The United States is no longer a reliable country. For some, this is nothing new. The Iraq War, launched in 2003 – resulting in over 100,000 deaths, lasting regional destabilization, and the return of Russian influence – had already shown the world the wrongdoings of American military hubris. But the current crisis is new because it challenges the very core of the country's economic, financial, and political power. The US appears disoriented, led by an unstable and erratic leader with no democratic counterweight.
To envision what comes next, we need to comprehend the ongoing turning point. If Trumpists are pursuing such a brutal and desperate policy, it's because they don't know how to respond to the country's economic decline. Measured in purchasing power parity – meaning the real volume of goods, services, and equipment produced each year – China's GDP surpassed that of the US in 2016. It is currently more than 30% higher and will reach double the US GDP by 2035. The reality is that the US is losing control of the world.
More serious still, the accumulation of trade deficits has pushed the country's public and private external debt to unprecedented levels (70% of GDP by 2025). The rise in interest rates could lead the US to have to pay substantial interest flows to the rest of the world, something it had so far escaped thanks to its grip on the global financial system. It is in this context that we should interpret the explosive proposal by Trumpist economists to tax interest payments to foreign holders of US securities. More directly, Trump wants to refill his country's coffers by seizing Ukrainian minerals, along with Greenland and Panama.
From a historical perspective, it is worth noting that the enormous US trade deficit (about 3-4% of GDP on average each year from 1995 to 2025) has only one precedent for an economy of this size: It correspondents roughly to the average trade deficit of the major European colonial powers (United Kingdom, France, Germany, and the Netherlands) between 1880 and 1914. The difference is that those countries held vast external assets, which brought in so much interest and dividends that it was more than enough to fund their trade deficit while continuing to accumulate claims in the rest of the world.
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