A New Era for U.S. Foreign Policy: Shifting Alliances and Global Influence
Tariffs on allies, pressure on NATO spending and a transactional approach to diplomacy. How U.S. foreign policy has shifted, and why it matters.
For decades, U.S. foreign policy rested on a network of alliances, open trade and multilateral institutions. Since 2025, Washington has taken a more transactional approach under the banner of "America First", and allies around the world are adjusting.
Trade as a foreign policy tool
Tariffs have been applied not only to rivals but to long-standing partners, and used as leverage in wider negotiations. Allies from Europe to Asia-Pacific have responded with a mix of negotiation, retaliation threats and efforts to diversify their trade relationships.
Pressure on defence spending
The U.S. has pushed hard for allies to spend more on their own defence. At the 2025 NATO summit in The Hague, members agreed a new long-term target of 5% of GDP for defence and security-related spending by 2035, a major increase on the previous 2% benchmark.
What allies are doing
- Europe is investing more in its own defence industry and security capabilities.
- Sweden, which joined NATO in 2024, sits at the centre of a changing Nordic security landscape.
- Australia and Singapore continue to balance close ties with Washington against deep economic links across Asia.
The bigger picture
Whether this shift proves temporary or permanent, it has already pushed many countries to hedge: building new partnerships, strengthening regional ties and reducing reliance on any single power.
