Trump’s Transactional Diplomacy: A New Era in U.S. Foreign Policy?

Trump’s Transactional Diplomacy – 2025 and Beyond: A Critical Analysis

President Donald Trump’s return to the Oval Office in January 2025 signaled the continuation—and in many ways, the intensification—of his signature transactional diplomacy. His approach, which began during his first term (2017-2021), has seen a resurgence with an even more pronounced emphasis on securing direct, measurable benefits for the United States.

This policy is rooted in the idea that global relations should be based on the principle of “quid pro quo,” where the U.S. expects clear returns for its engagements.

Here is a breakdown of Trump’s transactional diplomacy, categorized by his first and second terms:

First Term (2017–2021) – Key Instances of Transactional Diplomacy

Withdrawal from the Paris Climate Agreement (2017): One of the most emblematic moves of Trump’s first term was the withdrawal from the Paris Climate Agreement in 2017. Trump’s rationale was that the deal disadvantaged the U.S. economically, while countries like China were allowed to continue their emissions growth. He viewed the agreement as a poor trade deal for the U.S., reinforcing the transactional nature of his foreign policy.
Renegotiation of NAFTA to USMCA (2018-2020): Trump renegotiated the North American Free Trade Agreement (NAFTA) into the United States-Mexico-Canada Agreement (USMCA) between 2018 and 2020. The renegotiation was based on securing better terms for U.S. agriculture, labor, and manufacturing, particularly in the auto industry, emphasizing the “America First” agenda.
China Trade War and Tariffs (2018-2020): Beginning in 2018, Trump launched a trade war with China, imposing tariffs on hundreds of billions of dollars worth of Chinese goods. The goal was to force China to change its trade practices and intellectual property policies, and to secure greater U.S. market access. Trump often framed this as a “win-win” where the U.S. would benefit from a better trade deal.
U.S.-Israel Relations – Moving the Embassy to Jerusalem (2018): Trump’s decision to move the U.S. Embassy to Jerusalem in 2018 was part of a broader effort to gain Israeli cooperation on issues such as counterterrorism, while also ensuring that the U.S. received political and economic benefits, such as closer ties with Israeli businesses and technology sectors.
U.S. Withdrawal from the Iran Nuclear Deal (2018): Trump’s decision to withdraw from the Iran nuclear deal in 2018 was grounded in the belief that the agreement was not providing enough concessions from Iran. In exchange for lifting sanctions, Trump expected Iran to curb its nuclear ambitions, an example of the transactional nature of his diplomatic negotiations.
Korean Peninsula – Denuclearization Talks (2018-2019): Trump’s meetings with North Korean leader Kim Jong-un were aimed at securing North Korea’s denuclearization in exchange for potential sanctions relief. The negotiations, framed as a mutually beneficial deal, ended without any lasting agreement but exemplified Trump’s transactional diplomacy.
Saudi Arms Sales (2019): The U.S. approved large-scale arms deals with Saudi Arabia in 2019, where Saudi Arabia was expected to secure greater investments in U.S. infrastructure, business, and energy sectors in return for defense contracts. This deal underscored the U.S.’s willingness to exchange arms sales for political and economic influence.
Mexico Border Wall Funding – Threat to Mexico (2019): Trump’s repeated insistence that Mexico pay for a border wall as part of the broader immigration deal was an instance of transactional diplomacy, wherein the U.S. sought financial compensation for its domestic policies.
Defense Contributions from NATO Members (2017-2020): Throughout his presidency, Trump pressed NATO members, particularly Germany, to increase their defense spending to 2% of GDP, threatening a reduction in U.S. military presence in Europe unless these nations met the target.

Second Term (2025–Present) – Expanded Instances of Transactional Diplomacy

Ukraine Mineral Deal (2025): Trump signed a deal with Ukraine in January 2025 to provide the U.S. with critical minerals, including lithium, cobalt, and rare earth elements. In return, the U.S. would supply Ukraine with advanced weaponry and military support, reflecting Trump’s transactional approach in leveraging global security for economic advantage.
Panama – U.S. Aid Cut and Threat (2025): In early 2025, after Panama deepened its relations with China, Trump threatened to cut U.S. foreign aid to the country. The move was part of Trump’s broader strategy to demand that countries align their policies with U.S. interests in exchange for financial or diplomatic benefits. He also canceled U.S. support for several Panama-based USAID projects, signaling a clear linkage between U.S. aid and geopolitical loyalty.
U.S.-Japan Trade Agreement (2025): Trump renegotiated the U.S.-Japan trade agreement in early 2025, pushing for increased Japanese imports of U.S. agricultural products and a significant reduction in tariffs. Japan was also asked to increase its military cooperation with the U.S. in exchange for favorable trade terms.
U.S.-China Trade Deal (2025): A new trade deal was reached with China in 2025, which saw China agreeing to purchase U.S. agricultural goods in exchange for a reduction in tariffs. This deal continued Trump’s policy of using trade as leverage to force China to meet U.S. demands.
Middle East Peace Deals – Expanding the Abraham Accords (2025): Trump successfully brokered new peace deals between Israel and additional Arab countries in 2025, capitalizing on economic and defense incentives. He pushed for U.S. military presence in the region and security deals with Saudi Arabia, Bahrain, and others in exchange for normalization agreements with Israel.
NATO – Defense Spending Requirements (2025): Trump, continuing his first-term demand, has doubled down on pressure for NATO members to increase defense spending, threatening to reduce U.S. military presence unless countries meet the 2% GDP target.
Cuba – Renewed Sanctions (2025): In 2025, Trump announced the renewal of sanctions against Cuba, demanding that the Cuban government cease its support for Venezuela in exchange for any potential easing of sanctions. This action demonstrates Trump’s continued use of economic and diplomatic pressures to enforce political changes.
Philippine Military Cooperation (2025): In exchange for U.S. military support, Trump’s administration has urged Philippine President Duterte to increase its cooperation with the U.S. military in the South China Sea. The arrangement also calls for greater trade deals between the two nations, highlighting a bilateral, benefit-driven relationship.
Vietnam – Trade and Lithium Extraction Deal (2025): Trump negotiated a trade deal with Vietnam to secure access to critical minerals like lithium, necessary for U.S. electric vehicle production. In return, Vietnam received U.S. investments in its infrastructure and tech sectors, again reflecting Trump’s transactional foreign policy.
Russia – Oil and Gas Deals (2025): Trump engaged in talks with Russia in 2025, emphasizing the need for Russia to work more closely with the U.S. in stabilizing global energy markets in exchange for lifting certain sanctions. Trump emphasized energy deals as a way to secure U.S. economic interests while maintaining geopolitical leverage over Russia.

Conclusion: A New Era or Just a Transactional Pivot?

Trump’s second term has intensified the transactional nature of his foreign policy, building on the strategies he initiated in his first term. While this approach has brought immediate economic benefits and reinforced U.S. dominance in certain markets, the long-term effects are still to be fully understood. Critics argue that this may alienate traditional allies, undermine international cooperation, and destabilize multilateral institutions. However, the transactional framework fits with Trump’s broader worldview, one that sees global diplomacy primarily as a series of business deals where the U.S. must always secure clear returns.

What is evident is that Trump’s foreign policy will continue to reflect this philosophy of direct, quantifiable engagement, forcing countries to meet U.S. demands in exchange for political and economic benefits. Whether this transactional approach will define the future of U.S. foreign policy remains uncertain, but it undeniably marks a departure from past norms, reshaping the way America engages with the world.