The Levers of US Foreign Policy: How Effective Are They?

In just the first three months of 2025, the international system has shifted dramatically from a US led world order to one that is rapidly fragmenting with each day, with America testing its allies and its allies responding. President Trump’s rapid acceleration of his America First approach, now appearing much more like a discernible doctrine, has not only reset the domestic policy dial, it has also undone long- standing norms in international relations. From executive orders targeting international institutions and trade alliances, to overt statements about territorial acquisition, the US is now actively redefining the rules of global engagement, with great consequence to its nation and the world.

In the backdrop of escalating tensions, from Israel’s resumption of the conflict with Hamas, Iran’s missile test, the continuation of Russia’s attack on Ukraine and recapture of its territories, America’s traditional allies in the Americas, Europe and Asia increasingly find themselves under American pressure. Canada is in talks with the EU over joint defence procurement. Germany has invoked its constitutional emergency clause to increase defence spending, and ASEAN, long averse to hard power coalitions, is discussing collective alternatives to US security guarantees. Washington, once the indispensable nation in every global crisis, is now viewed as unpredictable, transactional, and unreliable.

At the same time, the world is not conceding to US pressures but seeking to counter them. New trading blocs are forming, dollar diversification strategies are being formulated, and leaders are openly questioning the value of US partnerships. A global order painstakingly built over eight decades seems to be unravelling rapidly, not by foreign adversaries, but by design by America itself. In the tricky transition from the industrial to the information era, and in the wake of the rise of a rival power in the form of China, the policies of America have a profound effect on the nature of the world’s transition and America’s role in it.

This month’s Sign of the Times considers the levers of American power being deployed and how effective they actually are. More crucially, it asks what the current pattern of measure and countermeasure implies about the future trajectory of American power and influence, and whether “America First” risks leading to “America Alone” unless the approach is recalibrated in the light of the realities of today.

Americas Role in the World being Rapidly Redefined

America under President Trump has fundamentally reoriented both domestic and international politics in their biggest shift in over a generation. His nearly 100 executive orders¹ and more than 400 executive actions across trade, energy, governance, and civil society, along with the actions by the Department of Government Efficiency, under Elon Musk, cutting the federal government, are reshaping American democracy and its government and people at home and abroad.

Further, these orders, along with his foreign policy in Israel, Ukraine and around the world have already fundamentally changed international perceptions of America, its role in the world, and the geopolitical order that is has upheld in the past 70 years.² This order, based on multi-lateral action, the rule of law, globalisation and free markets was led by America through de facto control over multilateral institutions as well as through its economy, currency, and capital markets. The Trump administration is now charting a very different course.

President Trump’s first administration espoused ‘America First’ which emphasized US sovereignty, economic nationalism, and reduced involvement in global conflicts. Other presidents also pursued American primacy believing that was best achieved through leading multilateralism. In the second term, the Trump administration’s approach and modus operandi has been translated into a more comprehensive set of foreign policy priorities, including:

1. A focus on bilaterial transactionalism in international relations (evidenced in the US-Russia meeting in Saudi Arabia on ending the war in Ukraine, without Ukrainian or European participation).

2. The withdrawal from and effective weakening of international institutions (such as WHO, UNRWA, and withdrawal from the UN Human Rights Council as per Executive Orders 14155 and 02504).

3. The abandonment and weaking of international alliances (involving casting doubt on NATO’s Article 5 and leaving the Paris Agreement, as per Executive Order 02010).

4. Economic pressure applied through tariffs, now projected as a preferred feature of international trade (thus far against Canada, Mexico and China as per Executive Orders 02406, 02407, and 02408).

5. Aggressive statements regarding the sovereignty of allied territories and the aim to acquire or remove others in favour of American control and expansion of its sphere of influence (evident in Agenda 47 reevaluating NATO, and statements about acquiring the Panama Canal, Canada and Greenland).

6. Increased border security (captured in Executive Orders 02015 and 02089 which indicate a tougher stance on immigration).

7. The shifting of US priorities, softening its stance on Russia in contrast to (ostensibly) hardening on China (evident in the direct engagement with President Putin and the imposition of further tariffs on China).

Collectively, just the tariffs and foreign aid suspension alone have already impacted 161 countries³ , pointing to the global scale of the potential shifts underway.

