institutional reforms, including anti-corruption efforts in the customs department and pledges to repeal the Prevention of Terrorism Act. These steps are essential not just for domestic credibility but for reassuring partners that Sri Lanka is a stable, safe and reliable state. Progress is mixed, but Colombo’s intent is clearer than it has been in years.

Still, structural vulnerabilities remain. The global economy is heading into rougher waters. US President Donald Trump’s sweeping ‘reciprocal tariff’ policy could further squeeze Sri Lanka’s exports. Colombo is especially exposed as it has no free trade agreement or privileged access under the generalised system of preferences. Tourism is recovering, but any trade slowdown in the West could hit remittances and export earnings hard.

That makes diplomatic agility more important than ever. Sri Lanka must continue building economic resilience through diversification, value-added exports and deeper South-South cooperation. It should also court middle and regional powers—including Japan, South Korea and Gulf states—who offer investment without great-power entanglements.

For Washington, the message should be equally clear: if nations such as Sri Lanka are being pushed towards China, your policy settings probably aren’t right. Development aid, trade access and political consistency are not just tools of influence; they are measures of partnership. If the US wants to remain a credible actor in the region, it must demonstrate reliability and respect for countries navigating complex geopolitical terrain. For Colombo, due diligence is vital, regardless of the partner. That means holding all partners to the same standard.

Trump’s national security strategy: from Pax Americana to Pact Americana

After 100 days of action, US President Donald Trump’s national security strategy is coming into focus. His second presidency appears to embrace a ‘peace through strength’ approach, as first suggested by US Senator Roger Wicker in 2024. This translates into US power focusing on only a few main tasks through ruthless prioritisation, enhancing national security without overstretching resources. Gone is the era of Pax Americana, where the United States underwrote the global liberal order. A new framework emerges: Pact Americana. Soft power is gone, alliances are transactional, security guarantees are conditional and US strength dictates the rules of engagement.

Six pillars seem poised to define Trump’s strategy.

First, Trump will likely seek his own variant of a Monroe Doctrine; dominating the Western Hemisphere to the shores of China, while reducing footprints elsewhere. Expect aggressive moves to counter the growing influence of China and Russia in Latin America, particularly regarding mineral extraction and critical infrastructure. At the same time, Trump seeks a reset with Russia—possibly lifting sanctions to encourage cooperation in energy, Arctic security and counterterrorism. This realignment reflects an effort to prevent Moscow from becoming a full client of Beijing, though the approach has drawn scepticism from NATO allies.

Second, Trump’s emphasis on homeland security stands to reshape the US’s global military posture. Troop reductions in Europe and the Middle East could accompany a strategic rebasing of forces back to the continental US and across the Pacific. Expect significant investment in the US Northern Command, expanding its mission from the Arctic to beyond the southern border, with a focus on combatting Chinese-linked drug cartels trafficking fentanyl. Technology will play a key role, with AI-enabled drones, missile defences and advanced sensors becoming the backbone of a reinforced Western Hemisphere defence.

Third, Trump’s second administration means strictly transactional diplomacy. Alliances and security guarantees will be conditioned on direct, measurable returns, such as arms purchases, access to critical minerals or favourable trade terms. Open-ended security assistance, including to Ukraine, Kosovo and Palestine, will likely vanish. A doctrine of ‘minerals for military assistance’ may emerge, tying US support to resource extraction deals, especially across Latin America and Africa. Foreign military sales will be central to US diplomacy. Taiwan, for instance, will be expected to buy more weapons to preserve a US security umbrella.

Fourth, Trump is likely to pursue a more hardline Middle East policy. Trump will likely abandon the two-state solution, instead reinforcing US support for Israel. Regional stability will be pursued through arms deals with Arab partners, ensuring that Saudi Arabia, Egypt and the United Arab Emirates remain firmly in the US camp. Iran will face mounting pressure. A nuclear breakout by Tehran could prompt US-backed nuclear proliferation among Iran’s regional rivals, such as Saudi Arabia or Turkey. Trump’s willingness to disrupt decades of non-proliferation norms reflects a realist approach: regional balances of power matter more than diplomatic niceties.

Fifth, expect an intensified US campaign to economically and technologically isolate China. Tariffs, export controls and financial pressure will aim to sever supply chains in critical sectors such as semiconductors, pharmaceuticals and rare earth minerals. Trump will deepen ties with Indo-Pacific countries—including India, Japan, Vietnam, South Korea and Australia—to create alternative supply networks and enhance regional defence postures. Allied cooperation will be non-negotiable. Nations reluctant to curb Chinese tech influence, such as through restrictions on Huawei or TikTok, may face tariffs and reduced security cooperation.

Finally, it’s likely that the Pentagon will prioritise a lethal, no-frills military focused on power projection. This means doubling down on lethality and prioritising warfighting capabilities over administrative overhead. Expect aggressive investment in unmanned systems, hypersonic weapons, nuclear modernisation and space-based surveillance. Naval expansion will likely become a signature initiative, with the goal of growing the fleet from around 350 to 600 ships to counter China’s rising maritime advantage. However, Trump’s strategy must recognise that future wars will be fought not just with missiles and ships, but also in the cognitive domain. Dominance in information operations, cyber warfare and AI-enhanced influence campaigns will be essential to deterring China’s non-kinetic hybrid threats.

