Overview

The Administration's Theory of American Power

The moves made across the first year and a half of the second term reflect a worldview in which American power is transactional — not a public good but an asset to be traded. From this perspective, the post-Cold War habit of maintaining open-ended security commitments, funding multilateral institutions, and providing foreign assistance without clear returns was a form of strategic subsidy that weakened the United States at home while allowing partners to free-ride abroad.

The administration has acted on this theory with unusual speed and scale. By January 2026, the administration had announced withdrawal from 66 international organizations, including 31 UN-related bodies and 35 non-UN organizations and arrangements, terming them contrary to U.S. interests. It also implemented a sweeping transformation of U.S. foreign assistance through mass firings, program cancellations, and the dismantling of the U.S. Agency for International Development (USAID). The administration's stated rationale is that these reductions strip away wasteful commitments and force partners to contribute more; critics argue they eliminate tools that cost comparatively little but generate substantial American influence.

Alliances as Assets or Obligations

The alliance question has been sharpest at NATO. A top administration priority has been to urge European allies and Canada to increase defense spending and assume greater responsibility for conventional defense in Europe. The pressure has produced measurable results: non-American NATO countries collectively spent 1.4 percent of their combined GDP on defense in 2014; by 2025, it was close to 2.3 percent. European governments have broadly accepted that they must spend more, produce more, and take on greater responsibility for their own security, following pressure from the White House.

The July 2026 NATO summit in Ankara crystallized the ambiguity of this outcome. At the summit, Trump announced a surge in defense investment from allies, with $3 billion in major deals and joint ventures that will expand American defense industrial capacity in Europe. The White House framed this as "NATO 3.0" — a move toward greater burden sharing and self-reliance that frees critical American resources for homeland defense. Yet Trump appeared unmoved even by allied compliance, saying he was still disappointed by some NATO allies' refusal to join the Iran war, which he had launched alongside Israel without consulting them. During both of Trump's terms, NATO's leadership has dedicated a huge amount of energy simply to keeping the United States inside the alliance.

The concern expressed by outside analysts is that burden shifting and alliance cohesion are not the same thing. As one senior European Council on Foreign Relations fellow put it, this is "really the NATO summit where NATO goes from burden sharing to burden shifting." NATO has been structured around U.S. power for 77 years, making the issue as much a political question as a military one. Some members of Congress, including the chairs of the House and Senate Armed Services Committees, have expressed concern about the administration's announced troop reductions, stating they are "very concerned by the decision to withdraw a brigade from Germany."

Tariffs, Sanctions, Aid, and Diplomatic Leverage

Trump has deployed tariff threats to shape the behavior of India, Pakistan, Canada, Europe, and the United Kingdom, and has wielded the threat of military escalation and of withholding support to jolt negotiations in Mexico, the Middle East, and elsewhere. His White House demanded rare earth mineral access from Ukraine in exchange for U.S. assistance. This represents a deliberate conflation of economic and security instruments — what in prior administrations were treated as distinct tools are now bundled into a single negotiating posture.

Foreign assistance underwent the most dramatic retrenchment. The administration dismantled USAID through mass firings and program cancellations, and the termination of aid programs produced humanitarian consequences, created vacuums now being filled by China and other U.S. rivals, and undermined long-standing U.S. soft power. Congress partially pushed back: the fiscal year 2026 foreign aid bill allocated $50 billion — a 16 percent cut from 2025 — which was $19 billion more than what the White House had originally requested. The episode illustrated the limits of executive unilateralism on foreign assistance and the degree to which the administration's most aggressive proposals have been moderated by a Congress that, in bipartisan fashion, still sees development and humanitarian spending as instruments of American statecraft.

As China's economy has built resilience against U.S. tariffs, CFR Senior Fellow Zongyuan Zoe Liu has argued that China has presented itself as a more stable, pro-free trade alternative to the United States. This dynamic — American economic coercion inadvertently enhancing a rival's diplomatic standing — is one of the central vulnerabilities of the tariff-first approach.

Relations with Rivals and Authoritarian Governments

The administration's engagement with strategic rivals has been notably more accommodating than its treatment of democratic allies on economic matters. Trump launched military strikes on Iranian nuclear sites alongside Israel in early 2026 without consulting NATO partners, yet has simultaneously pursued deal-making frameworks with Russia and China that critics argue reward intransigence. The war in Ukraine has moved toward resolution at a much slower pace than Trump hoped, owing to Russian intransigence. Aid freezes, including a hold on U.S. munitions to Ukraine in March 2025, and Trump's softened stance on Russian military activity, exacerbated fears of strategic abandonment.

On China, the administration has oscillated between maximum pressure and selective accommodation. An early high-profile Trump-Xi phone call produced little of substance, with no binding outcomes on tariffs, technology controls, or rare earths. In December 2025, Trump allowed Nvidia to sell its powerful H200 chip to China — a significant concession in the AI competition — even as tariff and visa restrictions on Chinese nationals remained in place. The pattern suggests that the administration's pressure on rivals is selectively and often commercially motivated rather than strategically consistent. Strategic competitors have been keen to fill vacuums left by U.S. disengagement, with both China and Russia increasing their presence in Africa, Southeast Asia, and Eastern Europe.

Immediate Bargains and Long-Term Credibility

The administration's approach has generated a fundamental tension between short-term leverage and the longer-term credibility on which American diplomacy depends. The Trump administration is wielding U.S. power, but its employment of transactional means could invite unpredictable consequences for alliance ties and U.S. interests. Allies who spend more on defense and purchase American weapons may simultaneously accelerate plans for strategic autonomy — building capacity that reduces their reliance on Washington over time.

The transactional approach has reorganized how global actors perceive American intention, changing expectations about the U.S. from a stabilizing force to an erratic actor that centers on short-term self-gain. According to a 2025 Pew Research Center study, global confidence in U.S. leadership has plummeted, with many nations expressing low confidence in Trump's leadership of world affairs. Credibility is not only a reputational concern; it affects the cost of future bargains. A partner that doubts American commitment will demand greater concessions, hedge by diversifying relationships, or accelerate indigenous capabilities — all of which reduce U.S. leverage precisely when it may be needed most.

Despite legal challenges and strong opposition, Congress and the courts have largely allowed the administration to proceed with its controversial changes, revealing diminished checks and balances and making it likely that the damage to U.S. credibility and capacity will take years to repair.

The Test of America First Abroad

A fair assessment of the record through August 2026 must distinguish what the administration has actually achieved from what remains contested or incomplete. On burden sharing, there is a genuine result: European defense spending has risen substantially, and the Ankara summit produced concrete defense-industrial commitments. The administration's advocates argue, with some basis, that pressure produced movement that decades of polite requests had not.

What remains genuinely disputed is whether the costs of that pressure — reduced intelligence sharing, strained consultation, uncertainty about Article 5 reliability, and accelerating European strategic autonomy — will prove manageable or consequential. U.S. liberal hegemony based on values could change into a hierarchical order based on power and interests, but not all aspects of U.S. foreign relations will dissolve entirely; while some countries and regions will suffer more disadvantages than benefits from this approach, others will experience the opposite.

What has not yet been tested is whether the transactional model can manage a genuine great-power crisis — a moment when ambiguity about American commitment could invite miscalculation. The United States needs NATO, and NATO needs the United States; without the U.S. as the indispensable leading partner, NATO Europe has insufficient nuclear or conventional deterrence against further Russian aggression. The administration's theory of American power rests on the assumption that leverage can be maximized without permanently eroding the institutional architecture through which that leverage is exercised. Whether that assumption is correct remains the central unanswered question of Trump's second-term foreign policy.