The systematic and institutionalized architecture that evolved over the years in the US to coordinate, prepare, and implement foreign policy began to erode under President Donald Trump’s second tenure. The first in this direction was President Trump’s move to suffuse his executive team and diplomatic offices with his longtime loyalists, sidelining foreign policy professionals or politicians with years of experience. To name a few, Steve Witkoff, a New York real estate baron and Trump’s business friend with hardly any political or diplomatic experience, has been appointed as the US Special Envoy to the Middle East despite the tumultuous geopolitics of the region. Sidelining the career diplomats, Trump was seen sending his businessman son-in-law Jared Kushner on diplomatic trips. His daughter Tiffany’s father-in-law, Massad Boulos, was appointed by him as senior advisor for Arab and African Affairs. These envoys appointed by Trump worked with broad and opaque mandates that did not ordain the financial disclosure requirements revealing their personal investments, business interests, and conflicts of interest.
While the standard procedure is that investment commitments and economic deals are negotiated through established institutionalized channels with legal oversight, where national interest is kept separate and safe from the negotiator’s personal interest or business benefits, President Trump is dismantling these institutionalized channels and existing legal oversight for the benefit of his loyalists and his family’s business interests.
The deinstitutionalization process witnessed more than thirteen hundred professional employees being dismissed from the State Department and a substantial reduction in the size of the National Security Council (NSC), which coordinates the foreign policy-making process, being confined to a mere one hundred employees in 2025. Keeping aside the rules, regulations, and norms, the State Department announced a mass recall of US ambassadors in late December 2025. The NSC has ceased to function as an independent agency; rather, it has come under the personalized control of his adversary turned loyalist and Secretary of State Marco Rubio. The interagency process through which security policies are made and communicated has been bypassed in favor of the personalized leadership of Trump.
The Trump administration in its second tenure has cut down funds and staff of critical agencies such as the Office of Foreign Assets Control (OFAC), capable of gathering information and targeting measures against opponents. It imposed a staffing moratorium, hitting institutions including the Treasury’s Office of Terrorism and Financial Intelligence that oversees OFAC, leaving key positions vacant and departments understaffed. That has made weapons of sanctions intuitively toothless to promote business interests. President Trump pushed Ukraine to agree to terms of peace as dictated by Russia with the objective of accessing frozen Russian central bank assets for joint US-Russian projects and, more subtly, for new business opportunities for his loyalists.
At one end of the spectrum, the Trump administration drastically cut down foreign aid meant for assisting developing and underdeveloped countries on various socio-economic parameters by substantially slashing grants to the United States Agency for International Development (USAID) in the name of saving money to address American economic predicaments. On the other side, Trump’s cronies kept expanding their footprint in real estate megaprojects and resorts in the Gulf. In April 2025, Trump’s son Eric announced plans for an 80-story Trump tower in Dubai. President Trump’s vested business interests can be inferred from the administration’s reluctance to enforce the Foreign Corrupt Practices Act that was instrumental in stemming US companies from engaging in bribery abroad. Moreover, the Treasury Department suspended the enforcement of the Corporate Transparency Act for US companies, allowing them to be involved in corrupt practices. The administration also deliberately looked over the legal guardrails that kept a constant watch on the flows of cryptocurrency. This facilitated money laundering, and the entire National Cryptocurrency Enforcement Team was disbanded in April 2025.
Forged Financial Data and Manufactured Economy
President Trump dismissed Erika McEntarfer, head of the Bureau of Labor Statistics, an impartial body responsible for tracking jobs, wages, and inflation. He also threatened the independence of the Federal Reserve, openly declaring his intent to fire Chair Jerome Powell and dismissing Governor Lisa Cook on charges of mortgage fraud. Trump’s resort to trade, tariffs, and technology wars appeared less about protecting American interests than about diverting attention from domestic economic failures and promoting the vested interests of his cronies. By blaming countries for trade deficits and pushing “Make in the US” policies, he sought to rewrite the rules of global engagement. However, economists warned that these actions would backfire, raising prices for American consumers and businesses while disrupting supply chains. When Goldman Sachs’ chief economist pointed out that tariffs were inflationary, Trump dismissed the observation by attacking Goldman’s CEO in a social media post, showing once again his disdain for expert opinion.
