Tag Archive for: United States

What Donald Trump can learn from allies on foreign aid

There are smarter and more effective ways to streamline and re-strategise US foreign aid.

The Trump administration is not the first Western government to envision a stronger, safer, and more prosperous country by integrating foreign aid with strategic objectives. The experiences of the United States’ Five Eyes partners, particularly Australia and Britain, offer encouraging evidence for reform, having achieved tightly targeted development programs supporting diplomatic and strategic priorities. They also offer sobering lessons about implementation pitfalls, including the abrupt disruption of established programs, especially those already aligned with strategic policy, loss of critical skills among government personnel and heightened unease among international partners.

The logic driving aid integration is compelling. In an era of great power competition, maintaining separate tracks for diplomacy and development is an unaffordable luxury. China has harnessed development, along with trade and financial investment, as an instrument of strategic influence through both soft and hard means. Both Australia and Britain recognised this reality, merging their aid agencies into their foreign ministries to create more strategically coherent development policies. Having made clear its intent to fundamentally reshape USAID, the Trump administration has the opportunity to learn from its allies in the pursuit of the American national interest.

A unified strategy: Australia 

The Australian government integrated the Australian Aid Agency (AusAID) with the Department of Foreign Affairs and Trade (DFAT) in 2013 with the stated goal of better aligning Australia’s development, foreign policy, trade priorities, strategies and objectives while bringing an enhanced focus on the Indo-Pacific. The integration accompanied a reduction of Australia’s development funding. After reaching a peak of more than $5 billion in 2013–14, or 0.33 percent of gross national income, Australia’s development budget has progressively declined. In 2023-24, the budget was $4.8 billion, or 0.19 percent of gross national income. This change is also stark in terms of the slice of the Australian budget spent on foreign aid compared to defence expenditures.

An independent review of the integration in 2019 found that 90 percent of the Australian government’s strategic targets for the integration had been met, driving development allocations towards infrastructure and the Pacific. The review also found ‘examples of development goals being more strongly advanced through joined-up, whole-of-department efforts.’

These initial efforts—such as the Pacific Seasonal Worker Scheme and the Australian Infrastructure Financing Facility for the Pacific—have since grown to enable more ambitious and innovative integrated development and strategic initiatives. Key among these 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 Telstra’s acquisition of Digicel Pacific, the largest mobile provider in the Pacific, with the Australian government’s support amid rumors of interest from China Mobile. While the review stepped carefully around the issue, it found integration had increased Australia’s ability to counter efforts to overshadow Australia’s influence, like China’s Belt and Road and Digital Silk Road initiatives.

However, the review also found several areas of concern. Early morale problems among staff arising from the abrupt way the integration was implemented had largely dissipated by 2019, but a ‘pronounced deterioration in skills and systems’ remained. The review found that ‘almost 1000 years of experience left [government service] shortly after integration.’ Additionally, ‘estimates suggest another 1000 years of experience’ left the department in the five years before 2019 due to the department underestimating the capability needed to design and deliver development programming.

This loss of know-how continues to hamper effectiveness over a decade later. While development is now firmly accepted as a tool of statecraft, best wielded as part of a whole-of-government strategy, an article by the review’s author 15 months ago suggested DFAT still had room to improve in terms of fully harnessing its development delivery.

Strategic prioritisation: Britain

The merger between Britain’s Department for International Development and its Foreign and Commonwealth Office occurred in 2021. The principal intention behind the merger was to better align Britain’s development activities with its wider diplomatic, trade and geopolitical interests, both in strategic terms and in terms of in-country representation. The merger coincided with a decision to reduce the Britain’s development funding commitment from the 0.7 percent of GDP enshrined in law to 0.5 percent of GDP. Notably, the integration occurred while Britain was experiencing the economic slowdown of the Covid-19 pandemic, which resulted in a double blow to funding in absolute terms, constituting a 30 percent reduction overall.

Alongside the budget reductions, a strategic prioritisation of development initiatives was pursued, in which Britain focused on bilateral funding to a smaller group of countries where measurement of effect is often easier to determine, but at the expense of some wider bilateral and multilateral commitments which were deemed to deliver less tangible value to Britain.

In addition, Britain identified a select set of issues for its development focus, namely climate investments, girls’ education, and global health, where it had demonstrated expertise and where funding would have constructive spillover effects. For example, improving girls’ education is found to reap positive dividends for local security, prosperity and governance. These initiatives, concentrated in Africa, the Indo-Pacific and South Asia, are all areas in which Britain’s adversaries were harnessing development as an instrument of influence, dependence and coercion.

Britain’s National Audit Office (NAO) review of the progress of the merger in 2024 found positive evidence ‘of where a more integrated approach has improved the organisation’s ability to respond to international crises and events, which has led to a better result.’

Two such examples were Britain’s coherent humanitarian, diplomatic, and military response as the leading European power supporting Ukraine after Russia’s invasion, and the joint humanitarian and political response to the Ebola crisis in Uganda. The findings supported the rationale for the merger and the modernisation of the department as fit-for-purpose in sharpening the Britain’s geopolitical interests. However, the NAO also noted that ‘the indirect costs’ of the merger ‘in terms of disruption, diverted effort and the impact on staff morale should not be underestimated.’

The NAO also reviewed the effect of the overseas development aid reduction and found that while the prioritisation compelled in the government’s activities had some positive dividends, ‘the speed and scale of the budget reduction, and the lack of long-term planning certainty, increased some risks to value for money.’

What can the US learn?

These cautionary tales suggest some considerations for the Trump administration:

First, pace matters more than may be immediately apparent. While decisive action has its advantages, too rapid a transformation risks institutional damage that could take years to repair. Recipient partners need to be assured about the value of the relationship, as reputation matters when development partners have the luxury of choice. A phased integration that maintains critical expertise while gradually aligning strategic direction would likely prove more effective in the long term.

