The U.S. president has upended the traditional liberal international order, recalibrated relations with allies and is poised to exert a profound influence on the global strategic landscape through transactional alliances.
U.S. President Donald Trump shakes hands with President of the European Commission Ursula von der Leyen as he announces a trade deal with the EU at Trump Turnberry golf club on July 27, 2025 in Turnberry, Scotland, U.S.
During his first term as U.S. president, Donald Trump made “America first” the cornerstone of his foreign and economic policy. Now, in his second term, he has shifted the underpinning principle of U.S. trade from open market to paid access. He has changed U.S. security assurances from collective defense to strategic extortion.
This pivot has saddled U.S. allies with higher economic and political costs. While the word “alliance” usually connotes shared security, values and strategic coordination, Trump’s indiscriminate reciprocal tariffs on major trading partners laid bare a stark reality: Even U.S. allies have become collateral damage in the pursuit of “America first.” This underscores the inherent power imbalances and conflicting interests within the alliance structure.
Conventional wisdom once held that the United States secured its allies’ support by offering public benefits, such as security and a stable trade environment. Since World War II, the U.S.-led liberal international order has solidified around free trade and collective security. The U.S. advanced global trade liberalization through the GATT/WTO framework and ensured collective security via NATO, in return for the economic and political cooperation of its European and Asian allies. This model imposed the heaviest cost on the United States, while allies reaped the benefits of free trade and collective security.
However, Trump 2.0 has completely abandoned this arrangement. Under the Trump administration, alliance engagement prioritizes trade-offs and quid pro quo exchanges, giving short shrift to multilateral mechanisms.
On security, Trump exploits the asymmetric dependence on U.S. security guarantees, and pressures allies into ceding their sovereignty in exchange for U.S. security assurances. The United States has pressured allies to increase defense spending, with NATO members required to hit 5 percent of GDP and South Korea asked to pay $10 billion annually for the presence of U.S. troops.
Economically, Trump has pushed for greater market access. The tariffs under Trump 1.0 back in 2018 mainly targeted China. They were punitive and served as negotiating leverage. By 2025, “reciprocal tariffs” became a universal, structural market access mechanism, meaning the U.S. market now requires an entry fee. Any country that exports to the U.S. — ally and rival alike — must pay a baseline tariff to get in. Even long-time allies, such as the EU, Japan, and South Korea face a 15 percent tariff.
Guided by his business acumen, Trump has long recognized that the geopolitical loyalty of allies is tied not only to security interests but also to economic benefits. The economic dependence of Europe, Japan and South Korea on the U.S. is particularly high. Roughly 40 percent of the EU’s exports to the U.S. are in high value-added sectors such as autos and machinery. By imposing reciprocal tariffs and protection fees, Trump puts economic pressure on allies and extracts benefits for the U.S.
The U.S. said that under the US-Japan trade agreement, Japan agreed to buy billions in American-made military weapons and equipment and to invest $550 billion in the U.S. in a scheme under which the U.S. would retain 90 percent of the profits. (Japan did not directly use the term “return” but instead emphasized “profit distribution based on contribution and risk.”) South Korea pledged $35 billion investment in the U.S., with $15 billion for the shipbuilding sector to “make American shipbuilding great again.”
These investment pacts span key strategic industries, such as semiconductors, steel and shipbuilding, underscoring the shift of the U.S. alliance system toward transactional security. As the transactional alliance framework solidifies, it sparks new structural conflicts of interest. On security, the U.S. commitment to alliance deterrence contrasts with its private push for allies to do more, potentially destabilizing regional security in the short term and prompting allies to seek greater defense autonomy in the long run.
Economically, Trump’s policy of unilateralism and supply chain reshaping, along with tariffs on allies in certain sectors and demands for mandatory investment, are driving allies to diversify while staying close to the United States. Regional free trade agreements, such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and Regional Comprehensive Economic Partnership (RCEP), are gaining traction.
Such changes will profoundly alter the global landscape. The traditional order — a U.S.-led alliance system, underpinned by American values — is being challenged, while the trends of multipolarity and regionalization are set to intensify. The alliances will likely become more fragmented and purpose-based. Military, political, economic, and technological ties within these alliances will splinter and compartmentalize, and institutional linkages between different alliance networks will weaken.
Meanwhile, cross-regional multilateral frameworks may stall or regress, with countries more inclined to form alliances or engage in competition, or cooperation based on specific needs, undermining the stability of the global security order.