By undermining the independence of the Federal Reserve—an institution that ensures stability by regulating growth, inflation, employment, and credit—Trump risked sacrificing long-term stability for short-term economic advantage and business opportunities. His hostility toward independent agencies even led financial market players to turn to satellite data and private alternatives, undermining the credibility of once-reliable public statistics.
This effort to manufacture an artificial picture of the US economy also took the form of fund withdrawals and staff dismissals from federal agencies, erasing thousands of government webpages and datasets. The resulting vacuum spurred academics to launch the Data Rescue Project to preserve crucial economic information for public use.
Impacts of Deinstitutionalization of Foreign Policy Making
The strength of the US economy has been largely contingent upon the global public goods it provided to other countries and the confidence it inspired among them to play according to its playbook, embodied in international liberal norms, financial institutions, and currency, ensuring lucrative returns back home.
The US-led international economic order set rules for international trade, ensured secure navigation in air and seas, sought to secure economies from uncertainties, provided stable currency for business transactions, and secured savings.
By heralding as well as by throwing its weight behind the liberal international trade order, the US could maintain control over other states’ economy and security policies through legitimate channels without having to use coercive power. The US, through this economic order, also ensured that most economies derived the benefits of growth without succumbing to the threat of large-scale instability, as well as the order facilitated the integration of smaller economies with bigger economies through trade and investment.
The sense of financial security the US provided turned it into the most attractive destination for trade and investment. This apart, the security partnerships that the US forged around the globe were not only intended to provide military security to the allies but also aimed at integrating the partners with the US economy through trade of its weapons, energy, and industrial products, including making profits from the payments the allies made for hosting American troops.
The US profited from the liberal international system by granting long-term loans; its corporate sector and workforce thrived by receiving massive foreign investment; acceptance of US technical and legal standards among the countries leveraged the US-based producers; and profits were also derived from most states’ reliance on the financial system that the US provided for global transactions and reserves.
The interdependent global economy structured around American infrastructure included technological platforms such as the Internet, e-commerce, and social media, providing the global communication systems. US dollars remain the predominant currency undergirding international deals and banking transactions, and the SWIFT financial messaging network turned the US into the pivot around which the global financial system revolved. Intellectual property rights ensured that the technological platforms provided by the US could not be supplanted by others. The US also provided the basic infrastructure for telecommunication channels between the countries, supplemented by internet services. These were very often used as tools for global surveillance. These structures, encompassing financial, technological, and communication systems, were so intensively centralized that the US could use them as weapons to bludgeon adversaries and spy on them through tapping of information. The second tenure of Trump’s presidency is seeking to leverage these American advantages to foster narrow business interests of political elites. It launched attacks on Venezuela and threatened to annex Greenland, Mexico, and Canada with the latent objective to promote business interests in the guise of national interest and national security.
The longtime allies and partners of the US are getting affected by the Trump administration’s volatile foreign policy because they are more dependent on the US for trade and investment and are greatly integrated with its supply chains. The allies and partners have placed a larger share of their savings in US treasuries for much longer duration. They have been led to believe that they can sell their products more competitively in American markets, safely invest in production in the US, save their assets, and move their savings out from US Treasury bonds with flexibility. Apart from raising uncertainties surrounding the stability of the US financial system, market, and currency, the Trump administration has also slashed funds for foreign aid and development that are likely to impinge on the financial stability of allies and partners. As the US is pressuring its partners, allies, and adversaries alike through tariffs and coercion for narrow business interests, they would look for alternative sources of trade and investment. The dollar will begin to lose its weight under the incumbent administration, making the assets of different countries in the US less secure. Decoupling from the US economy would remain as the only alternative.