Second, capability preservation requires active management. Both Australia and Britain learned the hard way that development expertise isn’t quickly or easily replaced. The technical knowledge required for effective commissioning, procuring, financing and managing of development programs, while not unique to the aid world, is distinct from traditional diplomatic and geostrategic policy skills. Any US reforms must include concrete plans for retaining and developing each of these specialised capabilities and empowering them to work together to deliver coherent whole-of-government priorities.

Third, funding stability enables strategic coherence and builds influence with partners. Britain’s experience shows that simultaneous organisational and budgetary upheaval can undermine even well-conceived reforms. While efficiency gains are desirable, treating integration primarily as a cost-cutting exercise risks strategic self-harm. With strategic competitors snapping at our heels, such interruptions cannot always be remedied.

Fourth, clear metrics for success must encompass traditional development indicators and strategic effects. Australia’s focus on its immediate neighbourhood and Indo-Pacific infrastructure and Britain’s emphasis on areas of demonstrated expertise and reputational value offer useful models for linking foreign aid and development assistance to broader national interests.

The stakes for getting this change right are immense. China has outflanked the West in harnessing foreign aid as a strategic tool of statecraft, having learned from the experiences of Western development agencies. The US cannot afford to unilaterally disarm in this arena and sacrifice its many areas of retained advantage through poorly executed reforms.

Secretary of State Marco Rubio’s framework of strength, safety and prosperity provides useful guideposts. Development programs should demonstrably enhance US security partnerships, expand trade relationships that benefit US workers, or strengthen allies facing authoritarian pressure. Programs that cannot do this should be reconsidered.

Achieving these goals requires maintaining the US’s development capabilities even as they are more tightly aligned with strategic objectives. The experiences of Australia and Britain suggest this balance is achievable but demands careful attention to ensure areas of national strength and influence are strengthened, not squandered.

Trump’s trade war is about more than trade

The opening salvos of US President Donald Trump’s trade war have sent shockwaves around the world. Over the past three weeks, his administration has broken with decades of free-trade orthodoxy, threatening to impose tariffs not only on strategic adversaries such as China but also on longstanding allies such as Canada and Mexico. Even Denmark—a NATO member and steadfast US ally during and after the Cold War—has found itself in Trump’s crosshairs.

Trump’s actions have made many in the United States and around the world wonder: what exactly are tariffs, and how do they affect global trade? Simply put, tariffs are taxes on imported goods. If a Chinese manufacturer wants to sell shoes in the US, the American government can impose a tariff. If a US retailer pays $100 for a pair, then a 10 percent tariff, like the one that Trump recently imposed on goods from China, means that the retailer must pay the US government $10.

Those $100 shoes now cost $110. Who pays the extra $10? When Trump raised tariffs on Chinese imports during his first term, US importers bore most of the cost, particularly when they could not find alternative suppliers. Consequently, retail prices remained relatively stable, at least in the first year.

But the picture becomes more complicated when tariffs remain in place for an extended period. US importers cannot absorb the added costs indefinitely and may go out of business unless they find new suppliers or pass those costs to consumers, who may then need to cut back on spending.

When one country uses tariffs or other sanctions to damage another country’s economy, the result is often retaliation and trade war. China, for example, responded to Trump’s tariffs by imposing its own tariffs on US imports. Yet, although Chinese and US tariffs are based on similar reasoning, their impact will not necessarily be the same.

During the first US-China trade war, most of the burden of China’s retaliatory tariffs was borne by American exporters rather than Chinese importers. This was because China quickly found alternative suppliers for the goods it had previously sourced from the US. Oil and food—two of the top US exports to China—were readily supplied by Russia and other countries. Meanwhile, the US struggled to replace Chinese imports, forcing US businesses and consumers to bear the brunt of Trump’s tariffs.

These consequences have not gone unnoticed. Under both Trump and former President Joe Biden, the US has taken steps to incentivise domestic production and encourage firms to reduce their dependence on Chinese supply chains. But the extent to which such efforts will enable the US to shift more of the tariff burden onto China remains unclear.

To be sure, the vast size of the US market gives it a significant advantage. While Chinese importers can find alternative suppliers, Chinese exporters will have a hard time finding a market that can fully replace the US. The combined GDP of Russia, India, Africa and South America amounts to $13 trillion—just over one-third of US GDP, which is projected to rise to $30 trillion in 2025. And if the US convinces its Organisation for Economic Co-operation and Development allies to join the trade war, China could face tariffs from countries representing 46 percent of the global economy.

The Trump administration is betting that because the US is the world’s largest economy, China and other foreign exporters will struggle to find viable alternatives. This, in turn, would give the US decisive leverage in the trade war between the two countries. Early signs suggest that Trump’s strategy may deliver at least symbolic victories, with Mexico and Canada seemingly acquiescing to his demands by promising to do what they were already doing.

That said, tariffs are often a double-edged sword. On one hand, winning the trade war with China would allow the US to negotiate better trade terms. But US households could pay a heavy price. Fewer goods would be produced and sold to US consumers. While reduced imports could boost the competitiveness of domestic manufacturers, higher production costs and the absence of foreign alternatives would likely drive up consumer prices.

The potential geopolitical benefits of Trump’s trade war are less ambiguous, as his administration has decided to use economic pressure to achieve broader strategic objectives. It seeks to pressure Mexico and Central American countries to stem the flow of migrants to the US southern border and accept deported immigrants, and to counter China’s growing influence in the Asia-Pacific region and rein in Chinese expansionism, especially in the South China Sea. Moreover, Trump has vowed to take back the Panama Canal, and he seems serious about buying Greenland for its strategic location and natural resources—a US ambition going back to 1868.

Consumers and manufacturers in the US, China and beyond must brace for price increases and escalating geopolitical tensions. If Democrats regain control of Congress in the 2026 midterm elections, in which one-third of the US Senate and the entire House of Representatives will be on the ballot, they could curb Trump’s ability to impose tariffs. This gives Trump two years to win his trade war with China and the rest of the world—or at least convince Americans it was worth the cost.

With US funding freeze, China nonprofits are facing extinction. They need emergency assistance

An entire ecosystem of vital China-related work is now in crisis. When the Trump administration froze foreign funding and USAID programs last week, dozens of scrappy nonprofits in Hong Kong, Taiwan, and the United States were immediately affected. Staff are losing their jobs; some organisations face imminent closure due to lack of funding; others are paring back their programming.

