Trade as a New Tool for Diplomacy: How Trump Uses Economic Power to Shape Global Peace
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| Leaders of Armenia and Azerbaijan Shake hands at the White House after signing a peace deal facilitated by President Donald Trump |
In just six months, the global diplomatic map shifted in ways few observers could have imagined. Flashpoints that had long resisted resolution: The tense India vs Pakistan standoff, Cambodia vs Thailand’s border skirmishes, Armenia vs Azerbaijan’s decades-old territorial dispute, the DR Congo vs Rwanda animosity, Ethiopia vs Egypt’s water conflict over the Nile, Israel vs Iran’s entrenched hostility, and the grinding Russia vs Ukraine war all saw fresh peace talks or tentative agreements emerged. Behind this unexpected wave of diplomatic breakthroughs is President Donald Trump, who, rather than leaning on the slow, ritualized machinery of conventional diplomacy, chose a different playbook.
Instead of relying solely on summits, communiqués, or the back-and-forth shuttle diplomacy that often moves at a glacial pace, Trump brought the United States’ economic weight to bear. Tariffs, trade deals, investment promises, and market access became his diplomatic currency. This was not diplomacy in its traditional sense; it was economic statecraft in high gear, a deliberate use of financial incentives and penalties to push adversaries toward the negotiating table (Baldwin, 2020). The message was clear: in the globalized economy of the 21st century, the quickest route to peace may run through the marketplace.
The Problem with Conventional Diplomacy
Traditional diplomacy has always had its virtues: discretion, patience, and the careful building of trust among nations. However, it also carries limitations that have become more pronounced in an interconnected and fast-paced world. For decades, peace negotiations have been hindered by bureaucratic protocols, red tape, and the inertia of multilateral institutions (Fawcett, 2017). These processes, while methodical, often fail to keep pace with rapidly evolving conflicts on the ground.
In conflicts like those between India and Pakistan or Israel and Iran, diplomats can spend years debating terms, exchanging draft agreements, and holding symbolic summits, only for violence to flare up again within weeks. This slow-moving process, which critics call the “talk shop syndrome,” often frustrates both policymakers and the populations they represent. In many cases, entrenched geopolitical rivalries become resistant to conventional approaches, leaving negotiators recycling the same talking points year after year without substantive breakthroughs.
Trump’s approach sidestepped much of this procedural bottleneck. By linking trade privileges directly to political concessions, he introduced a speed factor that traditional diplomacy often lacks. The calculation for other states became immediate and concrete: make peace and gain economic rewards, or face punitive trade barriers and financial isolation.
Economic Statecraft in Action
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| Foreign Ministers from DR Congo and Rwanda at the White House for the signing of a peace deal facilitated by President Donald Trump |
Economic statecraft, as defined by Baldwin (2020), refers to the use of economic tools such as trade policy, investment, sanctions, and aid to achieve foreign policy objectives. It can be both coercive (sticks) and incentivizing (carrots). Trump’s version leaned heavily on a mix of the two.
For example, in the India-Pakistan case, Trump leveraged the potential for expanded bilateral trade with each side, conditioned on a reduction in cross-border tensions. Similarly, with Armenia and Azerbaijan, the promise of U.S. investment in infrastructure projects became contingent on progress toward a lasting ceasefire. In Africa, the Ethiopia–Egypt Nile water dispute saw Washington hint at preferential trade terms and development financing as rewards for cooperation, while warning of tariff penalties for non-compliance.
Perhaps most striking was Trump’s approach to the Middle East. Instead of framing peace solely as a moral or security imperative, he recast it as an economic opportunity. Under his administration, certain Arab states that had long avoided normalizing ties with Israel were offered generous trade packages, investment deals, and technology-sharing agreements in exchange for diplomatic recognition and security guarantees. This blend of transactional and strategic diplomacy disrupted the traditional script, where peace talks often revolved exclusively around political concessions and historical grievances.
