It is the second year in a row that America has dropped a spot on the annual list.
Switzerland on the other hand retained its top spot for the second straight year.
Trump is set to fly to the Swiss ski town of Davos late Wednesday to promote his "America First message" during a gathering of global business and political elites.
A large American delegation, including more than half a dozen cabinet members, journeyed to the World Economic Forum to talk trade and security.
The forum largely focuses on finding joint solutions to global problems, which seems to contrast Trump's protectionist, isolationist policies.
America's perceived retreat from its traditional global leadership role is creating opportunities for other countries, particularly in the areas of "soft power," arenas where economic and cultural influence drive opinions and policy-making, according to U.S. News.
A recent Gallup poll found that global approval of U.S. leadership sank to its lowest point in nearly two decades during Trump's first year in office.
The U.S. has also dropped significantly in the U.S. News rankings of trustworthiness and political stability.
The list is based on a survey of more than 21,000 "global citizens" who rank 80 countries in 24 categories, including cultural influence, heritage, adventure and quality of life.
Terrorism, income inequality and climate change remain the top issues that survey respondents want their leaders to prioritize and tackle.
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