In sum, Trump’s forthcoming national security strategy will be a strategic gut punch to the post-Cold War order. Transactionalism will replace multilateral idealism. Alliances must deliver tangible benefits or risk marginalisation. Security guarantees will be earned—not assumed—through arms deals, trade incentives and resource access.

The ripple effects means Europe may hedge toward China. Indo-Pacific nations will face growing pressure to militarise. But for Trump, that’s the point: forcing nations to choose between adapting to the US’s power-first model or risking irrelevance.

This isn’t isolationism; it’s strategic dominance by design. Under Trump, gone is ‘Team America: World Police’. No longer a benign hegemon, the US will be setting the terms, writing the rules and unapologetically pursuing its interests. Pax Americana has ended, Pact Americana emerges: bring something to the table, or you don’t get a seat.

Defence and Trump shape Australia’s election

Australia’s cost-of-living election has a khaki tinge and an uneasy international tone.

You know defence is having an impact when a political party promises to raise taxes to buy more military kit, and makes defence its largest election promise.

The domestic dimensions of the campaign have been decisively disturbed by forces beyond the borders.

The broad defence consensus between Labor and the Coalition has always had tacit and explicit dimensions. But much that was once implicit and inferred is now declared. Taboos fade. Sacred cows topple.

The international mantra of the 2022 election was ‘China has changed’. This time it’s ‘the United States has changed’. China and the US are destabilising forces in different ways, but are equally disturbing.

Each pushes Australia to think about defence more and spend more. Thus, the Coalition has promised to spend an extra $21 billion over five years, taking defence’s share of GDP from just over 2 percent to 2.5 percent within five years.

Labor’s plan is to lift defence spending to 2.3 percent by 2033–4, making the point that this is more than 0.2 percent higher than the spending trajectory it inherited. So, in opposition, the Coalition has become more ambitious for military might than it was in office. How times change. The 2.5 percent trek is the new policy norm. With the target agreed, only the timeline is in question.

The Coalition has reversed the standard election question ‘where’s the money coming from?’ Instead, it has announced the cash and said it’ll decide the details in office. The money answer is that Coalition will raise taxes by repealing Labor’s $17 billion tax cuts.

Labor has the military shopping list, the Coalition has the budget. Although coming from those two different directions, the campaign shows a consensus for more defence money, even as politics-as-usual argy-bargy continues over which side has the better record and the smartest plan.

The shadow defence minister, Andrew Hastie, said he’s ‘agnostic’ about what to buy with all the extra cash: ‘We’ve got to work out where the most pressing problems lie and then resource them.’

Reflecting the view that political parties are supposed to detail what they’re offering, Defence Minister Richard Marles argued that the Coalition policy has ‘no strategic direction, no strategic purpose’, offering only ‘vague numbers, aspirations, targets, but not one iota of substance’.

A generous view would be that the holes in the Coalition policy don’t show a lack of preparation, but an understanding of the rolling revolution in military affairs. Perhaps Hastie’s hesitation shows he wants to ask big questions about our future defence force. If so, it’s a brave move, because elections demand colour and movement, not a plea for time to think.

To caricature these complex debates about future defence kit, reduce them to a simple either/or equation: missiles and drones versus ships and submarines. Now there’s a proposition to light up The Strategist forever: sure, we want all of them, but even big budgets must make choices about rolling demands.

The other revolution in this campaign is Hurricane Donald. The decade-old Liberal-Labor consensus on the China problem now has a new twin, the understanding that Donald Trump makes the US a less reliable friend, testing the three core elements of Australia’s international policy: the US alliance, the region and multilateralism.

Explaining the Coalition’s defence spending plan, Andrew Hastie referenced the America First shift, stating: ‘We have a strong relationship with them but can’t take anything for granted.’

Journalist and academic Mark Kenny called the Coalition’s $21 billion defence boost the most consequential policy pivot in the election, based on a ‘terrified’ diagnosis that Trump’s US has ‘shifted from a global force of stability to a net creator of instability’.

The twin fear of China and the US is on show in Labor’s announcement of a critical minerals strategic reserve. Australia will stockpile rare earths to protect against ransom demands from China, as the dominant supplier of the minerals. The reserve will be offered to ‘key international partners’, so it becomes an important card in dealing with the transactional Trump.

The US has featured as a strategic factor in other Australian election campaigns: Harold Holt’s ‘all the way with LBJ’ campaign in 1966; Gough Whitlam in 1972 affirming the value of the alliance while proclaiming an Asia-focussed foreign policy; John Howard standing with the US after the 9/11 attacks; and Kevin Rudd in 2007 holding firm to the alliance while promising to depart the ‘bad’ war in Iraq while committing to the ‘good’ war in Afghanistan.

