The United States is facing increasing challenges to its traditional role as the enforcer of global order, a position underpinned by a stable balance of power and agreed-upon international rules. Both of these foundational pillars are now seen as crumbling, with the US, despite its military and economic might, struggling to prevent conflicts or ensure the free flow of commerce. A notable example is its inability to open the Strait of Hormuz after Iran closed it, even though Iran is considered militarily hobbled. This reflects a broader shift where the US can no longer reliably secure the economic system that has supported global openness.
Several factors contribute to this decline. Changes in military technology, such as the use of cheap drones and missiles by actors like the Houthis, pose significant challenges. For instance, the US has spent approximately $2 billion in munitions to counter Houthi attacks in the Red Sea, using $2 million interceptors against drones that cost a few thousand dollars, and $3 million Patriot rounds against $35,000 Iranian Shahed missiles. This imbalance in cost-effectiveness highlights the financial strain on the US military's ability to maintain control over global commons. Furthermore, there's a growing disinterest within the US itself in bearing the disproportionate costs of being the world's police officer and free-trade champion.
Economically, the US faces its own burdens, with federal debt exceeding the country's annual economic output and large budget deficits. The cost of servicing this debt is rapidly increasing, leading to concerns among investors who are reassessing the risk of financing an increasingly indebted superpower. While the dollar remains the dominant reserve currency, and US Treasury bonds are considered safe, the need for higher compensation to finance US debt signals a shift in investor confidence. This is exacerbated by perceptions of political pressure on the Federal Reserve, as seen in market reactions to comments from Federal Reserve Chair Kevin Walsh.
Former President Trump's actions, such as withdrawing from the World Health Organization, scrapping foreign aid, and imposing tariffs, have accelerated the dismantling of the US-led order from within. Even after his presidency, it's unlikely the US will resume its former role. The world has also become less reactive to US threats; for example, recent tariff announcements by Trump were met with shrugs from international markets and trading partners. This indicates a growing perception that US bluster often does not translate into sustained action, further eroding its hegemonic influence and ability to dictate global affairs.