In many cases, these organisations provide our last window into what is actually happening in China. They do the painstaking and often personally risky work of tracking Chinese media censorship, tallying local protests, uncovering human rights violations, documenting the Uyghur genocide, and supporting what remains of civil society in China. They provide platforms for Chinese people to speak freely; they help keep the dream of democracy in China alive. I’m not listing the names of any specific organisations at this time, because some prefer not to disclose that they receive foreign funding. Beijing believes funding that supports free speech and human rights is interference by ‘hostile foreign forces’.

As China’s President Xi Jinping has squeezed Chinese civil society and expelled journalists, information from inside China has gotten harder and harder to access. The 2017 Chinese foreign NGO law crushed US and other foreign nonprofits based in China. Some moved to Hong Kong or elsewhere. The spending freeze may deal them a death blow.

The research and other work done by these nonprofits is invaluable. It largely isn’t replicated by think tanks, universities, private firms, or journalists. If it disappears, nothing will replace it, and Beijing’s work to crush it will be complete.

As a journalist who covered China for more than 10 years, I took for granted the numerous organisations I could turn to when I needed certain kinds of information. But Donald Trump’s foreign spending freeze has revealed how dependent these organisations are on a single government for their survival—and, by extension, how fragile our sources of information about China really are.

The US must immediately grant emergency waivers to China-focussed nonprofits. If the US is not able to do this, governments around the world that value democracy, human rights and truth must step in and find a way to restore funding to these organisations now. It wouldn’t take much; a few million dollars spread across a handful of donor nations would be enough to preserve the research, expertise and networks these organisations represent.

Regardless of whether the US continues funding this work, this crisis should serve as a wake-up call for democracies everywhere. Funding from a single government should not be the only thing standing between us and an information blackout on Chinese civil society. That is not a model of international democratic resilience.

Providing funding for China nonprofits operating outside of China is directly aligned with the core interests of democratic nations. We base our security on the idea that democratic systems are the best way to guarantee the long-term stability, prosperity and wellbeing of citizens. Government budgets exist to preserve the democratic systems that make these goals possible; we don’t sacrifice these ideals to shave off a few numbers on a budget.

A key part of China’s agenda is to persuade its own citizens and the world, falsely and through deception and coercion, that democratic systems are not better. Beijing claims its system is the best way to guarantee economic prosperity and stability. It claims its one-party system is a meritocracy.

It is difficult and time-consuming—though not particularly expensive—to do the work that proves Beijing is lying, and that what it offers is smoke and mirrors. Tools that allow us to uncover the flaws of China’s own system and the actual struggles Chinese people face, directly support the goals, security and resilience of democratic governments.

Without the work that China nonprofits do, it will be much harder to show that China’s domestic model of economic and political governance is deeply flawed. If we can no longer prove that, it becomes much harder to understand why democracies are worth fighting for in the first place.

Trump is right to worry about China’s Panama Canal influence

Donald Trump’s foreign policy priorities are coming into sharp focus: shoring up economic security, bolstering national security and sending a clear signal to America’s allies and partners. One of those partners is Panama, a small Central American nation that happens to control one of the world’s most vital maritime passages. Of the many Trump proclamations over the past week, this is one that Australia, as a maritime nation, should pay attention too.

Built by the United States from 1904 to 1914 to connect the Atlantic and Pacific Oceans, the 82km Panama Canal now handles around 6 percent of global maritime trade and 40 percent of US container trade, underscoring its importance to both American interests and the global economy.

Heavily reliant on seaborne trade, Australia is particularly vulnerable to disruptions in global shipping routes. Even though only a small portion of its maritime trade travels through the Panama Canal, disruptions to the Panama Canal would have an impact on the price of goods in Australia, as the global supply chain would have to respond to the constriction of another key waterway.

The Reserve Bank in its August 2024 report on monetary policy noted that maritime trade freight costs had risen sharply in 2024. This was predominantly as a result of conflict in the Red Sea and a reduction in capacity of the Panama Canal due to drought.

The Reserve Bank said increased freight costs hadn’t yet translated into higher goods inflation in Australia but could if they were sustained—demonstrating the impact to disruption of maritime trade on Australia’s economy.

So, what exactly are Trump’s proclamations? He has threatened to seize back the Panama Canal, not ruling out use of force, and has claimed it’s under the control of Chinese soldiers and that Panama is gouging US ships with exorbitant transit fees.

While his claims are demonstrably false, his underlying concern is not misplaced. Maritime infrastructure is crucial to the economic and national security of countries such as Australia and the US. Australia learned this lesson too late in 2015 when it rashly leased the Port of Darwin to Landbridge, a Chinese-owned company, for 99 years. Much as Darwin is vital to Australia’s security, the Panama Canal remains critical to America’s.

The canal has been fully owned by the Republic of Panama since 1999, when the US transferred control under two treaties, one of which was a treaty of neutrality, requiring the canal to remain in neutral hands—and stating that if it did not, the US reserved the right to defend the canal with military force.

Despite the canal being under Panamanian control, companies from mainland China and Hong Kong have acquired key port facilities on both its Pacific and Atlantic entrances. On the Atlantic side, Landbridge has taken control of Margarita Island, Panama’s largest port. Meanwhile, Hong Kong-owned CK Hutchison Holdings—which wholly owns Hutchison Ports Australia, operator of terminals in Sydney and Brisbane—holds concessions to operate the ports of Balboa and Cristobal, the canal’s major Pacific and Atlantic gateways.

While CK Hutchison Holdings is Hong Kong-owned, the national security laws that were introduced in Hong Kong in 2020 could allow China to exercise influence over these ports.

China’s national security laws can require companies, including Hong Kong companies, to assist the Chinese government in in­telligence gathering and military operations.

This means that even though China does not directly control the Panama Canal, it still holds significant sway at both its Pacific and Atlantic entrances. Coupled with a major uptick in Chinese investment in Panama, underscored by Panama’s decision to join China’s Belt and Road Initiative in 2018, this port ownership provides China with a strategic foothold in the region, and specifically at ­either end of the canal.