In those previous elections, alliance management stressed the enduring value of the alliance. In this campaign, Australia contemplates the US president as an unreliable bully, and the defence consensus adjusts accordingly.

Flexibility and awareness will help India deal with Trump (again)

India navigated relations with the United States quite skilfully during the first Trump administration, better than many other US allies did. Doing so a second time will be more difficult, but India’s strategic awareness and manoeuvrability will help it work with Donald Trump’s America once again.

The chaotic early months of the Trump administration have shown Washington’s partners that they must carefully navigate relations with the US for the next few years.

Indo-Pacific partners will likely fare better than European ones, as China appears to be a key and continuing concern for the US. And among Indo-Pacific partners, India probably stands to do better than others. India generally and Prime Minister Narendra Modi in particular show strong understanding of the game when they refrain from reacting to Trump’s negative comments.

This is unusual: the Modi government has usually been somewhat sensitive to outside criticism. Modi may be looking to the day when Trump moves on from whatever unpalatable comments he makes.

The bilateral relationship saw impressive wins during the first Trump administration. The US changed the name of its Pacific Command to the Indo-Pacific Command, acknowledging of the growing strategic role of India in the region. The US also granted India Strategic Trade Authorization Tier-1 status. This provided India with license-free access to a range of military and dual-use technologies and was a clear recognition of the enhanced confidence in US-India strategic partnership. As well as this, India developed and maintains multiple tracks of engagement with the US, including through its national security advisor, affording it greater flexibility.

There were also minilateral successes, with the Quad’s rejuvenation recognising India’s importance to the US. Many of the improvements made during the Trump administration were further strengthened under Joe Biden’s presidency.

On the other hand, Russia’s invasion of Ukraine put India in a difficult situation because of New Dehli’s traditionally good relations with Moscow. India was unhappy with Russian President Vladimir Putin’s naked aggression, but also reluctant to abandon its old partner, leading to some unhappiness in Western capitals with what was seen as India’s hypocrisy. In part, India’s reticence to upend its relationship with Russia was due to a lack of confidence that the US’s shift to New Delhi (and away from Beijing) was permanent—a view that other US allies may now understand better than they did.

Trump and his administration appear to favour a transactional approach to dealing with the Putin regime. This is causing concern for the US’s NATO allies while also making it less likely that the US will pressure India on its relationship with Russia. New Delhi can likely breathe easy on this point for the next four years.

But Trump’s tariff pressure presents other challenges. In the previous term, India managed to satisfy Trump with a few concessions alongside general goodwill and ideological messaging. This time, Trump is clearly much more determined and focused, especially on countries like India with which the US has a significant trade deficit.

This will likely be harder for India to manage this time around. India will have to concede much more, but it still has options to satisfy Trump. India may be helped by the fact that the initial tariff roll-out has been chaotic and confusing, with tariff rates and targets being changed seemingly every day.

Most tariffs have been postponed for few months, and the US is welcoming offers to negotiate bilateral trade agreements. This gives New Delhi a chance to once again use its diplomatic skills to secure a reasonable deal with Washington. Amid US-China tensions, India will also be acutely aware of the opportunities presented by Trump’s increased focus on China’s unfair trade practices.

India has room to manoeuvre. For example, automobile tariffs are one of Trump’s key focuses. Indian tariffs on direct automobile imports are high, at more than 100 percent. New Delhi appears reluctant to lower them, partly because of fears that it could hurt India’s thriving domestic automobile and auto parts manufacturing sector.

However, India will not be an easy market for US automakers to break into, even with low or no tariffs. Both General Motors and Ford, who had entered the Indian car market and established factories in India to compete more effectively, found that not all their products well suited the market. Even if India removes tariffs, it is difficult to imagine US manufacturers competing effectively in India.

Similarly, India has some options on the energy front too to entice Trump. India’s external affairs minister, Subrahmanyam Jaishankar, recently suggested that India might amend its nuclear liability law, which has prevented the US entities from entering the Indian nuclear sector.

US nuclear engineering company Westinghouse planned to build nuclear plants in India until a bill passed in 2010 imposing such onerous liabilities that it effectively prevented new plants from being built. If India does change the liability law or its provisions, it could stimulate not only the US nuclear power industry but also its own nuclear sector.

India could also buy petroleum from the US, reducing its trade surplus with the US of nearly US$50 billion and pleasing Trump.

India’s annual oil import bill is now well north of US$100 billion and will only increase. Redirecting purchases to the US would have negligible effect on the Indian economy.

Finally, India could buy more weapons from the US. Trump does appear to want to sell more US weapons, and India needs to keep buying as it faces a growing threat from China. There has already been some talk of the US offering Lockheed Martin F-35s.

Though dealing with Trump may be difficult, New Delhi does have some options, especially if it keeps turning the other cheek to his criticism. The Indian government does appear to recognise the need to keep Trump happy. This combination of strategic awareness and room to move may help India to manage the second Trump administration better than other US partners do.

