The world today is marked by elements of International Realism as we head into a decade of great power rivalries. As the dominant chaperone of the rules-based, international liberalistic world order, the US has seen increased proliferation in isolationist sentiments in much of the past decade, spurred by missteps in theatres across the world that made active involvements hugely unpopular. Yet in many ways, the US foreign policy has not divagated significantly within the past century.
Again, not unlike the decade of tension during the 20th century, the US National Security Council is concluding that the 2020s is the “decisive decade” in US competition with China. While much of what I intend to deliberate here pertains to US foreign policy with regards to their key international stakeholders, I in no means believe that the US is the only one that has taken hostile actions abroad. China for example, has been actively stealing intelligence on the South China Sea from the Philippines and have targeted Malaysia’s Kasawari gas fields. But we do live in a world marked by Pax Americana, and the arbiter of world peace has a larger responsibility to ensure accountability, no?
I also do understand that foreign policies can be rather cynical, after all independent sovereigns have an elected mandate to look after the needs of their populace first. I hence prefer evaluating the essence of US foreign policy on the impacts of their actions on the world. Likewise, while focusing on the missteps of foreign policy allows me some lucidness, a successful US foreign policy framework also involves the active engagement of middle powers such as India. Oftentimes, fostering partnerships with countries that categorically remain neutral and will in years to come, play increasingly integral worlds in geopolitical realignment trends will allow the US to strengthen influence abroad and partnerships in a multipolar global order.
I decided to pen down some off-the-head thoughts on how a continuation of narrow-mindedness, and antagonistic US foreign policy based in the theories of Offensive Realism could harm the collective good of stakeholders across the world. Framing the existing world order denominated around Geoeconomics will be vital in my view, for portfolio and mental frameworks in framing the next decade of drivers as factors evolve.
“Great changes unseen in a century are accelerating across the world … the once-in-a-century pandemic has had far-reaching effects; a backlash against globalisation is rising, and unilateralism and protectionism are mounting… The world has entered a new period of turbulence and change where external attempts to suppress and contain China may escalate at any time. Our country has entered a period of development in which strategic opportunities, risks, and challenges are concurrent and uncertainties and unforeseen factors are rising… We must therefore be more mindful of potential dangers, be prepared to deal with worst-case scenarios, and be ready to withstand high winds, choppy waters, and even dangerous storms”
Liberalisation to Protectionism
First to caveat, I think some are realising the way we view classical protectionism has evolved over the years. While the creation of the World Trade Organisation (WTO) and trading relationships were built on the principles of Ricardian efficiency, progressively we are seeing actors around the world allocating added focus to not the improvement of standards of living but to the development of National Champions (think BYD, Nvidia, Huawei, Airbus, ASML) and a weaponisation of trade through supply chain leverages, inorganic growth in trade surpluses and as tools for negotiation. In these countries where there are heavy state subsidisation/stimulus/growth incentives, the threat for unfair and beggar-thy-neighbour trade policies are valid and warranted concerns for foreign markets who seek to ensure that domestic producers remain competitive and afloat.
Protectionism today has become entrenched in bipartisan politics. As much as the Democrats were against Trump’s tariffs in 2018, the Biden administration has largely chosen to maintain previously imposed tariffs, whilst expanding on other areas the administration has deemed as of “National Security” concerns. There is no doubt this will continue to become a prominent mainstay of international realism in the subsequent decades as the Great Power rivalry intensifies. Yet, the nucleus of hostile protectionism jeopardises much of the work past administrations have done to build extensive networks of global relationships especially as the Trump administration threatens to impose flat tariffs on all trading partners, walking back on prior commitments to promote free trade and ensuring equal treatment across the WTO for reasons not involving conflicts and uprooting the concepts of the Permanent Normal Trade Relations (PNTR) status.
I believe the real and warranted concerns towards the weaponisation of the trade function have instead fostered policy missteps.