Secretary of State Marco Rubio on Sunday demanded that Panama end the influence of the Chinese Communist Party over the canal area.

The canal area is part of a broader trend of Chinese investment in maritime trade routes, including in the Indian Ocean. Think of Bangladesh, Sri Lanka and Pakistan, to name a few. This foothold grants China significant influence over the Strait of Malacca, the Strait of Hormuz and other vital shipping lanes in the region. China has poured resources into Pacific ports, such as those in the Solomon Islands.

The point is that China is investing heavily in infrastructure that underpins global maritime trade. Under its national security laws, the companies driving these investments, some of which are state owned or have close ties to the Communist Party, could be compelled to use them for intelligence gathering or even military purposes. In the event of heightened strategic competition or conflict, these investments would allow for the targeted constriction of maritime trade to countries such as the US and Australia.

Despite Trump’s threats, it’s unlikely the US would opt to take the canal by force. But Australia should take notice. While Trump’s claims of Chinese soldiers controlling the Panama Canal are false, China’s increased control of port infrastructure globally, including at each end of the canal, should generate concern for a maritime trading nation such as Australia.

Trump’s trade and economic security agenda: what we know so far

President Donald Trump’s trade and economic security team is united and ready to use tariffs, export controls and enhanced sanctions to strengthen the US economy and achieve geostrategic outcomes against US adversaries. Those objectives range from preserving the US technology edge over China to stemming the flow of fentanyl pre-cursors into the United States and forcing a Russia-Ukraine peace.

The team also stands ready to use these tools against US allies and partners for what the administration considers to be the greater good and for addressing trade imbalances, building up US industries, pushing up allies’ defence spending or managing immigration. Australia can take nothing for granted and must take every chance not only to demonstrate how the alliance benefits US security and prosperity but to show that hindering the Australian economy with trade measures would damage US security.

Of the slew of presidential actions and executive orders already issued, the America First Trade Policy memorandum has been one of the more detailed, with stated objectives of promoting investment, productivity, US industrial and technological advantages, defending economic and national security and benefiting US workers. It initiated more than 20 possible trade and economic security measures to address unfair and unbalanced trade.

The only surprise was that decisions on tariffs and other measures, including those relating to China, were delayed until after 1 April, to allow for detailed reviews by the Treasury, Commerce Department and the Office of the US Trade Representative. Detailed reviews are required for the use of some trade measures, those under section 232 of the 1962 Trade Expansion Act and Section 301 of the 1974 Trade Act. But others, such as those under the International Emergency Economic Powers Act of 1974 and section 122 of the 1974 Trade Act, can be imposed by presidential declaration, though sometimes only temporarily.

Trump’s trade and economic security team

For the main roles in the economic and trade team, Trump nominated Scott Bessent, a billionaire hedge fund manager, as treasury secretary; Howard Lutnick, a Wall Street trader and chief executive, as secretary of commerce; and Jamieson Greer as US Trade Representative (USTR). Greer was chief of staff to Robert Lighthizer, Trump’s first-term USTR. The Senate confirmed Bessent’s appointment on 27 January and is likely to approve the other two within days or weeks.

They appear to be in lockstep with Trump on use of tariffs, export controls and sanctions, though the degree and breadth of such measures is not settled. This contrasts with a diversity of views in Trump’s first term.

In his testimony to the Senate Finance Committee on 16 January, Bessent said the administration could raise tariffs for three reasons: to remedy unfair trade practices in a particular sector or exercised by a specific country; to raise revenue; or as a negotiating tool. Bessent strongly defended tariffs, particularly as tools for achieving deals, and emphasised that he expected the Treasury, Commerce Department and the Office of the USTR would deliver a coherent economic security agenda.

Lutnick, whose confirmation hearing before the Senate Commerce Committee is scheduled for 29 January, has actively promoted Trump’s use of tariffs as a tool to force other countries to reduce their tariffs on US goods or to generate revenue for widening domestic manufacturing.

In his testimony in May 2024 to the Congressional US-China Economic and Security Review Commission, Greer advocated expanding economic security policies implemented under the first Trump administration and the administration of president Joe Biden. That included calling for the extension of tariffs on China to include Chinese companies operating in other countries.

Also awaiting confirmation are key members of Trump’s first-term trade team. These including Kevin Hassett, former head of the White House Council of Economic Advisers, nominated as director of the National Economic Council; Russell Vought, former White House budget director and lead in the Heritage Foundation’s Project 2025, nominated to again be Trump’s director of the Office of Management and Budget; Stephen Miran, a former senior economic policy adviser at Treasury, nominated as chair of the Council of Economic Advisers; and Peter Navarro, a former trade adviser and avowed China hawk, nominated as Senior counselor for Trade and Manufacturing. This group will constitute the upper middle management of Treasury, Commerce and the Office of USTR, responsible for executing the agenda.

The America First Trade Policy in detail

According to the memorandum, the Treasury by 1 April must review US trade partners’ exchange rates and recommend ways to counter currency manipulation and other unfair trade practices. In the same time limit, it must assess risks associated with continuing exemption of imports worth less than US$ 800 from duties (currently allowed under de minimis exemption), and it must consider strengthening limits on US investment in national security technologies and products in China. Biden’s Executive Order 14105 of 9 August 2023 imposed those limits.

Also by 1 April, the Commerce Department must investigate the US deficit in merchandise (goods) trade and associated economic and national security implications, and it must recommend remedies, potentially including a global tariff and other section 232 tariffs. The department must also review and improve US anti-dumping and countervailing laws, consider revocation of US-China Permanent Normal Trade Relations and improve US-China reciprocity on intellectual property rights. To improve US economic security, the department will lead a full review of the US industrial and manufacturing base and export control system to assess whether additional barriers are needed to protect the US’s technological edge. The steel and aluminum sectors are listed.