Donald Trump’s first three months: rude, raucous and rogue

Sunday marks three months since Donald Trump’s inauguration as US president. What a ride: the style rude, language raucous, and the results rogue.

Beyond manners, rudeness matters because tone signals intent as well as personality.

Trump’s version of going rogue means to leave the herd, or to become savage or destructive. His rogue is about means and policy, shifting where the United States stands and what it stands for.

Manners maketh the man, but means maketh government.

Berating Ukrainian President Volodymyr Zelenskyy in the White House was the rough and rude stuff politicians usually do to each other behind closed doors. The rogue moment of policy significance and shocking symbolism was at the United Nations when the US sided with Russia in voting against resolutions to mark the third anniversary of the full-scale invasion of Ukraine. Trump embraces foes as he throws friends overboard, aiming for a quick peace in Ukraine by giving Russian President Vladimir Putin most of what he wants.

The US president is driven by his will, his wants and his whims. The only metric that counts is power. Get a great deal. Make a profit. Punish enemies.

Trump calls his tariff wall a ‘declaration of economic independence’ that will make the US ‘good and wealthy’. Offering a ‘stupidity theory of tariffs’, Nobel Prize economist Paul Krugman responds that Trump launches ‘a global trade war’, destroying 80 years of credibility in three months with ‘wild zig-zags’.

What’s so challenging about Trump’s style is that zig-zags are the strategy.

The US sets a 145 percent tariff on China’s goods; China’s answers with a 125 percent tariff on US goods. The world’s top two economies impose embargoes on each other. Trump may, indeed, zig to clinch a beautiful deal with China. But the isolationist and nativist standard is set. Trump believes that for decades the US ‘has been looted, pillaged, raped and plundered by nations near and far, both friend and foe alike’.

The US had the largest role in creating today’s world; under Trump the US is scared of the world it made, declaring a pox on Pax Americana.

Trump’s three months show he has learnt from his first term, when the adults in the room were a constant check on his will and whims. A more experienced president leading his remade Republican Party means fewer adult restraints.

Trump’s new treasury secretary, Scott Bessent, qualified for the adult label by getting the president to put a 90-day pause on the reciprocal tariffs announced on 2 April, because the bond market was melting. Wall Street, though, speculates Bessent won’t last long, because the first Trump administration showed that telling adult truths to the wild king soon ends cabinet careers.

Trump now attacks the foundations of Washington to get systemic shifts. He smashes so his vision can arise atop the rubble. In contrast, during the first-term soap opera, courtiers vied to handle the king while Washington kept ticking (many administration jobs were still vacant a year after Trump’s first inauguration).

The president luxuriates in the pomp, while his administration wields sharper authority. He still enjoys the king label, but the court politics forms factions.

Because loyalty is what Trump values most, the true-believer faction gathers around the MAGA cap that reads ‘Trump was right about everything’.

Standing amid the believers are those who see Trump as the perfect instrument to ‘burn down Washington’, as per the original subtitle of a book by the head of the Heritage Foundation on how to institutionalise Trumpism by torching institutions. The foundation created Project 2025 to write the conservative agenda for Trump’s administration ‘to take down the Deep State and return the government to the people’.

The tech bros, led by Elon Musk, want Trump to remove any Washington restraints so algorithms can get on with eating the world. The tech bro discomfort over trade war was voiced by Musk’s attack on Trump’s tariff tsar, Peter Navarro, as ‘dumber than a sack of bricks’. The tech vision of a borderless world crashes against Trump’s love of borders.

The China hawks fly with Secretary of State Marco Rubio and National Security Advisor Michael Waltz. Rubio’s version of Trump foreign policy starts by stating that the post-Cold War period of US unipolar dominance was an ‘anomaly’. Now, Rubio says, the US faces ‘a multipolar world, multi-great powers in different parts of the planet. We face that now with China and to some extent Russia, and then you have rogue states like Iran and North Korea you have to deal with.’

The view that the US is no longer as powerful as it was is Trump’s central argument. His answer is America First. The fear for allies is the prospect expressed by Australia’s previous ambassador to the US, Arthur Sinodinos, that this might become America Only.

President Trump is redefining America’s international role, and Australia has influence

In the week of Australia’s 3 May election, ASPI will release Agenda for Change 2025: preparedness and resilience in an uncertain world, a report promoting public debate and understanding on issues of strategic importance to Australia. This is an article from the report.

President Donald Trump’s America is done with being taken advantage of by other countries and is demanding more from its adversaries, its partners and, above all, its allies. Decades of Australian cooperation with the US on defence, diplomacy, intelligence and trade have established the right relationships to get a seat at the deal-making table. Australia now needs to use that access to convince the US that Australia’s robust trade and economic strength, whole-of-nation leadership in the Indo-Pacific and investment in rules and institutions benefit US national security and prosperity.

