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Trump’s transactional foreign policy returns with a bill

Published: 17 Apr. 2025, 00:02

Park Hyun-young

The author is a senior economic reporter at the JoongAng Ilbo.

In 1987, Donald Trump, then a 41-year-old real estate developer, placed full-page ads in the New York Times, Washington Post, and Boston Globe — at his own expense. The headline read, “An Open Letter from Donald J. Trump on Why America Should Stop Paying to Defend Countries That Can Afford to Defend Themselves.”

The following year, during an appearance on The Oprah Winfrey Show, host Oprah Winfrey asked about the ad and what Trump would do differently in foreign policy. His response was blunt.

“You don’t need to talk about our enemies. The problem is with our allies,” he said. “They need to pay their fair share. Try selling something in Japan — it’s impossible. But they come here and sell cars and VCRs, crushing our industries. This isn’t free trade. In Kuwait, even the poorest live like kings thanks to oil, which they sell under our protection. Why aren’t we getting 25 percent of their profits? It doesn’t make sense.”

U.S. President Donald Trump speaks during a meeting with El Salvador's President Nayib Bukele in the Oval Office of the White House in Washington, DC, April 14. [YONHAP/AFP]

When asked if he planned to run for president, Trump initially said no — then added, “If this country keeps getting ripped off, I can’t rule it out. And if I run, I’ll win.”

That mindset — marked by grievance, alliances as transactions and the pursuit of “fair share” — has endured. Today, it forms the core of the Trump administration’s foreign and trade policy, especially as he begins his second term as U.S. president.

Stephen Miran, chairman of the National Economic Council and a Harvard-trained economist, has emerged as a key architect of this vision. He gained notice after Trump’s re-election with a paper titled "A User Guide to Reconstructing the International Trade System." In it, he proposed a “Mar-a-Lago Accord,” modeled after the 1985 Plaza Accord, to weaken the dollar, reduce the trade deficit and bring manufacturing back to the United States.

In a recent speech at the Hudson Institute, Miran argued that the world has benefited from two global public goods provided by the U.S.: a security umbrella and the dollar’s role as the dominant reserve currency. He claimed the cost of maintaining those goods has fallen too heavily on U.S. taxpayers, while other countries prospered under U.S. protection.

To correct the imbalance, Miran said foreign governments should begin directly sharing the costs. While the U.S. struggled with trade deficits and industrial decline, its allies thrived, he said. That must change.

He offered five ways allies could contribute: Accept U.S. tariffs without retaliation, thereby funding the U.S. Treasury; open their markets and increase imports of U.S. goods to curb unfair trade; boost purchases of U.S. defense products to reduce the Pentagon’s burden and support domestic jobs; invest in U.S. factories to avoid tariffs and support local industry; simply write a check to the Treasury to help fund global public goods.

Stephen Miran, U.S. President Donald Trump’s nominee to be chairman of the Council of Economic Advisers, testifies during a Senate Banking, Housing and Urban Affairs Committee confirmation hearing on Capitol Hill in Washington, D.C., U.S., February 27, 2025. [REUTERS/YONHAP]

The last proposal — offering cash with no conditions — stood out. Though Miran didn’t elaborate, the suggestion implied a willingness to accept money for continued U.S. leadership.

His logic, however, contains contradictions. Calling for a weaker dollar while maintaining its reserve currency status is inconsistent. Imposing tariffs while selectively negotiating reductions undermines the idea of a rules-based trade system. Demanding that allies not retaliate against U.S. tariffs risks dismissing their sovereignty.

More broadly, treating military alliances and currency dominance as items on an invoice misses their strategic purpose. These tools have long served as instruments of U.S. influence and leadership, not burdens reluctantly carried.

It’s true that the United States faces serious challenges. Its industrial base has weakened, the middle class has eroded, and China’s rise as a geopolitical rival has created new urgency. U.S. policymakers are right to question whether the current system still serves their country's interests.

But while the diagnosis may be valid, the remedy is questionable. Reducing diplomacy to a ledger of payments and debts could alienate longstanding allies, destabilize the global economic order and ultimately undermine the very influence the U.S. seeks to preserve.

If the United States insists on charging for leadership, it may find fewer willing to follow.

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.