The US was the strongest proponent for the appellate body during the creation of the WTO in 1995. As part of the Dispute Settlement Panel, the appellate body held judges to be the enforcers of rulings and provided an effective dispute resolution mechanism. In May 2016, President Obama announced his decision to block the reappointment of Judge Chang under criticisms of judicial overreach and since then, the US has inveighed against the WTO and blocked future appointments. Today, the appellate body sits empty and the WTO is left paralysed to curbing unilateral trade measures and resolving conflicts, increasing the risks of retaliatory trade wars and making the global system more volatile.
Increased protectionism has also not necessarily yielded benefits. Pitts Enterprises, a trailer manufacturer in the chassis market, was one of the firms who filed petitions in Washington seeking punitive tariffs on chassis made by state-owned Chinese container giant CIMC due to an inability to price compete. Despite a finalisation of more than 220% on Chinese trailers, Pitts realised that their factor inputs as well contained enough Chinese components to be subject to the new tariffs, wiping out $250mm in expected gross revenues. Cumulatively, the trade tensions and business frictions resulted in a huge loss for CIMC/CIE and Pitts, but hurt the many employees of these firms in Emporia and Pitts workers in Pittsview the most. Even the Chinese began affectionately referring to Trump as “Comrade Chuan Jianguo” because they believed he was hurting America’s interests in favour of the Chinese. Most economists seem to agree as well, that protectionist policies and tariffs tend to hurt the global economy more. Tariffs during Trump 1.0 did not increase US production of steel and aluminium, nor is it viable to expect that with a great many goods now entirely sourced abroad, production would materially return to domestic sources. Even more so as tariffs put pressure on the domestic economy, and with a clear mandate set out to enforce the deportation of a swath of low-skilled workers and implementing blanket tariffs, I don’t see how the already tight US economy will rebuild comparative advantages and absorb induced costs at a rate strong enough to keep a stagflation at bay.
In another significant study, the Federal Reserve Bank of New York studied the consequences that strategic decoupling and protectionist policies regarding critical technologies brought. It discovered that — while US export controls aimed at reducing dependencies on Chinese firms, US producers were largely unsuccessful in forming alternative supply chain relationships especially with non-Chinese and domestic firms, creating collateral challenges where US firms encountered limitations finding substitute partners without access to their established Chinese customer base. In contrast, Chinese companies quickly adapted by turning to domestic chip manufacturers and other critical technology suppliers, leading to minimal disruptions caused by US restrictions and maintaining production flows. These divergences in adaptability led to a situation where US firms, constrained by national security goals, faced financial constraints without sufficient support for alternative supply chains while Chinese counterparts could rely on strong domestic suppliers, preserving technological advancements. In fact, an analysis of China’s current semiconductor manufacturing capabilities revealed they were reaching a level three years behind industry leader Taiwan Semiconductor Manufacturing Co.
I do think that some of the backlash to tariffs are slightly overboard, especially those that reference the failed Smoot Hawley Tariff Act of 1930. During the late 1920s and 30s, the US saw a rise in protectionist sentiments amidst running huge trade surpluses. US today is instead running huge trade deficits. The impacts of punitive tariffs are likely to be rather different. The increase in tariffs, if the convexity favours, might also work in reducing the size of US fiscal deficits through the stimulation of the domestic economy and incentives for investment. Through much of the past decades, the US has had to spend more and keep up nondiscretionary payments to fill the increasing void left by moderating domestic demand and reduced incentive to invest within, hence maintaining a balanced AD-AS. Considering the circumstance that the US is currently running huge trade deficits and extensive income inequality, the effect of tariffs and protectionist policies may not be as negative as many make them out to be. I also don’t see significant changes to the status quo where sovereigns and investors direct their excess savings to the US.
An isolationist/protectionist stance plays out in arenas other than trade as well, where the US should be willing to advance soft power. China now sits at the top of the Lowy Institute’s 2024 Global Diplomatic Index, with leadership in number of global diplomatic outposts and more than the US has in Africa, Asia and the Pacific Islands. With Chinese diplomatic foibles (support for militaristic regimes in Iran and North Korea), the US must put renewed efforts into engaging the world, carefully navigating the techno-nationalism in China while ensuring global cooperation and knowledge sharing, key pillars to American leadership in innovation and soft power maintain open pipelines.