While the White House has not publicly articulated a cohesive foreign policy vision for America and its role in the world, these priorities represent a sharp departure from previous US foreign policy and amount to a dismantling of the liberal international order and the crafting of a new US-led sphere of influence largely focused on North America, while indicating the willingness to cede other parts of the world to others such as Russia, In the space of merely eight weeks, this presidency has fundamentally altered a US-led global order that has been eight decades the making.

American Foreign Policy in Practice: Levers of Control

In the absence of a foreign policy manifesto, the world is left to divine America’s new objectives from the evidence provided by the president’s words and actions. Extracting a coherent set of goals from the president’s often adlibbed statements can be challenging, given that neither his supporters nor his opponents appear to be able to agree whether these should be taken literally, seriously or both (or neither), which may well be the aim. Conversely, looking at specific US actions, whether merely contemplated or actually carried out, can provide a better picture of American foreign policy aims.

The US government has several levers available to it in the pursuit of its foreign policy objectives, broadly categorized into four types of instruments: diplomatic, economic, military and intelligence, and soft power. In addition to deploying these four levers, the president (and senior government officials) has made a series of repeated, clear and unequivocal demands that have not yet been tied to the threat or promise of any specific foreign policy lever (Table 1).

Table 1: The Levers of US Foreign Policy

These lever and demands point to several takeaways:

• A clear preference for hard power. Of the four groups of tools available to the US, the Trump Administration clearly favours actual economic levers- and the threat of military ones. Both are inherently bilateral in nature, provide the US with a scale advantage relative to the countries they are deployed against, and can be deployed (and revoked) immediately as tools in negotiations, making them ideal levers in a transactionalist approach to foreign policy

• Tariffs as a general-purpose negotiation tool. While the president has been a proponent of tariffs (“the most beautiful word in the dictionary”)⁴ for decades, his second administration has ramped up their use to levels unprecedented since the Great Depression or the McKinley tariffs of 1890. However, while historical tariffs were strategically deployed to protect domestic industries, create jobs and drive investment, Trump is using tariffs as a general-purpose negotiation tool against friends and foes in pursuit of a broad range of goals.

• Diplomatic tools being dismantled. The president’s apparent reluctance to the use of diplomatic levers is in keeping with his preference for bilateral ‘deals’ over rules-based diplomacy. In fact, the use of diplomatic tools appears to be centred on dismantling, rather than on their constructive deployment, with the US abandoning international treaties and weakening multi-lateral organizations, thereby impairing their future effectiveness as foreign policy levers not just for the rest of the world, but for America itself as well.

• Abandonment of soft power. The Trump administration appears to have no interest in the use of soft power, preferring coercion over persuasion to influence other countries. This preference is accompanied (and supported) by the president’s and administration’s indifference to how the rest of the world sees America, including whether it trusts it, evidencing no interest in shaping America’s reputation internationally, other than as a “hard man”.

• America’s preferred foreign tools geared towards allies. Both economic sanctions and threats over security guarantees are more effective against partners than against competitors. Security guarantees are only given to allies in the first place, and the effectiveness of tariffs is tied to the level of economic integration between America and a given country, which is typically highly correlated to the level of political alignment the two counties have.⁵

• Focus on tactical deal-making over long term change. There is an overtly tactical element to the president’s use of foreign policy levers, with measures being rapidly threatened, deployed, revoked, suspended or escalated in pursuit of discrete deals. This contrasts with previous administrations which deployed both short term and longer-term levers in an integrated fashion over extended periods of time to drive systemic economic, political or security changes.

America’s foreign policy actions to date do indicate a broader world view (which President Trumps has espoused before), the creation of a world where powerful countries stay out of each other’s backyards, where America doesn’t really need to deal with competitors, (other than disentangling itself from China economically, as it is currently trying to do), and relations are defined by transaction. Instead, America can focus on using its scale to extract maximum value from neighbours and erstwhile allies. This explains why the Trump administration has reserved the harshest measures for its immediate neighbour Canada, while the country widely purported to be America’s greatest competitor China, has gotten off rather lightly by comparison. It also explains why the EU, as one of the world’s largest trading blocs, is seen as a rival and singled out for the greatest enmity. The president has further threatened or imposed tariffs on Mexico, the UK, the EU, Japan and Korea, while traditional strategic opponents like Russia, Iran or North Korea on the other have been largely unscathed to date. The simple reality is that economic and security levers work better against friends than against enemies since the former are not geared up to respond to threats or defend themselves against attacks from states that they consider allies.