With his election mandate to ‘Make America great again’, President Trump is redefining US global leadership through economic statecraft, diplomatic coercion and hard-power threats. That’s accompanied by a ruthless redefinition of US budgetary priorities to address what the administration sees as core domestic challenges: illegal immigration, a bloated public sector, underutilised manufacturing capacity, and burdensome private-sector regulations that stifle American industry. A key goal is to reduce the US national debt, which currently sits at around US$36.7 trillion and 123% of GDP.

Elon Musk’s Department of Government Efficiency (DOGE) is slashing government spending on the basis that for too long US taxpayer dollars have been spent on bureaucratic passion projects and not on making America ‘stronger, safer, and more prosperous’. Ninety-two per cent of the grants and programs of the US Agency for International Development (USAID) have been cancelled, including many providing emergency food and medical aid in crisis zones. DOGE is working to fire most of the more than 13,000 USAID staff and contractors worldwide. The plan is for the remainder (294 people, with just eight in the Asia Bureau) to be folded into the State Department.

The State Department itself has been told to prepare for a 20% cut to staffing numbers and the closure of some consulates (primarily in Europe), and the Pentagon has been told to find budget cuts of 8% for each branch, some of which will be redistributed to priority projects. Significant cuts are being made to other departments. DOGE has also been tasked to review the US Navy and Coastguard’s troubled shipbuilding programs.

The Trump administration is unilaterally redefining the global trade environment to address what it sees as unfair trade imbalances and overregulation of US tech companies, and to build US manufacturing capacity, increase revenue, and force burden-sharing. To do that, President Trump on 2 April imposed a global minimum 10% tariff on imports to the US and continues to threaten up to 50% ‘reciprocal’ tariffs on those countries he considers the worst offenders. These complement global tariffs on imports of steel and aluminium, some automobiles and auto parts (including on countries, such as Australia, that have trade deficits with the US) along with specific tariffs on its own neighbours—Canada and Mexico. The harshest treatment has been reserved for China. Goods from China, Hong Kong and Macao have been excluded from US de minimis duty free provisions, and tariffs have been added to total around 125%.Further complicating the picture, the US has excluded some essential products from the proposed tariffs, including copper, pharmaceuticals, semiconductors, some critical minerals and energy.

In maximalist demonstrations of ‘might is right’ coercive diplomacy, Trump has sought to whitewash President Putin’s invasion of Ukraine and demanded that President Zelenskyy be ‘more grateful’ for US aid. He wants Ukraine to provide the US with rare earths and hydrocarbons in exchange for a voice in peace negotiations and some semblance of US security support. Trump is siding with Israel, closing its eyes as the international community protests alleged Israeli war crimes as the US seeks to strong arm peace in Gaza. He has also made it clear that he thinks the US should control Greenland and the Panama Canal to manage security threats from Russia and China.

Members of Trump’s cabinet insist that those machinations are aimed at enabling a more focused and strengthened US position against a rising and malign China, including to weaken President Xi’s influence over Putin and other leaders. Others say that it shows that the US considers that it has no allies, just competitors. Trump’s comments from the Oval Office on 28 February 2025, when he said, ‘I’m not aligned with Putin. I’m not aligned with anybody. I’m aligned with the United States of America’, would seem to support the latter.

While many American allies, including Australia, would agree that China represents the pacing security threat and that action should be taken to constrain Beijing’s malign activities, running roughshod over friends is unlikely to achieve that goal. The Trump administration appears to be targeting China’s economic and technological influence but in a way that has no care for the impact on America’s allies and partners.

So, what can Australia do?

Australia should protect itself, while also investing in its friends, partners and the trade and security institutions that sustain its prosperity and security.

The majority of American voters, many of whom felt let down by the unfulfilled promises of globalisation and multilateralism, endorsed President Trump’s promise to put US domestic interests at the centre of its foreign, defence and trade agendas. That’s felt deeply among working- and middle-class Americans, has been growing for many years, and is likely to remain the case for some time. To remain influential with the White House, Australia must advocate for its national interest priorities within that frame, recognising that Trump’s America isn’t withdrawing from global leadership, but that it’s fundamentally redefining what it considers that leadership to be.

America First economic statecraft: tariffs, investment, trade

Recommendation: The next Australian Government should continue to push back against Trump’s imposition of tariffs on Australia, maintaining a clear message that the unjustified tariffs do hurt the bilateral relationship but won’t affect the security alliance or AUKUS. The government should simultaneously explain to the Australian public that the tariffs act is an unfriendly one to a long-time friend while showing the Trump administration that the relationship won’t break but will be strained until the tariffs are terminated. Ongoing discussions with the US should focus on the fact that a strong Australian economy with robust trade ties benefits US national security, as is true for other US allies. US tariffs on Australia and other actions that de-stabilise the global economy may reduce the government’s ability to increase defence spending and weaken its leadership in Indo-Pacific security. They could also dampen enthusiasm for Australian foreign direct investment into the US. Australians might oppose closer ties with the US if they feel subject to US economic coercion and, indeed, it’s already assisting Beijing’s narrative in the region that all major powers act this way. If the Trump administration is attempting to counter the rise of China, its action against Australia will help Beijing, not Washington. Australia should oppose all tariffs against vulnerable Pacific economies, including because the action provides ammunition to support China’s claims of US self-interest.

