Trump’s Transactional Diplomacy: Trade as leverage in conflict mediation

Trade might contribute to peace by enabling economic development, complex interdependence, rising living standards, and enhancing education quality.

By Abhishek Kadiyala 

The second Donald Trump administration is known for its transactional diplomacy. With a combination of ‘America First’ and ‘Peace through trade’ policy approaches, Trump has actively transformed the American network of security guarantees into an overtly transactional system of resource and/or market access in exchange for security commitments. However, this transactional approach has also extended into the realm of conflict mediation, where the Trump administration uses peace efforts as an opportunity not only to gain mineral or market access but also to secure deals for private organisations associated with Trump or his allies. This transactional approach to the sensitive mediation process fails to produce sustainable outcomes and threatens to endanger international security in the long term.

America's Approach to Conflict Mediation

Trump's record in maintaining international peace and security in 2025 might seem like a mixed bag on the surface. His mediation attempts in the Russia-Ukraine and Israel-Palestine conflicts were unsuccessful, as both Russia and Israel regularly broke the negotiated ceasefires and agreements. His primary success came in mediating a peace deal between DR Congo and Rwanda. Beyond that, there have been unilateral claims by Trump of having mediated the India-Pakistan confrontation in May and the Cambodia-Thailand confrontation in July, despite these claims being openly denied by the parties involved.

Each of these attempts at peace is distinct and varies in context. However, one common element in these cases is the ‘Peace through trade’ approach, where the US attempts to mediate or claim diplomatic influence in exchange for trade promises or direct economic deals—or by pitching 'money' and 'trade' as answers to complex socio-political questions. Thus, through a combination of ‘America First’ and ‘Peace through trade’ policy approaches, these solutions not only place trade dependence at the core of their resolution but actively seek direct economic benefits for the US or Trump partners through their mediation 'services'.

In the case of Israel and Palestine, the Trump administration floated a business-oriented redevelopment proposal for Gaza, branding it as the future 'Riviera of the Middle East'. Although this was not a formal agreement, it was presented as a symbolic prelude to future mediation efforts, highlighting the administration's market-first vision of peace. In the case of DR Congo and Rwanda, the US signed a major mineral extraction and trade access deal with the Congolese government immediately following the peace deal. This deal included US investment rights in cobalt and coltan mining, with firms linked to Trump allies, including Gentry Beach, reportedly positioned to benefit. This has raised concerns about potential conflicts of interest and has blurred the lines between American diplomacy and private gain.

In the case of India and Pakistan, Trump claimed to have mediated a ceasefire in May, though this claim has been repeatedly denied by Indian officials. However, within weeks of the ceasefire, World Liberty Financial (WLF), a cryptocurrency firm, 60% of which is owned by the Trump family, signed a blockchain cooperation deal with the Pakistani government. The timing surrounding this deal has raised further concerns about the transactional nature of Trump’s mediation efforts, and whether peace attempts are being leveraged for personal-commercial gain rather than security interests. In late August, Trump commented on the context of this alleged mediation effort, stating that he threatened Indian Prime Minister Modi with tariffs so high "his head would spin" if he did not stop his attack on Pakistan.

The Cambodia-Thailand ceasefire was also claimed by the White House as a product of Trump’s 'Peace through Trade' strategy. While ASEAN, especially Malaysia, played the lead role in mediating the ceasefire, the Trump administration publicly asserted that US trade leverage and tariff threats helped pressure both parties. Regardless of the credits, this public framing by the US supports the broader pattern of using economic pressure and transactional rhetoric to claim diplomatic victories.

Private Interests and Conflicts of Interest in Mediation

The US has an unmatched global military presence and the capability to intervene and guarantee the outcomes of mediation with the threat of force. This is also the reason why, despite numerous criticisms of US efforts in ensuring international peace and security, democratic-liberal values, and human rights, it still stands as a credible deterrent and a viable party to initiate mediation processes.

These capabilities can be used to further Trump’s transactional diplomacy and 'mineral-for-military' security guarantees, as partner nations may be willing to trade and develop deeper economic ties with the US. This approach has been part of US grand strategy since the end of the Second World War and has also deterred nations from direct military confrontation with a US-aligned partner. However, applying this approach to mediation efforts, especially in active conflict zones, may prove counterproductive.

Trade as a Temporary Peace Solution

Each of these conflicts is deeply rooted in the historical, political, and emotional fabric of these nations, and 'trade' alone cannot resolve them. Trade might contribute to peace by enabling economic development, complex interdependence, rising living standards, and enhancing education quality; as seen most notably in the long-term reconciliation between the historical rivals, France and Germany. However, it cannot guarantee peace without strong institutional support, inclusive policies, and domestic political will. Even where this strategy has seemingly yielded temporary results, it is likely due to the looming threat of Trump’s tariffs.

Using security guarantees or undertaking military interventions has been a core aspect of US foreign policy practice. Over the years, it has used transactional models that range from trade to soft power. However, under Trump, this approach has been extended from security guarantees to conflict mediation, with trade with the US and Trump partners as the core aspect of all these deals.

Mediating complex conflicts using such transactional approaches risks undermining the sustainability of any agreements. When further complicated by the involvement of private actors and credible accusations of conflict-of-interest or corruption, the legitimacy and endurance of these agreements come into question. Therefore, applying Trump’s transactional approaches to conflict mediation might weaken not only his bid to present himself as a peace-maker but also undermine international peace and security, with the omnipresent risks of these conflicts resurfacing in the future.

(Abhishek Kadiyala is a Research Analyst at Takshashila Institution’s Indo-Pacific program with a focus on United States and US-India relations.)

Views expressed in this article do not represent the views of the institution.