Foreign Responses: Concession vs Confrontation

It’s too early to tell how effective the Trump administration’s foreign policy is overall after only two months, and the final tally will likely only be made after four years.⁶ More specifically, it also challenging to determine how successful or effective each foreign policy engagement individually has been, given the frequently ambiguity around the ultimate goals the president is pursuing. For example, the executive order announcing tariffs on Canada justified these in response to illegal aliens and drugs crossing into the US from Canada, while in public addresses the president has repeated spoken about both trade imbalances and about annexing Canada as a 51^st state. It is unclear how these three goals – border security, fair trade and territorial expansion – relate to each other, and that may also be the intention.

What is more feasible though is measuring the impact that America’s recent foreign policy actions have had to date, particularly in terms of how the world has responded. Utilising a simple framework of reply, one can start to put some parameters on whether policies have resulted in concessions:

1. Surrender. Fully acceding to US demands, while recognising that these may be highly disruptive or painful to the country, and that accession provides no insurance against further demands in the future.

2. Diversion. Diverting Trump’s attention by giving him a large headline ‘win’, (such as an investment or trade deal of apparently material proportions) allowing him to claim victory and move on, while recognising that this is an increasingly risky proposition given that the president is proving to be much less easily distracted during his second term than he previously was.

3. Negotiation. Negotiating substantively in an attempt to haggle some form of mutually acceptable deal, likely uneven in Trump’s favour.

4. Escalation. Retaliating with responses of one’s own, either to improve the odds of negotiation at a later stage or to ‘weather the storm’ until the president’s attention is drawn to other urgent priorities.

The table below lays out a list of key international responses to date to US foreign policy actions under President Trump, and points to a world seeking to push back against America’s new modus operandi in foreign policy.

Table 2: International Responses to US Foreign Policy, Partial List

The international responses to US foreign policy actions provide several important insights:

1. The world is countering, not conceding. Both US allies and opponents alike are refusing to accept America’s current foreign policy approach, with virtually no country caving to US demands to date and even small countries demonstrating defiance against US demands.

2. The approach is to reciprocate, not escalate. Most countries have preferred to respond to US pressures with reciprocal tit for tat measures of their own, avoiding escalation but signalling their willingness (and capability) to resist US demands.

3. Continue commitment to the international order. The rest of the world continues to support the rules based international order and its principles, with countries and institutions engaging in burden shifting activities to make up for US withdrawals, and stronger countries looking to fill the economic, security and political gaps small countries face as a result of US pressures.

4. Limited usefulness of diversion recognised. Few countries have chosen to employ diversion when directly targeted by US foreign policy measures. While during the first Trump administration many countries attempted to deploy flattery to appease the president (Japanese Premier Shinzo Abe’s repeated praise of Trump and his losing multiple rounds of golf played with the president during the first term was thought to have helped avoid threatened auto tariffs in 2019), leaders today appear to have recognised that the president’s favour cannot be easily won, and his administration is more determined to push their agenda through.

5. Focus on tactical responses as countries wait and see. Countries around the world appear to have adopted a wait and see strategy, responding tactically to US foreign policy moves in the absence of an established playbook with which to counter what are overwhelmingly financial demands by the US.

The tactical wait and see approach being taken by most countries in response to America’s new foreign policy actions and priorities makes sense in the short term, at least until the President’s priorities, red-lines, and vulnerabilities become clearer. However, there are already indications of where the tariff approach is leading. As the US loosens environmental, consumer protection and other critical forms of regulation, the corporate playing field in the US is beginning to look increasingly different from the rest of the world, imposing costs for US businesses operating abroad, as they need to adhere to much more stringent requirements that when operating at home. Trump’s tariff approach seeks to factor such costs into tariff levels, effectively intervening in other countries’ internal regulatory regimes, something that trading partners will find difficult of not impossible to swallow. More importantly, given American corporations dominate almost every industry sector in the world, taken to its extreme, if the administration cannot eliminate other’s strict regulatory regimes, the undoing of domestic regulations creates a two tier world, much like the Soviet Union faced when post the Cold War it found itself with older and dirtier industries than America, and adds cost and potentially tests a key post-World War II pillar of American power, its multinational corporations hegemony over global industries.