Trump’s administration should hold Australia up as showing what ‘good’ looks like—an incentive to all other countries to be more like Australia in consistently carrying a fair share of the economic and security burden.

By the Trump administration’s own ‘fairness’ metrics, Australia is in an enviable position. It’s maintained a 2:1 trade deficit in the US’s favour since the 1950s and has a free-flowing exchange rate. For the first 20 years of the Australia – US Free Trade Agreement, Australia levied no tariffs on US goods, while the US only gradually reduced tariffs on protected US goods, such as lamb. At a time when the White House has prioritised attracting sources of trusted foreign capital to grow US industry and infrastructure, Australia’s $4.1 trillion in superannuation funds looking for diversified long-term investment opportunities overseas add to Australia’s value.

As the 13th largest economy in the world, the prosperity of which has long been driven by free trade, Australia relies on a well-functioning, rules-based international trading system. A global tariff war that doesn’t distinguish fair trading nations from unfair ones undermines that system, disrupts supply chains and increases prices. The Trump administration’s tariffs on steel and aluminium impose direct pain on Australian companies selling into the US market, undermining their contribution to the long-awaited expansion of the US industrial base. The Australian Government must ensure that US partners recognise that those imports are critical for US supply chains, and that defence-grade steel supports the US Navy’s uplifted shipbuilding program and future AUKUS submarines. Similarly, specialised Australian aluminium building products are needed by US industry, particularly as the country rebuilds after multiple natural disasters.

Australia, as the 2025 chair of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (the members of which produce around 14% of global GDP) and as a member of the Regional Comprehensive Economic Partnership (the members of which produce about 42%), has a unique opportunity to coordinate the groups’ responses to the US tariffs and reaffirm member states’ commitment to free and open trade. Open and transparent leadership in those bodies, together with a close relationship with the Trump administration, will help to build Australia’s reputation as an influential partner of choice.

The World Trade Organization (WTO) has proven too weak to stop China flooding global markets with artificially low-cost exports to balance its weak consumer spendingor to make China stop bankrupting its competitors by manipulating the price of critical minerals such as nickel, lithium and cobalt. The previous Trump and Biden administrations had little interest in working to improve the WTO, blocking the operation of its dispute appellate body over concerns of judicial overreach. However, the current Trump administration’s desire to diversify its critical-minerals supply chains could offer a new opportunity to work with Australia and other like-minded partners in the WTO to curb China’s trade manipulation by modernising and strengthening WTO rules and procedures.

While challenging, the Trump administration’s tariffs on China are also an opportunity to reduce Australian business reliance on China and diversify supply chains. As Australian manufacturers and retailers seek alternatives to Chinese-made components, the Australian Government should incentivise Australian businesses to deepen their ties with ASEAN countries and with India, and resist accepting an influx of low-cost Chinese e-commerce diverted from the US market.

Australia should work with the Trump administration on implementation of its new America First Investment Policy, which is specifically designed to limit investment from adversaries, primarily China, and increase collaboration with allies and partners.

America First strategic policy: ‘Might is right’ or ‘Peace through strength’

Recommendation: Australia should encourage the Trump administration to collaborate on Indo-Pacific capacity building, infrastructure and security assistance to lessen regional dependence on China and blunt China’s influence activities in this key strategic theatre. Notwithstanding the shuttering of USAID, the US should honour its agreements and reform its tools of statecraft to enable agile and timely investment, including in partnership with the private sector on strategic regional infrastructure.

As part of that, Australia should offer to collaborate with the US (and others, such as Japan) to jointly fund Radio Free Asia and other critical development programs in our neighbourhood to help mitigate the effect of American budget cuts. Australia should also share with the US its experience of China taking over Radio Australia frequencies when the ABC ceased making short-wave transmissions.

Recommendation: To demonstrate Australia’s commitment to contributing to a secure, stable and prosperous Indo-Pacific, the new Australian Government should explain to the Trump administration that the 2024 National Defence Strategy and Integrated Investment Program are a 10-year demand signal for AUKUS defence and dual-use technology companies. It must also push ahead on quick wins for AUKUS Pillar II, focused on those aligned to the Trump administration’s priorities.

President Trump’s Inauguration Day directive to the Secretary of State called for US foreign policy to champion core American interests and put America and American citizens first. Despite that, Australia has more influence than many appreciate. The Trump administration’s first international meeting was of the Quad, held in Washington DC on 20 January, during which the US reaffirmed its commitment to strengthening a free and open Indo-Pacific. Secretary of State Rubio’s language about the Quad and the Indo-Pacific region contrasted strongly with the adversarial approach taken with Europe and NATO.

That regional focus concurs with early reporting that the Pentagon is to prioritise the work of INDO-PACOM and focus on the production and maintenance of Virginia-class submarines (needed for the US Navy and for AUKUS), and drones and counter-drone systems, in conjunction with key Trump election promises to secure the southern border and develop an Iron Dome–style missile-protection system. While they’re yet to get much media coverage, the strong protections in the America First Investment Policy against China gaining technological advantage from the US seem to confirm the administration’s focus on its only near-peer competitor.