Unilateralism in a Multipolar World
There should be no debate that the world today, is a multipolar one. The National Security Strategy, Washington has acknowledged that China “is the only competitor with both the intent, and increasingly, the capability to reshape the international order, while constraining a dangerous Russia”. Yet I believe the US acts in a unilateral manner, characterised by a flippant disregard for the interests of other states while perhaps contradictorily, driven by Mearsheimer’s theory on Offensive Realism and perpetuating a self-fulfilling prophecy.
Empires and sovereigns in the past derived power from the hegemon over tangible resources (Spanish armies and metals, UK’s navies and economic reach, US’s capital markets and nuclear arsenal). Yet the resources of influence today are increasingly of an intangible modality, and are non-sovereign in nature, mandating that the unilateral approach that America takes is largely detrimental. The fact that most threats today are unconventional and non-sovereign (impacts of Climate Change, unregulated AI and the ease of disinformation campaigns) exacts extensive global dialogue and partnerships, especially as both the US and China sit in the top 3 nations by cumulative global emissions. As long as the US continues to take a hostile and unilateral stance entering conversations with their partners across the Pacific, the world will struggle with developing solutions that rely on engaging reality — that which there are 2 dominant and extremely consequential powers at loggerheads.
I’ll leave an amazing article that shaped some of my thoughts on the role of the nature of assets of power here. To encapsulate the essence of the piece:
- Countries are increasingly deriving power from intangible resources — the knowledge and technologies such as AI, scientific discovery and military potential
- Private companies stake on geopolitical outcomes are growing, and the interests of US private sector are not always aligned with national objectives
- What drives intangible power — academic research funding, education and favourable immigration policies are becoming less favourable to promoting American leadership in innovation. America suffers from chronic underinvestment in basic research and a decade ago, the US produced by far the most highly cited scientific papers in the world. Today, China holds that accomplishment, with contributions surpassing those of the US in the closely watched Nature Index
- Due to spiralling federal debt, the Pentagon increasingly runs on stopgap budget measures that fund only existing programs instead of nascent and promising development initiatives, stifling innovation
And since the American foreign policy doctrine of the past, such as the Eisenhower Doctrine, containment policies and hostility will not yield the same results in managing the edge America owns in intangible assets, a persistence in American dogmatism will make certain the world we live in for the next half century, will be a much more tumultuous time marred more than ever by geopolitical tension and sovereign investment risks.
Likewise, if the US hopes to receive Chinese support for their aims in restraining Russian aggression, they will not achieve their intents in upholding peace in the Baltic theatre if they do not effectively engage China with respect and acknowledgement they want. And there is a vested interest in doing so — Russia’s reliance on the Chinese is sizeable, with 70-90% of its Computer Numeric Control machine tools which automate their precision-guided munitions as well as aircrafts and tanks coming from China. So why are the Americans crossing the Pacific and angering the Chinese, with statements like “if you’re not at the table in the international system, you’re going to be on the menu” from the Secretary of State? The Chinese who prioritise face (面子) will definitely not appreciate this table and menu approach.
American unilateralism is not limited to a pursuit of their own interests with often, a disregard for their counterparts, but also a disregard for diplomacy with potential allies. Whilst many around the world recognise the strategic importance of engaging African nations, the Biden administration has hosted minimal visits for African leaders and many have expressed chagrin over “crossing the ocean to come only to be loaded into buses like school kids” at the Washington Leaders’ Summit, allowing them to leave without even offering a private photograph or handshake with the President, a diplomatic courtesy extended to them in other bilateral summits with China and Russia. After repeated promises to African heads of states that he would travel to the continent, Biden quickly cancelled visits after the Gaza conflict. One recent South African editorial noted “US non-proposal would relegate the African continent’s 1.4bn people to the category of permanent second-class citizens without any significant decision-making power on a UNSC that allocates 60% of its agenda to issues relating to Africa”. Through continued dismissal of African interests and face, while the colonial impact on African nations is still felt keenly today, the US is perpetuating the self-fulfilling prophecy of alienating unaligned nations and sending them to the unified Eastern bloc.