The Office of the United States Trade Representative will have the biggest task. By 1 April, it must complete a wholesale review of countries’ trade practices, US trade agreements and sectoral agreements and propose ways to remedy unfair practices and improve market access and job outcomes for US workers and businesses.

Unsurprisingly, US trade with China is a particular focus. Foreshadowing application of tariffs and other measures, the USTR must review the US-China trade agreement to determine whether China is abiding by the agreement (it’s not, but the US isn’t fully complying, either), consider further section 301 tariffs based on an investigation started during the first Trump Administration and address any unreasonable Chinese actions that burden or restrict US commerce.

Also unsurprising is that there is no reference to consultation with US allies and partners in the America First Trade Policy memorandum. Friends get no free pass—but they never do in US trade policy. Even longtime and trusted US allies such as Australia, which has a trade imbalance that favours the US and is in the US’s primary strategic theatre, must advocate strongly to minimise the impact of foreshadowed measures.

Showing just how turbulent US trade and economic security policy could be until 2029, Trump on 26 January threatened a tariff of 25 percent and later 50 percent on Colombian imports to the US in retaliation for the US ally’s refusal to accept planeloads of its deported nationals. Colombia backed down within hours.

Since his inauguration, Trump has said that Mexico and Canada must do more before 1 February to stop fentanyl and unauthorised migrants entering the US to avoid a 25 percent tariff. China must do more to stop fentanyl to the US, via Mexico and Canada, to avoid a 10 percent import tariff, Trump has said.

In the latest development, on 27 January, Trump told House of Representatives Republicans in Miami he would add tariffs on foreign-produced ‘computer chips, semiconductors and pharmaceuticals to return production’ to the US. He also said he would be ‘placing tariffs on steel, aluminum and copper’.

This is where we are after only seven days. It will be a wild ride.

In Pacific island countries, Trump should pursue embassy transformation

The Biden administration struggled with adequately advancing US national security and foreign policy interests in the Pacific islands. The problem was that the White House failed to select the right business concept to pursue.

What is needed is not simply a strategic pivot. What is needed is a business transformation. That requires more than reform and modernisation. It requires a radical rethinking and restructuring of the core business processes of the US embassies and consulates to the Pacific island countries.

Until that happens, Washington’s foreign policy establishment will be unable to afford to compete with revisionist authoritarian powers seeking to displace US influence in the Pacific islands.

Unfortunately, such organisational change cannot be achieved overnight. Among other things, it will require new executive leadership teams, and ambassadorial confirmations for Pacific island countries are notoriously slow. However, that does not mean that the new Trump administration cannot change the status quo at US diplomatic missions in the region by the end of the first 100 days. Here are four suggestions that could help to get the ball rolling.

First, the administration should systematically assess the strategic planning of the State Department in the Pacific. As a matter of policy, each mission is supposed to create a multi-year strategic plan that declare the United States’ whole-of-government priorities in ‘a given country’.

The plain meaning of the phrase ‘in a given country’ suggests that the requirement is to produce an integrated country strategy for every independent state of concurrent accreditation. In practice, that does not always happen. For example, the US embassy to Fiji, Kiribati, Nauru, Tonga, and Tuvalu produced a single integrated country strategy for what it refers to as ‘five diverse and geographically distant Pacific Island nations’.

The Trump administration should consider providing different guidance and instructions to missions that cover multiple countries. That revision might stipulate that the mission is to produce separate integrated country strategies for each of the countries, followed by an integrated mission strategy that synthesises the individual country plans.

Second, Trump should re-evaluate the concurrent accreditation of the diplomatic staff at the US embassy in Fiji to Kiribati, Nauru, Tonga and Tuvalu. These countries span the Pacific’s cultural subregions, Fiji being part of Melanesia, Nauru and Kiribati within Micronesia and Tonga and Tuvalu forming part of Polynesia.

The Trump administration should consider restructuring the US diplomatic footprint across the region. While current arrangements may reflect logistical and resource constraints, a more strategic approach would create three subregional complexes of US embassies, consulates and consular agencies. Within each of these complexes, key business functions would be centralised to promote efficiency and thereby reduce costs.

Under this strategic approach, the Melanesian complex would be composed of the US embassies in Fiji, Papua New Guinea, Solomon Islands and Vanuatu. The Micronesian complex would be composed of the US embassies in Marshall Islands, Federated States of Micronesia and Palau. And the Polynesian complex would be composed of the US embassies in Samoa and Tonga and the US Consular Agency in French Polynesia.

Under this structure, it would make sense for the concurrent accreditation for Kiribati and Nauru to shift to the US embassy in Marshall Islands until the US embassy in Kiribati is established. Similarly, it would make sense for the concurrent accreditation for Tuvalu to switch to the US embassy in Samoa.

Third, the White House should re-evaluate the regional diplomatic posture of the US in foreign dependencies and areas of special sovereignty. In the Caribbean, the US has an independent mission for Aruba, Curacao and Sint Maarten, which are constituent countries of the Kingdom of the Netherlands. In East Asia, the US has an independent mission for Hong Kong and Macau, which are special administrative regions of the People’s Republic of China.

In the Pacific, the US recently established diplomatic relations with the Cook Islands and Niue, self-governing states in free association with New Zealand. Following these precedents, the Trump administration should re-evaluate the diplomatic terminology used to describe other foreign dependencies, areas of special sovereignty and sovereign independence movement territories across the region.

Fourth, the Office of the Inspector General of the Department of State should address the gap that exists in inspections of the US embassies in Fiji, Tonga and Samoa. Under the Foreign Service Act of 1980, the office is required to inspect every US diplomatic post at least once every five years.

Unfortunately, that requirement is rarely met in practice, thanks to waivers from the United States Congress. The most recent inspection reports for the US embassies in Fiji and Samoa were a decade and a half ago. Shockingly, that was before the US pivot to Asia ever really started in earnest.

The Quad foreign ministers joint statement: short and sweet

Today’s joint statement from the Quad foreign ministers’ meeting in Washington is short and sweet, particularly for those who have been arguing that the grouping should overtly embrace security cooperation.