The Trump administration clearly views its three Quad partners, Australia, India and Japan, as a net positive for US interests. From Australia’s perspective, that’s a legacy of President Trump’s first term, in which his focus on China saw him come to understand Australia’s strength in spending on defence and standing up to Beijing despite coercion. It’s possible, however, that the second Trump administration will also ask more of Australia, as US partners and industry push for assurances that Australia will continue to uplift its defence capabilities, invest in the AUKUS optimal pathway on submarines and see tangible outcomes from streamlined processes for AUKUS advanced capabilities.

President Trump’s pick for Undersecretary of Defense, Elbridge Colby, who respects Australia’s contributions on defence, wants Canberra to increase defence spending to over 3% of GDP. Regardless of the percentage, Australia should continually point to the US$3 billion investment that it’s making in expanding and modernising US shipyards, the progress achieved in training Australian submariners to drive Virginia-class nuclear-powered submarines, and the strategic benefits to the US from new submarine maintenance facilities in the Indian Ocean. Canberra should also highlight how increasing cross-fertilisation of Australian and US industry and manufacturing is adding resilience to US defence supply chains in the Indo-Pacific and that the 2024 National Defence Strategy and Integrated Investment Program are a 10-year demand signal for US, UK and Australian companies.

As the US seeks to counter Chinese influence in the Indo-Pacific, Australia should encourage the Trump administration to honour its regional development commitments and collaborate on further initiatives, notwithstanding the shuttering of USAID. Building off the success of the Australia–US–Japan Trilateral Infrastructure Partnership in funding undersea cables in the Pacific, which started with the first Trump administration, Australia can encourage US counterparts to adopt more innovative approaches to development and security. Key examples are the Falepili Union with Tuvalu (which provides Australia with strategic denial rights and Tuvalu with climate resilience monies and opportunities for migration), the agreement between Australia and Papua New Guinea (which encompasses development and security elements) and Australian Telstra’s acquisition of Digicel Pacific (the largest mobile provider in the Pacific, acquired amid rumours of interest from China Mobile).

The Trump administration’s interest in working closely with private-sector investors from allied countries offers an opportunity to take this work further, including to secure Indo-Pacific strategic infrastructure while delivering shared, sustainable, long-term returns on capital. Australia should encourage the US to reform its Development Finance Corporation and enable it to work in a more agile way with the Pentagon’s Office of Strategic Capital, the Australian Infrastructure Financing Facility for the Pacific and Japanese counterparts.

Australia’s unwavering commitment to a free and open Indo-Pacific, its willingness to confront Chinese assertiveness and its active participation in regional security initiatives, such as the Quad and the Trilateral Strategic Dialogue with the US and Japan, and its membership of the Pacific Islands Forum, contribute to a secure and stable environment conducive to US interests. The Trump administration’s prioritisation of the Indo-Pacific and desire not to cede influence to China presents an opportunity to have it lean into regional issues. In this vein, Australia should also encourage President Trump to visit the Pacific, including the US Compact states, in 2025 and attend the 2026 ASEAN East Asia Summit in the Philippines.

Reset Pax Americana: the West needs a grand accord

The world is trying to make sense of the Trump tariffs. Is there a grand design and strategy, or is it all instinct and improvisation? But much more important is the question of what will now happen, as new possibilities emerge from the shock effect of the tariff announcements and from subsequent moves and counter-moves.

For many, the United States is behaving erratically and imprudently, not least by lashing out at its allies and partners and by confusing financial markets. It’s risking its credibility by engaging in what appear to be irrational and self-harming actions that have already generated systemic financial shocks. Confidence in US leadership and economic rationality is being shaken.

To judge what might happen next, one must see the through-line—namely, Trump’s long-held grievance about what he sees as unfair global economic arrangements and widespread freeriding on the US, and his willingness to deploy all instruments of power to set this right. For Trump, the functioning of the global financial and trading system has seen the US incur the costs of entrenched trade deficits, hollowing out of the US industrial base and overvaluation of its currency, a consequence of the reserve status of the US dollar and US Treasury bonds.

At the same time, the cost of underpinning global security since 1945, through the so-called Pax Americana, has been borne disproportionately by the US taxpayer, who now carries US$36 trillion in federal debt. For the first time in its history, the US is spending more on debt interest than on defence. Meanwhile, allies and partners, with few exceptions, have minimised their defence spending wherever possible.

It is clear that Trump will no longer tolerate a situation where other countries gladly consume the security that the US produces, at significant cost to US taxpayers, without contributing materially to that security and while enjoying the prosperity it brings.