China in contrast puts on a much favourable major country diplomatic approach, aiming to foster international relations and upholding multilateralism, fairness and win-win cooperations. In the New Era, the One Belt One Road Initiative (BRI) has deepened strategic ties and diplomatic relations between China and much of the developing world. Middle Eastern countries have increasingly expected China to play a more general and constructive role in the region as China works towards shaping a multi-layered cooperation framework across theatres in energy, infrastructure, finance and post-conflict reconstructions. All of this has culminated in a deepening of Chinese discourse power (话语权) — China is promoting a Global Security Initiative, a Global Development Initiative and has expanded on its role as a peace mediator in the Middle East, Horns of Africa and the Ukrainian conflict as they move from a passive to an active role on the world stage. Caveated, China’s involvement is still noticeably smaller than the incumbents and fraught with its own hostilities, but as we outlined at the start — there truly is no foreign policy aimed at supplementing others without a primary grail of achieving one’s own strategy interests. The crux lies on net global order, which of these superpowers are benefitting others more through their means of securing their interests.
Understanding Counterparts
Does Russia harbour revanchist ambitions, or is that largely a recycling of anti-Russian narratives across the West? I don’t believe that Russia is a saint state, and securing national interests through aggression and combat is incredibly destabilising and should be denounced. Yet I also believe due to the ease at which anti-whoever-we-are-against sentiments proliferate and become the orthodox thought, the West is hindering themselves from facilitating constructive and productive dialogue with their counterparts largely because entrenched narratives guide inherent biases in our policymakers. What the West lacks seems to be a lack of want to understand their counterparts, as well as an ability to as traditional media sources put no effort into providing a two-sided unbiased viewpoint. To make constructive steps in this arena requires a fundamental relook at our institutions, media and academia in guiding the Overton Window to one that focuses on dialogue, communication and mediation instead of one of conceit, aggression and hostility towards cross-border counterparts.
If the US were willing and able to understand deep rooted Russian insecurity arising from the multiple conflicts and tensions they have faced over the past century, there would be greater progress and chariness towards bringing the Baltic States into the NATO and EU theatres. The current Kremlin elites were also around during the fall of the Soviet Union, and the pain and embarrassment of how easily control was lost during the Autumn of Nations and the subsequent collapse remains. Today, the Kremlin is constantly on the lookout for any potential signs of an echo from the past, with this fear shaping Russian politics and beliefs. Russians strongly harbour the belief that their people are denigrated by outsiders. Just to be clear again, this is not diminishing any of the significance the Axis of Aggressors play in keeping the world on a precarious footing.
As long as the US fundamentally views China as an authoritative state and salt their words with libellous negativity, bilateralism will remain a thing of yore. This disdain of China is reflected through American framings of China on the world stage, unmasking a wholehearted belief in the American ideals and governance as the gospel and others to be wrong. Take a look at how the US describes China in the National Security Strategy. Is it detrimental to the rest of the world to have revisionist policies? I believe the description of “authoritarianism” is too easily thrown around these days. The US must also understand that Chinese culture and characteristics are not a nascent concept but a brewing over millennia of rich and proud history. Continued disdain of the Chinese governance will not yield positive results because there is no feasible solution that the US can undertake to transform the Chinese political model.
I also recommend spending some time viewing some of the Foreign Minister of Singapore George Yeo’s dialogues on China, especially if one believes China to be an imperialist brute in the Pacific. As with many other policies, China takes a Westphalian approach with Chinese principles, so viewing China as a rising superpower through the Mearsheimer lens or blindly trusting the Thucydides Trap might not be the most suitable way to assess Chinese regional interests. China has always been home to a clear and dominant unicultural society of over 90% Han Chinese, and they are much averse to shaking up this fabric and incorporating other societies into their fold. Whilst Rome and Athens were much more aggressive with expansionist ardour (Delian League, Gallic and Punic Wars), China’s history has largely been one of consolidation and reintegration of predominantly Han Chinese territories rather than overseas colonisations. On the cultural front, the Chinese also abide by Confucianist principles that focus on harmony, order and cultural continuity. Modern China’s policy frameworks reflect these values, prioritising internal development instead of the imposition of its system on others or ideological expansions (modern China!). So these key differences reject a revanchist view of China and suggest applying largely Western concepts in understanding them vastly overlook the uniqueness of Chinese culture and strategic objectives.