The statement’s emphasis on ‘security in all domains’ is a noteworthy and welcome shift from the previous, awkward position that the Quad was not a security partnership, despite working together in health security, cybersecurity and maritime security.

This inherent contradiction was unnecessarily self-limiting and confusing but persisted because Quad members, including Australia, saw this self-constraint as necessary to assuage Southeast Asian sensitivities about counterbalancing or containing China.

The Australian Department of Foreign Affairs and Trade should update its official description of the Quad, which is currently a ‘a diplomatic, not security, partnership’.

Also absent from the statement is any reference to ‘ASEAN centrality’. This is notable because past Quad statements have all dutifully replicated this diplomatic deference to the Association of Southeast Asian Nations. This ellipsis is an early indication that the Trump administration does not intend to pursue cooperation through the Quad only at a pace that is comfortable for Southeast Asian countries. In fact, ASEAN doesn’t appear to register at all as a policy concern among some members of Trump’s cabinet line-up.

While China is not named either, a joint commitment to ‘oppose any unilateral actions that seek to change the status quo by force or coercion’ leaves little doubt that Beijing is the Quad’s common challenge. A subsequent reference to ‘strengthening regional maritime, economic and technology security in the face of increasing threats’ should remove any remaining doubt. Beijing will inevitably react to such bluntness. But the Quad’s belated embrace of security cooperation is welcome. After all, security is a public good just like other elements of the Quad’s agenda, and something which the four countries should openly aspire to strengthen, without fear of offending others in the region.

Defence cooperation is not mentioned directly in the joint statement as part of the Quad’s security agenda. But it is strongly hinted in the commitment that ‘rule of law, democratic values, sovereignty, and territorial integrity’ should be ‘upheld and defended’ in the Indo-Pacific. (Note ‘defended’.) The Quad navies already exercise together in the annual Malabar drills. It is likely that a military dimension to four-way cooperation will now develop within the Quad, not only in unwarlike activities as disaster relief but also focused on deterrence. This should not dilute the Quad’s collaborative agenda in other policy fields, such as supply chain resilience and maritime domain awareness, but rather complement it.

The fact that the Quad foreign ministers meeting was virtually Secretary of State Marco Rubio’s first official activity will be read as a sign of President Trump’s willingness to back the quartet, which after all was revived in 2017 during his first term in office. This will come as a relief to Australia, India and Japan. And it underlines the Quad’s strategic utility not simply as a counterbalance to China but also as a means to anchor the US security role in the Indo-Pacific via a broad-based partnership with three of its most important regional partners, including its closest regional ally, Australia, and its most important one, Japan. India, which offers the heft as the world’s most populous country and democracy, will host the next summit of Quad leaders this year. Trump’s attendance in Delhi will be essential to maintaining the momentum.

This is a promising turn in the Quad’s fluctuating fortunes. It is tempting to inversely correlate the impact of joint statements with their length. The commendable brevity of this two-paragraph statement packs policy punches that were patently missing from some of the Quad’s recent, prolix pronouncements. When it comes to drafting joint statements, concision should be best practice: less means more.

Trump’s inaugural speech: the clues in what he said—and didn’t say

The global security implications of Donald Trump’s inauguration speech can be best summed up by two quotes that bookended his 30-minute remarks.

The first was an emphasis on his familiar ‘America First’ philosophy. Literally three sentences beyond the requisite acknowledgements, Trump said: ‘We will not allow ourselves to be taken advantage of any longer. During every single day of the Trump administration, I will very simply put America first.’

Then in the final minute of the speech, Trump said: ‘We will be a nation like no other, full of compassion, courage and exceptionalism. Our power will stop all wars, bring a new spirit of unity to a world that has been angry, violent and totally unpredictable.’

If the first could imply a retreat from US global engagement to concentrate on meeting its own priorities, the second indicates a continuation of an outsized role as guarantor of international security and stability. This apparent contrast could be written off as Trump saying anything and everything under the sun, but it should also be taken as a reminder that there is room in which the rest of the world can work, notably allies such as Australia.

An inaugural address is not a catalogue of policies, so we couldn’t expect it to tell us everything. But as a carefully prepared, teleprompter-read speech, it’s worth dissecting what Trump said and didn’t say.

Based on what we know of Trump’s wider views, the difference between a less engaged and a more engaged US will involve greater burden-sharing for allies. Those that take their security as seriously as the US does, and don’t assume the Americans will ride to the rescue, will get a better hearing. Persuading Trump that you are not taking advantage of US idealism is the number one reference point for other governments. That might happen through defence investment, as with wealthy countries such as Australia or NATO members, or showing mettle in the face of bullying, as with middle income friends such as the Philippines.

As expected, the most immediate challenge Australia and others face is trade and tariffs. The most detailed example of America First that Trump outlined was on revenue-raising through tariffs, including the creation of an ‘External Revenue Service’, mirroring the Internal Revenue Service or US tax office. Tariffs will therefore be used not just to level the playing field against China’s unfair trade practices but also as a tool to raise US government revenue.

The key security focus was the southern border—the only specific security challenge he covered in any significant detail. He declared a ‘national emergency on our southern border’ and designated drug cartels as foreign terrorist organisations.

There was no mention of allies or alliances. There was no mention of Ukraine and Russia. The only mention of the Middle East was an observation that, just before his inauguration, Hamas released some Israeli hostages.

It was notable that Trump did not say much about China, given he has sent other signals that he plans to get tough on the economic and security risks that Beijing poses, whether through high tariffs or his appointment of Marco Rubio as Secretary of State.

The single reference to China was in relation to the thorny issue of the Panama Canal, which the US built but then handed over to Panamanian ownership under a 1977 treaty signed by Jimmy Carter. This fell very much into the category of the US’s being taken advantage of and representing an economic security threat, involving the unfair charging of US ships and, above all, China’s having operational control of the canal—a reference to Chinese-funded infrastructure and contracts held by a Hong Kong-based company to run the ports at either ends of the canal. These raise security concerns just as Beijing’s interest in the Pacific, or the lease of the Port of Darwin to a Chinese firm, have raised concerns in Australia.

