Gallagher on How Trump-Era Policies Are Accelerating South–South Economic Cooperation
In a new analysis for The American Prospect, a magazine that discusses public policy and legislation, published November 27, 2025, Professor Kevin P. Gallagher and co-author José Antonio Ocampo, former Minister of Finance and Public Credit of Colombia, argue that President Trump’s “America First” economic policies—marked by tariffs, pressure on trading partners, and a retreat from multilateralism—are reshaping the global economic landscape in ways that are pushing countries in the Global South toward deeper cooperation with one another.
For decades, many developing nations have struggled under a financial architecture dominated by the International Monetary Fund (IMF), World Bank, and private creditors, often facing austerity and debt crises that limited their ability to pursue long-term development. The piece outlines how repeated cycles of boom-and-bust financing—from the OPEC shock of the 1970s to post-2008 capital surges and withdrawals—have reinforced structural vulnerabilities across Latin America, Africa, and parts of Asia. Today, more than three billion people in the Global South live in countries paying more in external debt service than in health or education.
Against this backdrop, Trump’s tariff policies are seen as both coercive and clarifying. They have underscored for many governments the risks of dependence on a U.S.-led economic order, spurring renewed interest in South–South trade, regional development banks, and alternative financing mechanisms. South–South trade has grown dramatically over the past three decades, and new institutions—from the Asian Infrastructure Investment Bank to the Development Bank of Latin America—have become increasingly influential sources of capital and policy experimentation.
The article points to emerging alternatives to IMF-style crisis management, such as the Chiang Mai Initiative in Asia, African regional financing efforts, and proposals for climate-focused stabilization funds. At the same time, Global South governments are engaging China with a mix of opportunity and caution: leveraging Chinese investment and market access while renegotiating loan terms to safeguard economic autonomy.
The writers elaborate on how this is a time of awakening,
Trump’s assertive ‘America First’ stance laid bare the fissures of a U.S.-anchored economic order. The Global South’s response—regional development banks, new reserve mechanisms, and trade deals beyond Washington—is not simply reactive resistance, but emergent institution-building.
Whether these initiatives can coalesce into a durable alternative remains an open question, but their momentum signals a significant shift in global economic governance.
The full analysis can be accessed here.
Kevin P. Gallagher is a professor of Global Development Policy at the Frederick S. Pardee School of Global Studies at Boston University and the director of the Boston University Global Development Policy Center (GDP Center). He serves as the lead expert on Multilateral Development Bank Reform to the Brazilian Presidency of the G20. Additionally, he is a member of the Task Force on Climate, Development and the International Monetary Fund and a co-chair of the Debt Relief for a Green and Inclusive Recovery Project. Gallagher is the author or co-author of eight books, including China and the Global Economic Order (Cambridge University Press, 2025), The Case for a New Bretton Woods (Wiley, 2021), and The China Triangle: Latin America’s China Boom and the Fate of the Washington Consensus (Oxford University Press, 2016). To know more about his scholarly work and achievements, visit his faculty profile.