America, long recognized as a dominant force on the global stage, is undergoing a significant shift in its economic and political strategies. For more than 150 years, the United States has led the world’s economy. It generates more than a quarter of the world’s economic activity while accounting for only 5% of the global population. By the early 20th century, America had outgrown that colonial chip on her shoulder. The lens of "exceptions" legitimized this pivot and nurtured “special” relationships with other countries. Recent recalibrations of how it conducts its operations have led to a global rebuke.
The White House has embraced a new economic strategy, described by some as rooted in "revenge politics and the punitive measures and the beggar-thy-neighbor" approach. This strategy has the following signature features — a heavy-handed use of tariffs, threats and military might to achieve a higher degree of influence. The overarching goal remains clear: to make America great by resetting the global financial and trading system.
Critics say that this kind of economic bullying is necessary to bend global behavior back to the U.S.’s advantage, changing the rules of the international game. The preoccupation with these tactics reveals an enablement mind-set towards resetting politics and global economic interests to perpetuate that dominance. This change reflects a growing backlash against the global neoliberal order. People are rightly blaming it for exacerbating inequality, destroying our environment, and accelerating climate change.
Australia, perhaps America’s most important ally, is getting ahead of these changes in typical Australian nimbleness. Australia has a well-deserved reputation for taking proactive, smart economic measures. It weathered the 2008 financial crisis by having the foresight to introduce smart and strategic government interventions. Australian economists have long been at the forefront of the rush to intellectual development of Keynesianism. This model leverages state resources with private industry expertise to create the most public good possible.
Furthermore, Australia's "third way" approach to deregulation and privatization—designed to balance interests—although it has weakened over time, demonstrates its commitment to thoughtful economic management. This flexibility gives Australia a great opportunity to lead the pack in terms of a changing global paradigm.
Gillian Tett's insights illuminate the fluid nature of economic ideologies:
"Every single person assumes that the intellectual framework they grew up with and built their careers around is natural, normal, inevitable and should be universal. That’s just the nature of being human. And everybody is wrong. Ideas change over time. They go in fashions or cycles."
These hegemonic perspectives demonstrate the necessity for flexibility for the sake of each nation to each global dynamic pivot.
Yet as America tries to shift its economic posture, the consequences to U.S. foreign policy are significant. Countries are re-evaluating their allegiances and economic priorities. Yet they are putting to the test the once “special” relationships in response to America’s new policy direction. The recalibration needed goes well beyond diplomatic relations and deep into the bilateral and multilateral roots of global economic collaboration.