Trump’s vow to take the canal back, along with his interest in Greenland because of its strategic value, may explain his eyebrow-raising reference to a US that ‘expands our territory’—though so could the reference to planting the flag on Mars.

Beyond the sometimes provocative rhetoric, Trump’s interest in the Panama Canal and elsewhere can be explained more as a desire to avoid the likes of China and Russia gaining control over US strategic interests, whether geographic or technological. During other inauguration events, Trump described his preferred approach to the future of TikTok as one of joint ownership that would enable the US to exert control to protect itself.

And his answer during a press conference in the Oval Office that Gaza must ‘be rebuilt in a different way’ and that the US may be willing to help suggests he recognises that while ‘not our war’, the US has an interest in ongoing involvement in the stability of the Middle East—which will also likely include countering terrorism and resuming normalisation between Israel and Saudi Arabia.

It’s his discussion of defence from which we can glean a bit more about how Trump might use American power in the world. He outlined a broad vision of a ‘peace through strength’ doctrine but with his own signature characteristics.

He vowed to build the ‘strongest military the world has ever seen’ (which the US has actually had now for at least 80 years but perhaps for the first time is being tested by a near-peer in China). Then, most tellingly, he said his administration would measure success ‘not just through the battles we win but also by the wars that we end and perhaps most importantly the wars we never get into’.

That could indicate Trump will refuse to be drawn into foreign conflicts that his predecessors might have seen as a US duty in which to intervene for the good of the world. But it could also promise a form of deterrence so effective that no one will dare risk starting a war in the first place if it might invite any kind of US involvement. That would be consistent with his—admittedly unprovable—claim that Russia would never have dared invade Ukraine on his watch.

How will China read that with respect to its ambitions towards Taiwan? Beijing’s own unprecedented peacetime military build-up is for expansionist purposes so a US choosing military superiority for deterrence is in all our interests. That said, Trump’s failure to mention Ukraine wouldn’t have gone unnoticed in Beijing.

From what we’ve known about Trump for some years now, including from his first administration, the US will look more fondly on countries that help themselves and pitch in to a shared effort. Again, not taking advantage of the US is the key reference point.

And this needs to be the number one takeaway for countries such as Australia.

AUKUS: Beyond submarines, a blueprint for allied Industrial Integration

The AUKUS defence partnership of Australia, the UK and US has made remarkable progress since its establishment in September 2021, though it also faces emerging challenges. After decades of frustrated attempts at reform of US defence-technology export regulations, the past three years have demonstrated what bipartisan congressional courage and masterful diplomacy can achieve when aligned with strategic necessity.

This was highlighted at a recent Center for Strategic and International Studies roundtable featuring Representatives Joe Courtney and Michael McCaul and Australian Ambassador to the United States and former prime minister Kevin Rudd.

In an era where metrics often oversimplify complex realities, Courtney’s reframing of the US shipbuilding debate deserves particular attention. While critics focus on vessel count, Courtney presents a more nuanced picture: US shipyards are already operating near peak Cold War production levels when measured by tonnage. More significantly, AUKUS will drive production over the next decade to exceed even World War II levels, though in fewer but substantially larger and more sophisticated vessels. This shift in measuring capability rather than quantity reflects the evolution of naval warfare and industrial capacity, and underscores the advantage of Australia building an additional allied shipyard.

However, this industrial renaissance faces immediate challenges. The most pressing concern lies within the Defense Department, where mid-level officials are wrestling with decisions about adding certain submarine technologies—particularly in propulsion and acoustics—to the exclusion list of the US export rules, called the International Traffic in Arms Regulations (ITAR). These seemingly technical decisions could have outsized implications for AUKUS’s first pillar. While McCaul reports reassurances from Deputy Secretary of State Kurt Campbell that these exclusions will ultimately align with AUKUS requirements, the situation highlights the complex interplay between bureaucratic processes and strategic objectives.

The congressional AUKUS Caucus of supporters are confident that the partnership’s durability extends beyond current administration priorities. McCaul’s confidence in AUKUS’s Trump-proofing stems from the former president’s role in its genesis, suggesting a rare point of bipartisan consensus in US foreign policy. Donald Trump’s candidate for secretary of state, Marco Rubio, on 15 January predicted strong support for AUKUS in the incoming administration.

Yet the alliance’s true resilience may lie in what Rudd astutely identified in its second pillar: the de facto creation of an AUKUS free trade agreement.

This emerging defence technology marketplace represents perhaps the most revolutionary aspect of the partnership. The deterrent effect of a unified, innovative defence industrial base across three continents could prove as strategically significant as the submarine program itself. However, realising this potential requires more ambitious steps toward market integration.

The current framework establishes key technological verticals but leaves crucial questions about the stages of innovation and company growth unanswered. A more comprehensive approach would better define the span from basic research to mature companies, which could lead to the creation of a genuine AUKUS innovation ecosystem. This could include shared acceleration programs, coordinated investment strategies, and unified contracting vehicles—all while drawing upon each nation’s unique investment and industrial strengths.

Such integration would require modest personnel commitments, targeted investment to back agreed winners and unprecedented transparency about capability gaps across the three nations. Yet these challenges pale in comparison with the strategic advantages of a truly integrated defence industrial base. This would not only accelerate innovation but also create redundancy and resilience in critical supply chains, a lesson brought into sharp relief by recent global disruptions.

The AUKUS partnership represents more than a submarine deal or even a defence agreement; it is a blueprint for deep industrial integration among democratic allies. As geopolitical competition intensifies, particularly in the Indo-Pacific, this model of alliance-building through industrial policy could prove as significant as traditional security arrangements.

Success will require sustained attention to seemingly mundane details: export control reforms, procurement harmonisation and investment coordination. These unglamourous tasks might not capture headlines like submarine announcements, but they will determine whether AUKUS fulfills its transformative potential.

Moving forward, policymakers should focus on three priorities. First is resolving the ITAR exclusion list challenges in a way that enables rather than constrains technology sharing. Second, there needs to be a comprehensive framework for market integration across all stages of technological development. Finally, we must establish the institutional mechanisms needed to coordinate investment and procurement across three different national systems.