Long-term Response Options: Strategic Diversification

The game of measure and countermeasures is of course at an early stage. However, the measures taken by the Trump administration reveal both character and pattern and lead to a number of considerations and steps that seem to lead to the world to diversify away from America, broadly as follows:

Opening position. Given these challenges, every country will ultimately develop longer-term strategies for dealing with America, based both on what the president wants from them as well as on their own strategic priorities and the degrees of freedom within which they operate.

Dependency level. In a world where America will act in a manner defined by this administration as its national interest, and where America will only provide its assets and capabilities in exchange for cash, on terms it will dictate, the United States is likely to be considered an unreliable ally and an unreliable counterparty.

Might, not rules. In the absence of a rules-based order, power is the only lever that ensures that countries stick to their agreements, effectively placing America, the world’s most powerful country, above the law. This is not entirely new since successive administrations have not submitted to bodies like the International Court of Justice or the International Criminal Court.

Disengagement, and timing. Typically, when a counterparty can neither be controlled nor trusted, disengagement is the chosen strategy. However, with much of the world dependent on American security, capital, and/or trade, it will take time for countries to disentangle themselves from the US, making continued short term constructive engagement with the US unavoidable in any case.

Diversification. Further, given America’s scale and pre-eminence in the world today, it cannot be easily replaced, and most often not by some other country acting alone. Diversification away from US dependence will require countries to work together, and agree norms for cooperation, build alliances, and pool resources to achieve goals, operating in a multi-lateral rules-based framework reminiscent of the liberal international order currently being dismantled.

The strategic options for diversification away from the US changes decades of working hand in hand and will be no doubt difficult and painful. The options so far are far-reaching for America, its allies and the world (Table 2).

Table 2: Strategic Options for Engaging America, Diversification

The greater the link a country or bloc has to the United States, the more difficult it will be to disentangle from it, and no country or bloc is more closely tied to America today than Europe, its closest ally,¹⁰ likely resulting in multiple levers to be deployed. Europe therefore serves as a potential case study and benchmark for the execution of both economic and security diversification. This is likely on the urgent list for Europe given the rhetoric of the recently leaked private exchange between the US Vice-President and US Defence Secretary Pete Hegseth revealed a desire to “extract economic gain” from “pathetic” “freeloading” Europe in return for US-led security actions, even when these served US interests.¹¹ while the Vice-President’s February 2025 speech at the Munich Security Conference described European leaders as “the enemy from within”.¹²

These levers provide a set of foresights on the nature of the developing relationship between America and the world:

1. Levers Likely Layered, Not Sequential. Diversification from the US cannot rely on a single domain (e.g., trade or defence); rather, it requires concurrent, multi-lever strategies, particularly for closely tied regions like Europe. Security, trade, and financial levers are deeply interconnected, and partial action in one area risks being offset or constrained by another.

2. Security Leverage Is Being Politicized and Monetized. The US now apparently views its security provision as a negotiable commodity rather than a shared alliance obligation. While advocates of the new US approach might argue it is simply incentivising Europeans to meet their obligations, the effect seems to be that Europeans perceive an unreliable partner as a result of the hostility and transactional approach leading them to pursue autonomy, including nuclear deterrence and defence industrial sovereignty.

3. Economic Rebalancing Requires Political Realism. While the EU has the scale to engage in economic diversification, internal fragmentation remains a barrier. Realignment (e.g., trade deals with India or LNG purchases from the US) reflects a pragmatic approach that is short of decoupling.

4. Diversification Is as Much About Governance as Strategy. Establishing alternatives to US systems - whether in defence coordination or payment infrastructure -requires governance innovation. Europe’s success depends not only on intent, but on its ability to create centralised, interoperable, and agile institutions that transcend national silos.

5. The Risk Is Not Just Overdependence, it is Strategic Exposure. The current crisis reveals that overreliance on the US has created strategic vulnerabilities that can be politically weaponised (for example, tariffs or withheld defence support). Diversification is thus not just about autonomy, it is about preparing for a potentially existential risk as both its former most critical ally (the US) and adversary (Russia) might coordinate to end the EU.

In summary, the underlying driver in resetting the relationship between America and the rest of the world is a breakdown of mutual trust and respect in the first quarter of 2025.

Conclusion: Does America First Lead to America Alone, and Is That Desirable?

