Donald Trump has filed for corporate bankruptcy six times under Chapter 11 of US law. He has openly bragged about doing so strategically — using it as a tool to restructure debt, shed obligations, and come out on top. This mindset, once confined to his business, is now shaping how he sees foreign and trade policy.
Trump approaches bilateral ties not as enduring partnerships, but as zero-sum transactions. His strategy is simple — “bankrupt” existing agreements, create chaos, and force the other side to renegotiate on terms more favorable to him. He believes that disruption itself is leverage.
This may work in the courtroom with creditors, but it fails dramatically when applied to sovereign nations, each of which has its own political dynamics, economic priorities, and long-term strategic calculations. Countries are not passive lenders, they are active agents with national interests, and memories that last beyond one US election cycle.
Deep consequences
Trump may be able to force short-term concessions from close allies like Japan, South Korea, or the European Union — nations that often feel pressured to preserve ties with the United States despite provocations. But these so-called “wins” come at a steep price: erosion of trust. Allies do not forget when they are publicly insulted, when agreements are torn up overnight, or when decades of alliance-building is dismissed as bad deals.
That erosion of trust has deep consequences. Future US administrations — regardless of party — will find themselves spending enormous diplomatic capital just to bring things back to baseline. They will be forced to reassure partners, reestablish credibility, and rebuild institutions that Trump gleefully undermines. All this diplomatic effort could be better spent addressing actual threats and shaping global norms.
And the timing could not be worse.
The US and allied intelligence agencies have warned that China could be preparing for a potential military move on Taiwan by 2027. If that nightmare scenario unfolds, Washington will face a historic test. Should the US fail to come to Taiwan’s defence, it risks a collapse in global credibility — the very foundation of deterrence and alliance-building. If it does intervene, it will need all the allies it can muster — allies that Trump has spent years alienating.
There is simply no version of US strategy — in the Indo-Pacific or beyond — that works without allies. The United States cannot contain China, stabilise Europe, and confront Russia without the diplomatic, logistical, and political support of its partners. And yet, Trump continues to treat those very allies as freeloaders or obstacles, rather than force multipliers.
This is not a question of America’s power, which remains considerable. It is about its relative power — which has declined. The unipolar moment that followed the Cold War is over. US influence is now contested, not just by adversaries like China and Russia, but by emerging powers seeking more autonomy on the global stage.
The post-1945 international order — built by the US and anchored in institutions like NATO, the WTO, and the UN — has served America exceptionally well. It expanded the US’ economic reach, secured global sea lanes, and created a network of alliances that preserved peace among major powers. Tearing that system down in the name of transactional nationalism is not just shortsighted — it’s dangerous.
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India-US ties
Trump’s worldview treats diplomacy like a failed casino deal. Break the contract. Threaten the counterparty. Force a renegotiation. But geopolitics is not a bankruptcy court. Other nations don’t simply cave. They adapt. They hedge. They seek alternatives. When the US withdraws or proves unreliable, others — China chief among them — are ready to fill the vacuum.
The consequence is a series of short-term tactical “wins” that weaken America’s long-term strategic depth. Nations begin to doubt US reliability. Global institutions lose legitimacy. And adversaries feel emboldened to test the boundaries of US resolve — from the South China Sea to Eastern Europe.
Recently, Trump singled out India in his familiar tirade against trade “abuse,” threatening tariffs and even questioning India’s oil purchases from Russia, accusing it of indirectly funding the war in Ukraine, and threatening additional tariffs over it.
India has responded with measured pragmatism, relying on facts to point out what many in Washington prefer to ignore: the US and EU themselves continue to import critical goods — including uranium, fertilisers, chemicals, and even LNG — from Russia. Pointing fingers at India while quietly maintaining trade ties with Moscow does not go unnoticed.
What Trump also fails to understand — or conveniently ignores — is the nuanced nature of India’s strategic posture. India is resolute about its red lines and its national interests. Its longstanding ties with Russia are both sentimental and practical. Russia remains a key defence supplier, a strategic partner, and a nation with which India shares decades of institutional ties. Previous US administrations have acknowledged this and said that the US wants to turn this around and win India’s trust to be the preferred partner. Trump is damaging the work that has been painstakingly done over 25 years.
Still, Trump’s rhetoric is giving fresh ammunition to sceptics within India’s strategic community — those who have long viewed the US as an unreliable partner. These voices have always existed, but their warnings are being amplified once again. The shadow of US support to Pakistan during the Cold War — especially its backing during the 1971 war and the deployment of the USS Enterprise to the Bay of Bengal — has never entirely faded. Now, Trump’s erratic posturing only reopens old wounds and raises new doubts.
Trump’s bankruptcy strategy may have worked in real estate, casinos, and hotels. But international relations run on trust, consistency, and credibility — not bluster and threats. America’s ability to shape global outcomes — to deter war, build coalitions, and protect its interests — will decline. Not overnight. But steadily, and perhaps irreversibly.
Yet India is not revisionist or transactional in its dealings with the United States. In fact, bilateral ties have grown significantly in the past two decades — economically, diplomatically, and militarily. The US is now India’s largest trading partner, a vital source of capital and technology, and increasingly central to India’s defence modernisation. Roughly 50 per cent of India’s total defence exports go to the US, and major US defence companies have established critical manufacturing bases in India. American jet engines are vital for India’s indigenous fighter aircraft programmes. In short: this is not a relationship either side can afford to treat lightly.
India will protect its autonomy, uphold its interests, and continue to diversify its relationships. But it will do so pragmatically. The US remains a key partner for India — not because of sentiment, but because of shared strategic priorities. But partnerships can’t be built on insults, threats, or false equivalencies. In the end, diplomacy isn’t about domination or deals. It’s about relationships. And relationships, once broken, are hard to repair.
The author is an adjunct scholar at the Takshashila Institution. He tweets @YusufDFI. Views are personal.
(Edited by Aamaan Alam Khan)