Fixing Foreign Policy Starts from Within
I don’t want to sound like I believe that free democracies around the world should be dragooned into adopting a dominant party/government system or move into autocracy, but it takes an ostrich to be impervious to the challenges and rampant hurdles that modern democratic systems present to the long-term collective good (take for example, coalition failures in the EU, short-termism around the world or the filibuster).
I also do believe there is a chronic lack of understanding of foreign countries/interests in the US, concerning because politicians, especially populist ones are overtly adept at following the Overton Window. A failure in the general public to understand American interests abroad, or even at the policymaking level leads to a critical lack of ability to make multilateral decisions. Much of the world today exports their top minds and future policymakers to the US to study and come back with stellar understandings of the American system, culture and interests. Yet, American leaders overwhelmingly lack similar experiences abroad, and are unexposed to alternate forms of governance, policies and societal fabrics and hence are largely cut from the same cloth, gospelising very similar and ossified governance styles and systems. Ideally, future American scholars and top minds will start to look for opportunities to broaden their horizons elsewhere and be rewarded for doing so.
Fixing a flawed foreign policy framework starts from maintaining American exceptionalism.
At least a quarter of key foreign policy positions sat vacant halfway through the first three terms of the last three US Presidents.
The US also will find it exceptionally challenging to build on competitiveness and maintaining a sustainable edge as long as significant wealth inequalities exist in an environment without strong incentives to invest excess capital. AI has the potential to shake this up, yet I would still hope policymakers remain concerned about the growing wealth divide that’s incredibly polarising all of America. Ever since Lawrence Fink released his annual shareholders letter earlier this year, I’ve been espousing the benefits of public-private partnerships and I’ll do so again — precisely because of the burgeoning need for greater fiscal considerations while maintaining a world-leading industry investment. Additionally, since Congress is largely unable to pass new budgets, the Pentagon runs on stopgap budget measures, preventing new research and developmental initiatives from obtaining critical funding to promote new, innovative solutions. Without sizeable and sustained public-private partnerships and whole reliance on the public sector to provide much needed funding for key industries, the US will find itself greatly hampered in competing with Made in China 2025 and its industries benefitting from years of credit guidance.
I think it’s great that President-Elect Trump has been vocal about offering green cards to nonlocal students who graduate from American colleges. For much of the past decade, a significant number of foreign students on visas have found it difficult to seek long-term employment opportunities, with America essentially adopting a “we’ll educate and train you, then make it difficult for you to get long-term work here, so we’ll export you back to your country to develop your domestic industries” model. A significant number of AI scientists in the US hail from China. Copious restrictions placed on American firms have restricted business opportunities with China and stemmed innovative processes, while restrictions on foreign talents have deprived American institutions access to the critical mass of brains needed in the key industries, they seek to establish leadership in.
Part of American exceptionalism has to be a model for free, liberal democracies around the world, driven by a united people with faith in world-class institutions and an ability to have conversations, debate and bipartisan policymaking. I find it hard to believe that today it is not sporadic to find Americans who want to cleavage the US from international commitments, or campaign for Russian interests, as well as spreading wild and unverified anti-institutional conspiracies that seek to destabilise America from within. I would like to point out that the entire concept of Appeasement is not novel and has been highly debated by Churchill in ‘While England Slept’ in 1938, and J.F.K in ‘Why England Slept’ in 1940 in his senior year Harvard thesis (check both out). Yet while the appeasement that emboldened Hitler to take Sudetenland and rearm the Rhineland was characterised by a general war-fatigued electorate, weakness in the League of Nations… the sentiments of today are of a more overt self-sabotage and a furore to bring about radical change reflecting a failure in the education system in enlightening the public on critical thinking. I think there’s an issue today if holding policymakers accountable is considered attacks on democracy; if in the age of disinformation and the information warfare the American public is so fixated on ensuring zero accountability in their media and information channels; or when half of the population is deeply distrusting of the other half and continuously hold party politics over national interests. I’d just like to add a quote here — “My right to swing my fist ends where the other man’s nose begins”. There is an excessive focus on total freedoms in Western societies, which while extremely idealistic is too often handicapped to be a force for good.