The speed with which the Trump administration has moved to transform America domestically and internationally has been unprecedented.¹³ However, unless he manages to suspend or amend the US constitution, he has at most just under four years to reshape America and the world. The policy approach may well survive his presidency in the form of an ideological continuity of course. The deeper question is whether the changes will be beneficial to America’s own long-term interests, and whether America’s position of power – geopolitical, economic, security and environmental - in a reshaped world will be sustainable. Key initial considerations for policy makers from both sides of the Atlantic and Pacific, as well as its neighbours include the following:

Relinquishing Leadership Now Risks It Not Returning.The current approach marks a shift away from America’s historical commitment to global leadership. This reorientation risks long-term erosion of US influence, particularly as allies begin to question the reliability and durability of American commitments. While executive orders can be reversed, the broader fracturing of the liberal international order may not be easily repaired, even under a future administration committed to multilateralism since the world has already realized that American commitments may change with each presidency.

Undermining Soft and Diplomatic Power May Limit Future Options. By deprioritizing diplomatic and soft power levers, the current administration risks weakening tools that have traditionally underpinned US influence. These levers - credibility, persuasion, alliance-building - are not easily restored once diminished. It remains unclear whether America will be able to rely on these forms of power in the future without significant investment in rebuilding trust and institutional engagement.

Short-Term Gains May Lead to Long-Term Isolation. While a transactional foreign policy may yield some rapid results, particularly where economic or security dependencies exist, given these transactions are perceived as coercive or zero-sum deals, they risk encouraging states to diversify away from the US. This process is already underway, as nations build new partnerships and reduce their exposure to unilateral American leverage.

Assertive Tactics Risk a Shrinking Sphere of Influence. While the current administration seeks to extract greater value from allies and partners, the effect may be to shrink the geographic and strategic scope of US influence and the population it can coerce too. The clearest indications of this are found in regional diversification efforts and growing alignment between US neighbours and alternative blocs, suggesting the possibility of a reduced American footprint over time.

America’s Current Strategy May Accelerate Multipolarity. The current model of US engagement is accelerating the shift toward a multipolar global system. Whether this leads to a fragmented world of competing spheres, or a more integrated web of multilateral relationships remains unclear. However, the abandonment of rule-based frameworks increases the risk of systemic instability, while also reducing America’s ability to shape outcomes through institutional leadership.

Multilateral Institutions Face Renewal or Irrelevance. Institutions historically shaped by US leadership, such as NATO or the Bretton Woods bodies, face existential uncertainty in the absence of sustained American support. Some may adapt to a more distributed power structure; others may decline. The rise of regional and issue-based organizations results in America playing a less central role than it does today given the powerful centralised multilateral institutions it dominates.

Diversification Away from the US Risks Becoming Structural.The moves by nations to diversify trade, security, and financial dependencies away from the US reflect more than temporary hedging. As outlined above, these responses are increasingly structural, coordinated, and long-term in nature. While America retains unmatched scale and resources, the effectiveness of unilateral leverage is likely to diminish as alternative systems mature.

The Prestige of American Power May Be Diminished. The growing perception of the US as a transactional and unpredictable partner carries reputational costs. America’s historic appeal rested not only on its overwhelming strength but also on the reliability and values underpinning its leadership. By deprioritizing these aspects, the US may find its power harder to project, and its leadership harder to sustain, especially in a world with rising alternatives.

While it is tempting to liken America’s current approach to the mercantile or colonial phases of the British Empire, a more apt historical analogue may be the British East India Company. Like that model, the current US strategy appears to prioritise transactional relationships, economic extraction, and the projection of influence without long-term governance responsibilities. The current strategy is not a conventional imperial strategy built on territorial control or the export of political systems, but rather one that seeks strategic advantage through ad hoc deals and leverage over chokepoints, whether in supply chains, security guarantees, or capital markets. However, as with the East India Company, such a model in the growth phase of a great power may provide outsized returns, but in the face of an interlinked and mature set of counterparties, it likely delivers far fewer gains and risks alienation.

In this tumultuous period of change between two eras, the industrial and the information, radical shifts can be expected to be a feature of the transition. While President Trump and his administration may well be seeking to leverage American power to address the issues and affect the changes they feel they were elected to address, the approach to doing so has consequences which may diminish American power, making their policy levers less effective, requiring recalibration. In addition, the unintended consequence may be to make dependent allies autonomous and therefore weaken allies while strengthening rivals. The Chinese curse of living in interesting times is never far away at this moment.

The Leader: Endnotes