THE US IS NOW AN EXTRACTIVE SUPERPOWER / PROJECT SYNDICATE

The US Is Now an Extractive Superpower

Since returning to the White House, Donald Trump has slashed foreign aid and weaponized the United States’ economic power to bully long-standing allies, underscoring his administration’s abandonment of multilateralism. Europe must respond by forging a more inclusive international order, with or without the US.

Moreno Bertoldi, Marco Buti

BRUSSELS/FLORENCE – In a matter of months, both the international role and global standing of the United States have undergone a profound transformation. 

Since the start of President Donald Trump’s second term, the country once described by former Secretary of State Madeleine Albright as the “indispensable nation” upholding the rules-based multilateral order has rapidly mutated into an extractive superpower. 

Rather than protecting the stability and integrity of the global system, US foreign policy now appears to be geared toward extracting resources from adversaries and allies alike through the use – and abuse – of the political, economic, diplomatic, and military tools at the Trump administration’s disposal.

In their 2012 book Why Nations Fail, Nobel laureate economists Daron Acemoglu and James Robinson define extractive institutions as “designed to extract incomes and wealth from one subset of society to benefit a different subset.” 

By extension, an extractive superpower seeks to transfer wealth and income from the rest of the world to its own citizens – or, in the case of Trump’s America, to a subset of them, typically the most privileged and politically connected.

To justify its policies, Trump’s administration has weaponized deep-rooted resentments, chief among them the belief that the US has been exploited by other countries for decades and must now correct these perceived injustices. 

In his recent book The Great Trade Hack, economist Richard Baldwin refers to this tangle of resentments as the “grievance doctrine.” 

Trump’s April 2 announcement of his “Liberation Day” tariffs, which marked the launch of his global trade war, offers a striking example:

“For decades, our country has been looted, pillaged, and plundered by nations near and far, both friend and foe alike. 

American steelworkers, auto workers, farmers, and skilled craftsmen – we have a lot of them here with us today – they really suffered gravely. 

They watched in anguish as foreign leaders have stolen our jobs, foreign cheaters have ransacked our factories, and foreign scavengers have torn apart our once beautiful American dream.”

Most of these grievances are of course either exaggerated or fabricated. 

They serve primarily as rhetorical devices to justify Trump’s actions. 

In reality, the principle driving his agenda was best articulated by the seventeenth-century French fabulist Jean de La Fontaine: “The argument of the strongest is always the best.”

Alarmingly, very few world leaders seem to grasp the full extent of the shift in US foreign policy– or are in denial about it. 

Many, including most European leaders, cling to the illusion that mutually beneficial agreements are still possible. 

But Trump’s recent actions have made it abundantly clear that the old rules no longer apply.

Trump’s Zero-Sum Agenda

The warning signs of a major, potentially permanent shift in US foreign policy are too glaring to ignore: the dismantling of the US Agency for International Development (USAID); the withdrawal from the World Health Organization and the 2015 Paris climate agreement; the undisguised contempt toward long-standing allies Vice President J.D. Vance displays every time he sets foot in Europe; the demand that Ukraine surrender its vast mineral resources in exchange for military aid; and the imposition of sweeping, indiscriminate tariffs. 

These developments all point to the same conclusion: the indispensable nation has become a rapacious one.

The closure of USAID is perhaps the clearest demonstration yet of the Trump administration’s priorities. 

It was neither random nor the result of a poorly designed algorithm applied by Elon Musk’s misnamed Department of Government Efficiency (DOGE). 

It was a deliberate and revealing political decision.

An extractive superpower, after all, does not “waste” resources helping other countries simply to win goodwill. 

Viewing development aid, poverty reduction, and humanitarian aid as irrelevant to its “America First” agenda, the Trump administration has cut funding for HIV/AIDS prevention and research in Africa, slashed support for vaccine delivery in the Global South, and effectively closed the door to asylum seekers and immigrants from poorer countries.

Given Trump’s long and well-documented history of climate-change denial, his decision to withdraw the US from the Paris agreement, as he did during his first term, is hardly surprising. 

But his aggressive promotion of domestically produced fossil fuels, the rollback of electric-vehicle (EV) tax credits, and his efforts to force trading partners to buy US energy at above-market prices to avoid higher tariffs underscore the extractive nature of current US policies. 

These moves compound the negative externalities of eliminating clean-energy subsidies and halting US contributions to international climate funds. 

Other countries, particularly poorer ones, will bear the brunt of the costs.

To be sure, Trump is not wrong to argue that America’s allies must spend more – and better – on defense and reduce their military dependence on the US. 