Challenging the Old Guard of Diplomacy
Trump’s methods unsettled the traditional diplomatic establishment. Multilateral bodies like the United Nations, the European Union, and even NATO have historically favored consensus-driven approaches built on incremental trust and symbolic gestures (Keohane, 2005). By contrast, Trump’s strategy was unapologetically results-oriented and rooted in the immediacy of economic consequences.
Critics argued that such an approach risked reducing diplomacy to mere bargaining, potentially undermining long-term trust between nations. Others countered that in a multipolar world with rising economic interdependence, leveraging trade is not only pragmatic but also more reflective of the global order’s realities. With economic interconnections tighter than ever, a country’s prosperity often hinges as much on stable trade relations as on security guarantees.
In this light, Trump’s method can be seen as an adaptive response to structural changes in the international system. The post–Cold War order, once dominated by ideological alignments and military alliances, has given way to a more fluid environment where economic vulnerabilities are often more decisive than troop deployments.
The Speed Factor and Symbolism
What startled many observers was the speed with which some of these peace openings emerged. Within half a year of taking office, Trump was able to point to tangible diplomatic outcomes in multiple global hotspots. While critics questioned the depth and durability of these deals, the fact remains that momentum was created, something the conventional system often struggles to achieve.
Part of this was psychological. By framing negotiations as business deals with deadlines, Trump tapped into a sense of urgency. Nations were no longer just negotiating to end hostilities; they were negotiating to avoid losing immediate economic benefits or to secure lucrative new ones. This transactional framing appealed to leaders under domestic pressure to deliver economic gains.
Moreover, the very act of breaking with diplomatic tradition carried symbolic weight. By rejecting the endless rounds of procedural dialogue, Trump positioned himself as a disruptor, sending a message to allies and adversaries alike that the U.S. was prepared to rewrite the rules if necessary.
Risks and Criticisms
Despite these apparent successes, there are valid criticisms of Trump’s trade-driven diplomacy. One concern is sustainability: deals struck under economic pressure may not endure once the immediate incentives or threats are removed (Hufbauer et al., 2007). If peace is tied too closely to transactional benefits, it risks unraveling when those benefits change or when a new administration shifts priorities.
Another criticism is that such an approach may sideline human rights or moral considerations in favor of economic expediency. For example, leaders with poor domestic governance records might still be rewarded if they comply with U.S. strategic objectives. This can send mixed signals about America’s long-term commitment to democratic values.
Finally, economic coercion can breed resentment, particularly among populations who perceive external interference in their domestic affairs. While trade leverage can be a powerful motivator, overuse risks diminishing U.S. soft power and fueling anti-American sentiment in the long run.
A New Model for 21st-Century Diplomacy?
Still, Trump’s approach raises important questions about the future of diplomacy in an era where economic interdependence is both a stabilizing force and a potential weapon. As Baldwin (2020) and Nye (2011) have argued, power in international relations increasingly derives from the ability to shape the preferences and behaviors of others through non-military means. In this context, trade and investment become not just tools of prosperity but instruments of peace and influence.
The traditional diplomatic toolkit built around negotiation tables, international law, and multilateral forums is not obsolete, but it may no longer be sufficient on its own. As conflicts become more complex and time-sensitive, hybrid strategies that blend economic incentives with political dialogue could become the norm. Trump’s tenure, whether one agrees with his policies or not, demonstrated that a willingness to leverage economic power directly can yield rapid, if sometimes fragile, results.
Conclusion
Donald Trump’s use of trade as a diplomatic lever represents a bold departure from the conventional wisdom of international relations. By bypassing much of the slow-moving machinery of traditional diplomacy and linking economic rewards or penalties to peace agreements, he reframed global conflict resolution as a high-stakes negotiation with tangible, immediate outcomes.
While this approach is not without risks, including questions of sustainability, moral compromise, and potential backlash, it reflects a growing reality: in the globalized 21st century, economic power is often the most immediate and persuasive tool a nation can wield. The challenge for future leaders will be to refine this model, balancing the efficiency and leverage of economic statecraft with the trust-building and normative commitments that remain essential to lasting peace.
BY SB ADAMS
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