The Trump administration seems to have overlooked that the current US position is based on trust - in the dollar, the predictability of the government in Washington and the reliability of the US military. If Trump and his cronies actually start breaking signed agreements and their own rules of the game, trust in them will be in ruins.
This text has been auto-translated from Polish.
The extremely controversial statements of Donald Trump at first glance give the impression that the United States wants to "shirk" its alliance commitments and leave Europe alone.
After all, announcements to take control of Greenland, without ruling out the use of force, undermine the existence of NATO. If the U.S. military were to annex territory belonging to Denmark, Poland would theoretically have to defend its important European ally against the aggression of its key security guarantor. It is hard to imagine a less comfortable situation for Poland, which has about 10,000 U.S. troops stationed there. If this were to happen, the North Atlantic Alliance would become a sham.
Picture stones
However, Trump's radically assertive, not to say brutal, behavior toward his allies can also be interpreted as an attempt to carve out a much better position for the US in the structures of the West. The political environment taking power on the Potomac long before the victorious election made it loudly known that the current global economic and geopolitical alignment is unfavorable for the US. This thesis is based on two pillars.
The first is economic relations with key trading partners - the US has been running a trade deficit for years, importing far more than it sells abroad. This has led to some industry moving out to cheaper areas of the world - mainly China, but also Mexico or Central and Eastern Europe.
As a result, the working class has suffered pauperization, and the once quite prosperous US states, whose economy was based on manufacturing, have seen a deep decline. The most striking example is the state of Michigan, which in a short period of time fell to the level of Louisiana, which had been poor for years, and its largest city, Detroit, is now a symbol of post-industrial degradation, like Walbrzych in 1990s Poland.
The second pillar of the theory of the disadvantageous position of the global hegemon - which, by the way, looks like an oxymoron at first glance - is the cost of the presence of U.S. forces in Europe and, more broadly, of acting as the main guarantor of security on the Old Continent.
Trump has said many times that much of NATO's membership does not spend 2 percent of GDP on the military, as the North Atlantic Treaty obliges them to do. Many in his circle are convinced that the EU is even preying on the US, using the American presence on the Old Continent to undercut military spending. Vice President JD Vance, in the pages of the Financial Times, even billed Europe.
"According to estimates, the continent would spend an additional $8.6 trillion on defense over 30 years if it maintained Cold War levels of military spending. As the U.S. defense budget approaches a trillion dollars a year, we should view the money Europe has not spent on defense as a tax on the American people to provide security in Europe," - Vance wrote in February 2024.
In other words, America has begun to view the de facto Pax Americana it created as an exploitative structure for the US and very unfair to Washington. Even if that were the case, it should hold a grudge against itself first and foremost.
The offended hegemon
It was the US as the victor of World War II that established the pillars of the current international order. This is not at all about the famous Yalta, in which the transfer of all of Central and Eastern Europe to the custody of the USSR was finalized, but about the system created at the Bretton Woods Conference.
As a result of agreements made back in 1944 in this small town in the state of New Hampshire, the key financial organizations - the International Monetary Fund and the World Bank - were established, in which Americans secured a dominant position. The most important effect of the Breton Woods system, however, was that the dollar took over as the global reserve currency, against which all central banks had to maintain a specific exchange rate.
This system was partially dismantled by the Nixon administration, which abandoned the dollar's convertibility to gold in the early 1970s. This was shocking at the time, but in the long run it did not change much - the U.S. dollar maintained its position as the absolute key currency of the world. It turned out that confidence in it was the result of confidence in the American state, not in gold bullion.
According to data from the International Monetary Fund, at the end of last year the dollar accounted for 57 percent of global foreign exchange reserves. The second-ranked euro was responsible for 20 percent. The U.S. currency is therefore three times more important in this regard than the single European currency. Others, such as the Chinese yuan, the Japanese yen, the pound or even the famous Swiss franc, are completely out of the equation, having a few percent share each.
This gives the U.S. confidence that the value of its currency is safe and stable, despite the very expansive policies of the Federal Reserve, which for many years has used aggressive quantitative easing, leading to an increase in the volume of money in circulation, without having to worry particularly about inflation.