However, as a condition for reaffirming its commitment to Article 5 of the NATO Treaty (which states that an attack on one member is an attack on all), the US has effectively imposed an arbitrary defense-spending target of 5% of GDP on its allies, without undertaking any in-depth assessment of their actual security needs.

Given that European countries purchase roughly two-thirds of their military equipment from the US, the newly elevated spending targets will trigger a surge in purchases of American weapons, often at inflated prices due to surging demand. 

Following June’s NATO summit, a massive transfer of resources from Europe to the US is now underway, and the same goes for America’s allies in Asia.

The extractive logic behind Trump’s foreign-policy agenda has been particularly evident in Ukraine. 

Seeking compensation for military aid, the Trump administration has pressured Ukraine into signing a predatory deal that grants the US a large share of the profits from future sales of the country’s vast mineral reserves. 

More recently, in response to Russia’s continued missile attacks on Ukrainian cities, the US agreed to resume the supply of anti-missile systems and weapons to Ukraine – on the condition that NATO’s European members foot the bill.

When it comes to trade, Trump’s strategy since his first presidential campaign has been to force America’s economic partners into submission. 

For Trump, trade negotiations are zero-sum, with a clear winner (the US) and a clear loser (everyone else). 

The idea of mutually beneficial agreements seems entirely alien to him; at best, the terms of surrender are negotiable. 

His recent announcement of arbitrary “reciprocal” tariffs on a wide range of goods from dozens of countries, set to take effect on August 1, is a prime example.

Moreover, Trump uses tariffs – alongside threats to retaliate against foreign companies that decline to invest in the US – to redirect productive resources into the American economy. 

But despite his promises, this siphoning of resources will not revive the golden age of US manufacturing. 

Instead, it will disrupt global supply chains and encourage wasteful, unprofitable ventures.

Europe’s Turn to Lead

America’s transformation into an extractive superpower is bound to inflict significant economic damage without delivering lasting benefits to the US. 

Whatever short-term gains come from resource extraction will likely be outweighed by its costs: slower growth driven by policy uncertainty, tariff-fueled inflation, widening macroeconomic imbalances, and the inefficient allocation of resources – an inherent feature of the extractive model Trump promotes.

The European Union, ideally in coordination with other major democracies, has both the opportunity and the responsibility to develop an alternative, non-extractive model of multilateralism. 

This effort should start with two key steps.

First, the dismantling of USAID has created a $60 billion funding gap. 

Team Europe – a humanitarian and development aid initiative made up of EU institutions and individual member states – should begin filling that gap by reallocating a portion of its roughly €90 billion ($105 billion) budget. 

This should be paired with stronger support for clean-energy projects in the world’s poorest countries. 

The EU must lead by example, encouraging other advanced economies to make similar commitments.

Second, the EU should deepen its economic and political ties with like-minded developed economies and emerging markets to reduce its dependence on the US. 

As Canadian Prime Minister Mark Carney bluntly put it, “the old relationship we had with the United States … is over.” 

America’s partners must now confront that reality and band together.

With this in mind, the European Commission should convene an international conference to shape a post-US agenda for free and fair trade with like-minded countries from the developed world and the Global South. 

Only a broad-based agreement offers any real hope of reversing the uncertainty, chaos, and fragmentation that Trump has unleashed.

In preparation for these talks, the Council of the European Union must urgently ratify the EU-Mercosur trade agreement. 

At the same time, the European Commission should accelerate negotiations with India, Mexico, Switzerland, Australia, Indonesia, and other ASEAN countries, and initiate discussions to establish a cooperation agreement with the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

Building a new multilateral order from the ground up will have far-reaching political and institutional implications. 

To enhance the scope and effectiveness of its global outreach, the European Commission could take inspiration from the American model, in which responsibility for trade policy and economic diplomacy is split between the US Trade Representative and the Secretary of Commerce. 

The Commission should consider appointing an Executive Vice President to negotiate with third countries and coordinate development aid, working closely with the Trade Commissioner and other relevant officials.

The EU cannot and must not abandon multilateralism. 

On the contrary, it should champion a more inclusive and fairer form of multilateralism, even if its main partner since the postwar period – the US – has, for now (and hopefully not forever), chosen to step away from it.

Moreno Bertoldi is Senior Associate Research Fellow at the Italian Institute for International Political Studies (ISPI).

Marco Buti is Tommaso Padoa Schioppa Chair at the European University Institute’s Robert Schuman Center and an external fellow at Bruegel.