US foreign policy was unusually bizarre in January 2026, with the kidnapping of Venezuelan President Nicolás Maduro and tariff threats against allies over the possible annexation of Greenland.
Key to understanding this whimsy is the radically revised US national security strategy (NSS) published on December 5 2025. This document was largely ignored by the mainstream media at the time.
The document represents a serious reorientation of US grand strategy, away from the post-Cold War consensus and previous NSS positions. Normally, the annual update tends to be a ho-hum affair. In the past it has been somewhat clunky and tried to be all things to everyone. Not so this one, and it is a must-read for any serious international investor. In fact, it’s the shortest and bluntest for many years.
The document’s foundation focuses tightly on the core national interest instead of global leadership for its own sake. It emphasises that the purpose of foreign policy is to protect the homeland, strengthen economic and technological power and advance security where it directly affects the US. It begins with a critique of previous strategies that sought “permanent American domination of the entire world”, arguing that such ambitions diluted US resources and failed to protect vital interests.
The key strategic principles are:
- Security and prosperity, not idealistic global missions, come first;
- Flexible realism — collaborate if it’s beneficial, and take unilateral action when necessary;
- Noninterference in reshaping other nations’ systems; and
- Economic strength is security. Economic and technological leadership are pillars of national power.
This needs to be read in parallel with the revised regional strategy, which started with a resurrected “Monroe doctrine”. Security for the Western hemisphere (the Americas), is absolutely the top priority; Taiwan’s continued independence and stability in Asia are central strategic efforts; Europe needs to assume greater defence responsibilities; and involvement in the Middle East and Africa is substantially reduced.
A number of notable themes emerge:
- Traditional adversaries such as Russia receive less emphasis and relations with China are framed largely in terms of economic competition rather than ideology;
- For the first time, an NSS treats migration and border security as national security issues;
- Alliances are reframed as transactional partnerships rather than communal defence obligations; and
- Economic, technological and cultural resilience are described as pillars of national defence.
Some reversion should be reasonably expected after 2028, but it is likely that many of these policy resets will survive his departure from the White House
The US’s relationship with the rest of the world is undergoing a tectonic shift. While Donald Trump has been the most isolationist president since Andrew Jackson, and while some reversion should be reasonably expected after 2028, it is likely that many of these policy resets will survive his departure from the White House.
This strategy is key to understanding the pivotal “middle powers” speech delivered in Davos by Canadian Prime Minister Mark Carney. There was much admiration of “truth to power”, but Carney was just facing up to the realities of the NSS and (not unreasonably) trying to drum up enthusiasm for the game theory principle of Nash equilibrium in world politics.
What wasn’t explicitly stated, but seems to be understood by everyone other than Americans, is that when we talk about the breakdown in trust in the global order, we mean trust in the office of the president of the US.
If we strip out ideology and personal bias and examine Trump’s first presidency, he had policies that were not necessarily terrible but were poorly executed. Unfortunately, one year into this second presidency, that pattern has been repeated. The idea of the US retreating from playing global police officer is a perfectly sound one. But the execution has been utterly dismal. An autocrat in business is a feature, not a bug; but in government, it’s the opposite.
The US government needs to roll over about $9-trillion of debt in 2026. You don’t want to be stoking inflation or weakening your currency until after you’ve issued that paper. In this context, the appointment of Kevin Warsh to succeed Jerome Powell as chair of the Fed was a good save from a near own goal.
I heard Evan Walker of 36One quip in a recent presentation that if you put global macro front and centre as your investment guide, you can freeze up and do nothing. A wise view. Observe and adapt.
Lucas is a portfolio manager at Vunani. These views are personal.
