Nepal-US relations under Trump 2.0

Donald J Trump was sworn in on Monday as the 47th President of the United States, marking a remarkable political comeback. On Sunday, Trump pledged to issue nearly 100 executive orders aimed at reversing or eliminating policies enacted by the Biden administration. These orders primarily target immigration, energy policy, and a range of other issues.

Foreign policy experts suggest that Trump’s return to office warrants close attention to his trade war with China, his approach toward Asian allies like Japan, South Korea and the Philippines, and his “America First” foreign policy. These stances could bring significant shifts to multilateralism and global diplomacy, with considerable effects on the Indo-Pacific region. Trump's transactional approach to diplomacy is expected to heighten tensions in critical areas such as the South China Sea, the Korean Peninsula and Taiwan.

Regarding Nepal, shifting US global priorities could impact American assistance in climate change and health sectors. Political analyst Chandra Dev Bhatta notes that while American foreign policy has shown consistency over time, recent years have highlighted ideological differences between Republicans and Democrats. If Trump 2.0 adopts a more aggressive foreign policy, Bhatta predicts it will manifest through economic measures, particularly tariffs. “If Trump becomes a ‘tariff man,’ it will have a ripple effect globally due to the interconnected nature of the world economy,” Bhatta said.

For smaller countries like Nepal, where economic stakes are lower, the focus will remain on geopolitics over geo-economics. However, navigating this geopolitical landscape will become more challenging, Bhatta adds, as geopolitics and geo-economics are increasingly intertwined. He also highlights potential domestic implications for Nepal stemming from Trump’s policies, especially his declared funding cuts through the Department of Government Efficiency and Governance (DOGE) and the “Make America Great Again” (MAGA) agenda. If these cuts are implemented, they could significantly affect funding both domestically and internationally.

Trump’s immigration stance could also impact Nepalis in the US, particularly if he enforces stricter policies on undocumented immigrants. Bhatta speculates that such policies might be part of a bargaining strategy, commonly referred to as the ‘madman theory,’ or a genuine intent, the outcome of which remains uncertain. Additionally, Trump’s efforts to consolidate power in Asia under the MAGA banner will likely exert geopolitical pressure on countries like Nepal.

Strategic thinker Binoj Basnyat believes that Trump’s second term is likely to continue Biden’s legacy in Asia due to the region’s growing importance in global trade, security and geopolitics. He emphasizes that managing rising challenges, fostering alliances and ensuring stability will shape US strategies. India’s role as a vital partner in the Indo-Pacific region will be central to these efforts. The US will likely continue leveraging frameworks such as the 2017 “South Asia Policy”, the “Free and Open Indo-Pacific” strategy and the 2022 Indo-Pacific Strategy.

Basnyat highlights that these strategies align with containing China’s rise while strengthening ties with India, designated as a major defense partner in 2016. Initiatives like the India-US 2+2 ministerial dialogue, established in 2018, will continue to influence smaller South Asian nations, including Nepal. He notes that global competition and great power influence are shaping national politics in South Asia, with Nepal’s political parties also reflecting these dynamics.

Basnyat asserts that Nepal’s strategic stability is shaped by global geostrategic factors, including the Post-Cold War syndrome in Europe, the New Cold War in the Indo-Pacific and proxy wars in the Middle East. He suggests that under any potential geopolitical scenario, Nepal’s strategic trajectory will largely depend on its relationships with New Delhi and Beijing. However, Nepal should also prioritize its ties with Washington as a third neighbor, balancing national interests without falling into strategic traps.

During the Joe Biden administration, US engagement with Nepal increased significantly, with over $700m in foreign aid provided since 2019 through the US Department of State and USAID. These initiatives focused on health, economic growth, democracy, governance and food security. One of the primary US priorities in Nepal is the smooth implementation of the Millennium Challenge Corporation (MCC) project. Recently, American private companies have also expressed interest in investing in Nepal’s tourism, medical and other sectors. Meanwhile, the US push for the State Partnership Program (SPP), pending since 2022, remains a contentious issue.

During Trump’s previous tenure, the 2019 Indo-Pacific Strategy report sparked controversy over its implications for MCC and other bilateral initiatives. The Biden administration carefully avoided conflating these issues in bilateral discussions. Observers suggest Nepal should closely monitor Trump’s policies toward India and China, as they could indirectly affect Nepal.

In an interview with ApEx, Katie Donohoe, USAID’s mission director in Nepal, highlighted the agency’s enduring mission despite changes in US administrations. She remarked, “Since USAID was established in 1961, there have been 12 presidential administrations, and this will be my fifth transition working with USAID. While new administrations bring different policy priorities, USAID’s core mission has remained consistent.” Donohoe expressed confidence that USAID will adapt to align with the new administration’s priorities while continuing to collaborate with the government of Nepal and its people.