The progress achieved in just three years suggests these challenges are surmountable. More importantly, it demonstrates that democratic nations can move with relative speed and unity when faced with clear strategic imperatives. As AUKUS evolves from concept to reality, maintaining this sense of urgency while attending to crucial technical details will be essential.

The ultimate measure of AUKUS’s success will not be in submarine counts or even tonnage produced but in whether it creates a new model for alliance-building through industrial integration. Early indicators suggest it is well on its way to doing exactly that.

Joe Biden’s disappearing legacy

All US presidents leave mixed legacies. The best make mistakes, and the worst get some things right. But Joe Biden’s legacy is more mixed than most, if only because he got some big things mostly right and some big things mostly wrong.

Start with the positives. The US economy performed extremely well under Biden, far outpacing its peers. Coming out of the COVID-19 pandemic, GDP increased significantly, from approximately $21 trillion in 2020 to more than $29 trillion in 2024. The economy added more than 16 million jobs, and unemployment fell substantially. And major legislation—the Bipartisan Infrastructure Law, the Inflation Reduction Act and the CHIPS and Science Act—secured significant funding for infrastructure improvements, domestic microchip production and clean energy.

But the surge in federal spending also caused inflation, with consumer prices up some 20 percent over four years. It also contributed to a ballooning deficit, with government debt increasing by some $7 trillion, to $36 trillion by the end of 2024.

Biden’s biggest foreign-policy accomplishment was undoubtedly Ukraine. While the administration ultimately could not prevent Russian President Vladimir Putin’s invasion, it made unprecedented, creative use of intelligence to warn Ukraine and the world. It also settled wisely on an indirect strategy, in which the United States and its NATO partners provided Ukraine the means to defend itself while avoiding direct military involvement, which could have triggered a larger—or even nuclear—war.

The policy largely succeeded. Nearly three years after the war began, Putin has failed to achieve his aims, despite the disparity in military strength and population. Indeed, Ukraine has fought the Russian military to a near standstill and maintained its independence.

The policy was not perfect. It too often erred on the side of caution in providing Ukraine advanced weapons systems or allowing them to be used in a manner most likely to affect Russian action. Similarly, framing the war as one between the forces of democracy and authoritarianism got in the way of building a broad international coalition to oppose Russian aggression and support sanctions.

The Biden team also failed to articulate achievable war aims. Fearful of being accused of selling out a partner and compromising in the face of aggression, the administration deferred to Ukraine, which until late 2024 insisted on recovering all its lost territory dating back to 2014, a position that, while understandable, was not realistic militarily. Allowing objectives to be defined in terms that could not be met played into the hands of opponents of aid to Ukraine.

More broadly, Biden took important steps to revive alliances that had been damaged and weakened during President-elect Donald Trump’s first administration. Biden essentially replaced ‘America first’ with ‘allies first’. He understood the strategic advantages of enlisting partners on behalf of common regional and global challenges. NATO added Finland and Sweden on Biden’s watch and continued to modernise, while Biden announced a significant trilateral partnership with the United Kingdom and Australia—AUKUS—and brokered a historic rapprochement between Japan and South Korea.

Elsewhere in the Indo-Pacific, however, strategic drift prevailed. Regarding China, Biden retained Trump’s import tariffs and imposed a host of technology-related export controls. Renewed dialogue did not halt China’s ongoing military build-up or its support for Russia’s war on Ukraine. Similarly, there was scant new diplomacy vis-a-vis North Korea, which remained hostile to US interests, continued to produce nuclear weapons and missiles, and sent troops to Russia to fight on the Kremlin’s behalf.

The most glaring hole in the administration’s regional strategy was economic. Biden announced the Indo-Pacific Economic Framework, which did not amount to anything, and the US did not join any regional trade pacts, allowing China to cement its position as the region’s economic centre of gravity. As a rule, free trade gave way to protectionist policies that emphasised costly domestic production and ‘buy American’ provisions.

In Afghanistan, Biden implemented the accord negotiated and signed by Trump in February 2020 that paved the way for a Taliban takeover. Even though a strong case could be made that the pact undermined a status quo that was affordable and kept the Taliban at bay, there was no effort to revise it. After years of US funding and training, the Afghan army collapsed in a matter of days, and 13 US troops died during the chaotic evacuation.

Meanwhile, efforts to put the Middle East on the back burner imploded on 7 October, 2023. Biden was properly supportive of Israel in the days after Hamas’s attack, but near-unconditional backing made the US appear weak as subsequent Israeli military action in Gaza caused tens of thousands of civilian deaths and created a humanitarian crisis. The administration spent the bulk of its time trying to broker a ceasefire between Israel and Hamas that neither side wanted.

While the region is arguably in far better shape than it was four years ago, this has less to do with US policy than with Israel’s decapitation of Hezbollah, its decimation of Hamas, its decision to strike Iranian air-defence and weapons facilities, and the ouster of Syria’s Bashar al-Assad, which ought to be attributed to Iranian weakness, Russian distraction and Turkish opportunism.

The Biden administration’s biggest single failure was at the US southern border. Illegal immigration surged by some eight million between 2021 and 2024. The administration initially sought to differentiate its immigration policies from those of Trump, but then was slow to react when it became clear its approach wasn’t working. Biden and the Democrats paid dearly, as polls indicate it contributed significantly to Trump’s re-election.

Biden’s decision to run for re-election, despite low favourability ratings and growing signs that he was no longer up to the job, also paved the way to Trump’s victory. Had he followed through on his earlier promises to be a transitional figure and opted to be a one-term president, Democrats could have staged a competitive nomination process, giving candidates time to develop agendas and introduce themselves to voters. There is no way to know if Vice President Kamala Harris would have prevailed, but if she had, she would have been a far stronger candidate for having earned the nomination and publicly defining herself in the process.

Presidential legacies depend in large part on what successor administrations retain. It is not just Biden’s misfortune to be succeeded by Trump, who is committed to undoing much of his domestic and foreign policy. It is also in no small part Biden’s doing. His biggest legacy could be the lack of one.