USAID cuts and tariffs will harm the United States’ reputation in the Pacific more than they will harm the region itself.
The resilient region will adjust to the economic challenges and other partners will fill gaps, but what will last is the memory of being a non-factor in the Trump administration’s foreign policy. The sentiment might not last forever, but the US must pursue reputational damage control. In the meantime, Australia needs to ensure that it’s not the only partner covering the US’s absence.
The Pacific is not even an afterthought in the stream of announcements and changes that have come under the new Trump presidency in the US. With sweeping cuts to USAID and tariffs threatening global supply chains, there are plenty of challenges on the horizon.
Some may argue that the US wasn’t doing much in the Pacific outside of Micronesia to begin with, and in many ways that is true. But even if it could have been much larger and more effective, the support from the US has had value. Its withdrawal is a hard pill to swallow for those it will directly affect.
The decision to freeze funding to USAID came in February, with more than 80 percent of USAID programs (worth more than US$50 billion) to be cut. Climate, refugee and sexual health programs were high on the hit list.
According to the Lowy Institute’s Pacific Aid Map, the US has been the fifth-biggest funder of the Pacific—behind Australia, China, Japan and New Zealand—providing around 7 percent of all development funding in the past decade.
Some have claimed that most USAID money to the Pacific goes through Australian NGOs. But of USAID’s recent US$249 million annual contribution, $75 million (around 30 percent) was in partnership with Australian NGOs—far below a majority. USAID has provided tangible support in pivotal programs that will be sorely missed.
Uncertainty around the future of USAID-funded projects for HIV/TB and Malaria is already affecting Pacific communities. Programs improving accessibility to climate financing for Pacific island countries are at a tipping point, and key gender-based violence initiatives that provide workshops on domestic violence, women’s empowerment and mental health are in limbo.
In response, Australia has redirected some of its aid from multilaterals to more direct action. But Australia does not have the capacity or resources to simply take over where the US left off, nor should it. Australia must find a way to get other partners to help fill the gap, whether through new minilateral partnerships or increasing its effort in multilateral initiatives.
Donald Trump’s Liberation Day tariffs have made things worse for the US. Most Pacific island countries received the baseline tariff of 10 percent, but Fiji, Vanuatu and Nauru all received higher tariffs. The US has suspended the higher tariff rates as it seeks to bring parties to the negotiation table, but for Vanuatu and Nauru, the amount of goods exported to the US is small anyway.
OECD data shows that in 2023 the US received 3.29 percent and 0.57 percent of Vanuatu and Nauru’s exports respectively, amounting to a few million dollars. Fiji would be hit the hardest: the US is its top export destination, receiving 31.8 percent of Fijian exports. The value in 2023 was more than US$366 million. On ABC Radio, Fijian Deputy Prime Minister Biman Prasad slammed the tariffs, calling them ‘unfair and disproportionate’.
In making these tariff decisions, the US hasn’t considered its partnership with Pacific island countries or accounted for potential implications. The tariffs may not directly spell doom for many, given the availability of other export destinations. But countries are concerned that the flow on effects to global supply chains will affect tourism and increase import costs.
While the consequences of these tariffs are hard to predict, we can be confident of one lasting effect: the memory of a careless and inconsiderate US.
So far, many leaders see these decisions as the actions of an individual, rather than a state, but trust has still suffered. The US has previously clawed its way back into relevance, but even if it can do so again, the lesson will not be forgotten: the US could, at any time, step away from the region.
For Australia, a little distance from the US wouldn’t hurt, particularly as China will likely tar the two countries with the same Western brush, as it has been doing for years. Australia must also look to partners such as Japan, India, South Korea and the European Union to test their appetite for stepping up regional support. Though sometimes overlooked, these actors have all contributed to the Pacific and sought to deepen engagement in the past decade. Their value should not be underestimated.
At the end of the day, the US is doing greater harm to their reputation than to Pacific nations. While we should be wary of an unpredictable US administration, we should not underestimate the resilience of Pacific island nations.
