Understanding the two-level game during trade negotiations with the US

IN the intricate dance of diplomacy, particularly in trade negotiations with the United States, it is not enough to speak merely of tariffs, quotas, or regulatory alignment. One must understand what political scientist Robert Putnam famously called the “two-level game.” Trade negotiators do not operate in a vacuum. They are simultaneously playing two games: one at the international level with their foreign counterparts, and another at the domestic level, where various interest groups, lobbyists, bureaucracies, and political coalitions constrain and shape the positions they can take abroad. This conceptual framework is especially instructive for small and medium powers—such as those in ASEAN—when negotiating with a global behemoth like the United States.

AI Brief

Trump's trade stance is transactional focusing on tariffs to signal protection of US jobs.
ASEAN states depend on US trade but must balance local political pressures.
Power imbalance forces ASEAN to tread carefully in negotiations with a dominant US.

The United States, under Donald Trump’s second presidency, has reinvigorated the primacy of domestic political considerations in shaping its foreign economic agenda. Whether through the reimposition of tariffs on steel and semiconductors or the withholding of trade benefits from countries deemed “unfair,” the U.S. trade approach has become deeply transactional. Trade, in this view, is no longer a tool of strategic reassurance, but one of conditionality and punishment.

Yet, to understand this posture, one must peel back the layers of the two-level game. Domestically, U.S. policymakers—especially those surrounding President Trump—are deeply concerned about job loss in traditional manufacturing sectors. Even if ASEAN countries such as Vietnam, Indonesia, and Malaysia offer cheaper and more efficient supply chains, their gains are framed in the U.S. as “taking American jobs.” Thus, any concession to these nations must be offset by proof of domestic political gain. In fact, in 2025 alone, Trump has promised 150 tariff letters to be dispatched across the globe—a symbolic gesture to domestic voters that the administration is protecting American interests, however small the trade volumes may be.

This is the first layer of the game. The second lies with ASEAN states. For many of them, U.S. markets remain indispensable—whether for electronics, textiles, or agricultural exports. Yet they are also tethered to their own domestic pressures: nationalist sentiments, anti-American rhetoric, industrial lobbies, and a growing middle class that demands economic resilience rather than dependence. This dualism creates friction. A trade minister from Jakarta or Hanoi cannot simply concede to Washington’s requests without calculating the domestic political costs.

What complicates matters further is the asymmetry of power. The United States plays the two-level game from a position of hegemonic strength; it can afford to lose certain negotiations in the short term because its economy is more diversified and resilient. ASEAN states, however, play from a position of strategic vulnerability. A 5% tariff from Washington can wipe out years of effort to build a competitive edge in global value chains. Thus, their negotiators must walk a fine line—appeasing domestic constituents while trying to coax concessions from an increasingly mercantilist U.S. administration.

In such an environment, the very structure of negotiations becomes a form of power politics. When the U.S. insists on bilateral talks, it strips ASEAN states of their collective bargaining power. The “hub-and-spokes” architecture of American diplomacy—long seen in its security alliances with Japan, South Korea, the Philippines, and Thailand—is now replicated in trade. Washington prefers to talk to countries individually, not collectively, because it allows for the maximization of leverage.

Yet this strategy is not without risks. The more the U.S. pressures ASEAN economies with punitive tariffs, the more it pushes them toward economic diversification—especially with China. In fact, the signing of the Regional Comprehensive Economic Partnership (RCEP), the world’s largest free trade agreement, excluding the United States, is a direct response to such American unpredictability. The Indo-Pacific Economic Framework (IPEF), initiated by Washington, lacks the market access component—undermining its credibility and attractiveness. Herein lies the paradox: while the U.S. flexes its muscle in the short term, it may be sowing the seeds of long-term strategic irrelevance in the region.

The two-level game also helps explain the frequent delays and breakdowns in trade negotiations. Even if negotiators reach an agreement at the international level, they must “ratify” it domestically. In the U.S., this means securing Congressional approval—a herculean task in a polarized Washington. In ASEAN, this means building consensus among ministries, parliamentarians, and private sector actors, many of whom have diverging priorities.

Indeed, the structure of ASEAN itself reflects a form of institutionalized two-level gaming. Every consensus at the regional level must first be harmonized across ten diverse political systems—from constitutional monarchies to military-backed regimes, from democracies to one-party states. The requirement for unanimity often delays decisions, but it also serves as a buffer against hasty capitulations. In contrast, U.S. negotiators frequently find ASEAN “slow,” “inflexible,” or “non-committal”—a reflection of their impatience with multilateral diplomacy.

Therefore, to be effective, trade negotiators in ASEAN must embrace the two-level game as both constraint and strategy. Domestically, they must build broad-based support by showing how trade liberalization aligns with national development goals. Internationally, they must leverage regional platforms—like ASEAN+1 FTAs, the East Asia Summit, and RCEP—to negotiate from a position of collective strength. Crucially, they must also invest in public communication. The average citizen in Southeast Asia must understand that global trade is not a zero-sum game. If the narrative is not managed, populist forces will weaponize trade liberalization as a threat to sovereignty and livelihood.

The U.S. too must reconsider the logic of its transactionalism. The world has changed since the Cold War when economic carrots and security sticks went hand in hand. Today, partners want reliability, predictability, and respect. Punitive tariffs may serve a short-term domestic agenda, but they erode the very foundations of long-term alliances and partnerships. If Washington insists on winning every game, it may find itself increasingly alone on the playing field.

In the final analysis, the two-level game is not just about negotiation tactics—it is about understanding the complexity of modern statecraft. As ASEAN negotiators prepare for the next wave of U.S. tariff impositions, they must recognize that success lies not in pleasing Washington alone, but in aligning foreign bargains with domestic consensus. Only then can Southeast Asia chart a sovereign and sustainable economic path forward.

Phar Kim Beng is Professor of ASEAN Studies at International Islamic University Malaysia (IIUM) and Director at Institute of Internationalization and ASEAN Studies (IINTAS)

Vic Li, PhD is Lecturer at University of Sheffield

** The views and opinions expressed in this article are those of the author(s) and do not necessarily reflect the position of Astro AWANI.