What’s challenging for the US is that there is no panacea to their maladies because of the recursive nature of their cumbers. To enact change there has to be a progressive and radical character, yet tough because populism is always more attractive to the masses. After all, good policies don’t get elected, the people elect what they want to hear or who they want blamed for their sufferings. I had a short look at the Strauss-Howe Generational Theory and Muqaddimah, both of which would describe the US to be a late-stage dominant force. So this presents some sort of dilemma for a young investor looking at a horizon of over a quarter of a century because its often hard to justify an investment losing its shine, having its comparative advantages eroded and on its decline simply because it has been the most lucrative so far. And on the other hand American corporations remain the envy of the world; the capital markets remain the deepest and the most liquid; the regulatory frameworks are still the blueprint for countries abroad and American soft power still permeates globally with the largest offshore military presences and the most widely followed media and entertainment industries.
Lessons from the Past
The Marshall Plan is widely viewed as one of the greatest successes of the postwar era and I believe the US can achieve similar outcomes today by renewing security and mutual engagements and rebuilding European competitiveness. By providing economic assistance to European nations in 1948, the Marshall Plan provided markets for American firms, established reliable trading partners and supported the colour revolutions in Western Europe. Americans today often misunderstand the significance that US support provides for American interests especially in Ukraine. Billions in spending in key military arsenals represent funds going towards American arms manufacturers, stimulating job creations in Texas, Virginia, California and Florida. The Marshall Plan saw the equivalent of $200 billion today given to discount European purchases of American exports and domestic firms largely benefitted as 70% of Marshall Plan funds were used to purchase American. That can be the same today.
In 1933, Roosevelt put forward the Good Neighbour Policy in a bid to improve relations with Latin America through Westphalian principles, a turnaround from prior interventionist policies such as the Roosevelt Corollary and military interventions. The result of encouraging reciprocal trade agreements and withdrawal of US troops was a bloom in economic integration, strengthening of hemispheric ties and a crucial solidarity during the Second World War, with many favouring the Allies and severing diplomatic ties with Axis powers.
The takeaway can be that renewed American leadership and engagement need not be one born out of lofty and noble ideals but again a strategic alignment with American interests. After all, credibility and reputation are more often than not strong considerations for any country to step out of its borders to help another. The pragmatic consideration would be that it is in American interests to uphold leadership through keeping allies strong and signalling willingness to be a leader in democracy and friendships, building goodwill abroad.
In All
The main takeaway would be that a successful foreign policy is a holistic blend of both domestic strength and outward openness. For reiteration, this is not meant to be an active comparison between foreign policies of different countries and a commitment to dialogue is not an US exclusive.
Despite recent supply chain fragmentations and nearshoring trends, the world remains chiefly interconnected and interdependent for a many critical supplies, not limited to metals and agriculture. Escalations in conflicts and hostilities such as disruptions in the Red Sea still limit our ability to cost-effectively facilitate cross-border trade and are mutually destructive. Tensions around the Taiwanese straits for example, could jeopardise approximately $586 billion worth of trade and add roughly 1000 miles to shipping journeys, critically impacting Japan, South Korea and Chinese port activities where they enjoy over $1.3 trillion in import and export activities. There will continue to be an immense opportunity cost borne if we do not take a united stand against sovereign aggression and focusing on diplomatic channels.
The evolution in power assets also means containment-esque policies likely effectuate vastly different outcomes from Cold War tensions and conversely entrench conflict as well as hostile multipolarity. There will be a critical need to reject rigid objectives and a zero-sum approach to allow for evolving dynamics without the proliferation of permanent antagonism.
Is it likely that the US will be able to make meaningful change in our time? America’s Foreign Policy Inertia notes that:
- Both Trump and Biden tried to steer US foreign policy in new directions but met resistance from domestic and foreign actors
- Since WWII, many US leaders have attempted to change foreign policies to no avail due to political inertia and bureaucratic resistance
The outcome is likely a weakened America and a unpredictable, isolationist and unreliable partner on the global stage.
Written with much inspiration from many different articles and Op-eds I’ve read over the year…
Palm Holdings 
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