Bargains regarding prosperity and security are often intertwined. The 1944 Bretton Woods agreement was negotiated at a time when the postwar security order was being shaped. The deal ended in August 1971, when President Richard Nixon suspended the US dollar’s convertibility to gold and introduced a 10 percent import tax to compensate for ‘unfair exchange rates’—overvaluation of the US dollar. In September 1985 in what became known as the Plaza Accord, the US agreed with leading western economies that the US dollar would be devalued in a managed fashion to tackle a mounting US trade deficit. All the while, the US kept up its end of the bargain in protecting allies and partners.

We should not be surprised that from time to time, the US might deploy its enormous strategic and financial power to reset the terms of global prosperity and security. Whether by design or otherwise, we appear to be in another such moment.

Through the shock of the Trump tariffs, the US has created for itself an extraordinary opportunity to restructure the global trading and financial system, with two twin objectives in mind. These are to increase the relative gains from that system for Americans and to reallocate the costs of Pax Americana, so that they are borne more by allies and partners and less by US taxpayers.

To this end, the US should pursue a new global agreement, which might be called the Pax Americana Accord. It should bring all issues to the table in the process, so we are not dealing later with other, related shocks—say, with US currency or debt issues—or with doubts over US alliance commitments.

The best way to do this, in a way that would take maximum advantage of the opening that the tariff shock has created, would be for Trump to call an urgent meeting of what might be termed the ‘G7+’. This would not be a meeting whose objective would be to craft and issue a worthy but forgettable communique. Terms would be set out and agreed in outline, under the threat of total trade war. The details could then be hammered out over the remaining balance of the 90-day pause period.

The G7+ would consist of the US, Germany, Japan, Britain, France, Italy and Canada (as G7 members), along with India, Brazil, South Korea, Australia, Mexico, Indonesia (representing itself and the rest of Southeast Asia) and the European Union (in its own right and also representing the 24 non-G7 EU members). The G7+ would represent 67 percent of global GDP. Others, such as Turkey, Saudi Arabia, Switzerland, Argentina, the United Arab Emirates and Israel, could sign on to the new accord at a later date, as might Taiwan.

The meeting would agree the broad outlines of a Pax Americana accord, which would ultimately address and, as necessary, resolve the following issues:

—US chronic trade deficits and US complaints about tariff and non-tariff barriers to its exports;

—China’s deliberate manufacturing overcapacity, which is creating global trade and financial imbalances, unacceptable supply chain dependencies and a dangerous capacity for rapid war production, all endangering the security and economic resilience of the US and its allies and partners;

—China’s re-exports to the US by way of countries such as Mexico, Vietnam and Indonesia, which would have to be blocked, lest China evade what will be crippling US tariffs and other trade barriers (if a US-China deal cannot be separately done);

—Technological de-risking in relation to Chinese goods and services, to prevent China from gaining security advantages by passing high-risk technology into foreign economies;

—The enduring role of the US dollar as the world’s reserve currency, a global public good that the US provides;

—Long-term funding of the US Treasury, whereby US debt underpins global security (by paying for US military capabilities, another global public good) but where others who consume that security also enjoy income returns as debtholders and are not liable for the recapitalisation of those capabilities;

—US concerns about its industrial base, the strength of which also underpins global security and so represents another global public good;

—Defence spending of US allies and partners, most of which will need to build greater capacity to defend themselves without having to rely on US forces, at least in the early stages of a war;

—Potential for co-production of defence capability, in which allies and partners make larger contributions to US development programs; and

—Strategic reservation of critical minerals and other tangible assets by US allies and partners and the granting to the US of concessional access to these assets.

This is an ambitious agenda. A Pax Americana accord would address US trade grievances but more importantly would better spread the costs and risks of global security. It would reset the terms of Pax Americana such that it could be sustained. The US would be reassured about its strategic solvency, and allies and partners would take an active stake.

This would require negotiation of complex deals and arrangements. Achieving it would mean treading a narrow path. Careful and precise execution would be required, especially to reassure financial markets, which are always inclined to lose their minds during periods of uncertainty. If only we had a modern-day James Baker, the driving force behind the 1985 Plaza Accord. With the mandate of Reagan, who set the direction without managing the details, Baker deployed US power through velvety diplomacy in pursuit of US interests, knowing that US allies and partners would always prefer to deal with America, even when it was having a bad day. Has their attitude changed from Baker’s time? We are likely to find out over the next 90 days.

China will have to brought into any accord at some point. The underlying problems that have led us to this point are largely a consequence of Beijing’s strategy of concentrating industrial power in China. This has stunted development of a services-based economy in China, distorted global trade and supply chains, hollowed out Western industrial bases, delayed the industrialisation of the Global South and created national security and economic resilience risks for the US, its allies, partners and others.

Through a concerted strategy, as sketched out here, global trade could be rebalanced such that China would have to divest itself of overcapacity, including to the benefit of less developed countries.

By reallocating the costs of Pax Americana, the US would gain more financial and strategic resources to deal with the risk of China’s growing power and its strategic ambitions. It would be sustainably solvent, sitting at the centre of a reformed global system of prosperity and security. That would be worth the volatility of recent days. Whether we have arrived here through great cunning or as a consequence of instinct and improvisation does not matter much. What matters is the art of getting the deal done.