The second manifestation of the dollar's hegemony is its share in international transactions. According to an analysis by the Polish Institute of International Affairs last February, authored by Piotr Dzierżanowski, in 2023 almost half of the transactions made in the interbank SWIFT system were based on the dollar. The euro was used for 23 percent of transactions, and other currencies were already of marginal importance.
Thus, the Fed does not have to worry about the value of the currency it issues, as there is no shortage of people willing to buy it. This allows it to apply low interest rates, which provides Americans with access to cheap credit. Sometimes all too cheap, which ended with the 2008 mortgage crisis, which quickly turned into a general financial crisis and spread around the world, leading, among other things, to the economic collapse of Greece.
Thanks to the dollar's dominance, Americans can enjoy not only cheap credit, but also low prices for everything else. During the recent cost-of-living crisis, inflation in the U.S. did not break through 10 percent, although in the EU it was approaching 25 percent in some countries (Hungary and the Baltic States). It peaked at 9 percent in June 2022, but fell rapidly in the following months and was already at 3 percent a year later.
By using a global reserve currency on a daily basis, Americans can buy goods produced in other countries at low prices on a massive scale. The U.S. is the world's largest importer - according to PKO BP Bank, it purchased nearly 3 trillion euros worth of goods abroad in 2023. Most from Mexico (443 billion euros), China (414 billion euros) and Canada (nearly 400 billion), which Trump is just now threatening to impose harsh tariffs (but graciously assures that, unlike Greenland, he will not use military force against it).
In terms of exports, the U.S. is already performing much more poorly. In 2023, it exported goods worth less than 1.9 trillion euros. Canada (326 billion euros), Mexico (nearly 300 billion) and China (137 billion) purchased the most products made in USA. However, if we consider the European Union as a whole, it is Europe that becomes the largest trading partner of the US.
According to Eurostat, in 2023 the EU accounted for 346 billion euros in U.S. exports and just over half a trillion in U.S. imports. In trade relations with the European Union, the US recorded as much as a 156 billion euro deficit. Only with China was the U.S. trade deficit larger - and significantly so, with as much as $277 billion under the dash.
This allows the US to run a high current account deficit (the country's annual financial flows with foreign countries) for many years without macroeconomic risk. Since the early 1990s, the U.S. has been constantly under the dash - according to OECD data, it recorded a deficit of 3 percent of GDP at the end of 2023. The OECD average was zero, while the European Union scored a surplus of 2 percent of GDP.
Trump manipulation
It is this trade deficit that Trump claims proves that the US is being exploited by other leading economies of the globe. However, this is a blatant manipulation - he is the result of the dollar's dominant position, which allows Americans and American companies to buy overseas on the cheap.
According to the Trumpists, the current shape of trade relations has led to millions of jobs moving outside the U.S., resulting in the pauperization of the working class - especially in the so-called Rust Belt, the once-industrialized states (the aforementioned Michigan, Indiana and Ohio - JD Vance's home state). However, this offshoring, which has been going on for several decades, is a result of the liberalization of global trade, which has allowed production to move to countries with lower labor costs. And who is behind this liberalization? The U.S., of course, which, at least since the 1970s, has promoted free trade around the world very strongly, resulting in the creation of the World Trade Organization, which upholds low tariffs, among other things.
The creation of the WTO was preceded by a whole series of General Agreement on Tariffs and Trade (GATT) conferences, during which the dominant US forced tariffs down. Officially to promote free trade, but in reality to prevent protectionism by economic tigers from different parts of the world.
For example, during the Tokyo round of GATT negotiations (1973-79), the U.S. cut the teeth of fast-growing Japan by lowering allowable tariffs on industrial goods from 33 percent to 6 percent. As a result of all these arrangements and the eventual creation of the WTO, today countries wishing to participate in global trade are formally prevented from pursuing an industrial policy along the lines of South Korea or Taiwan, which, using high tariffs and export subsidies, have rapidly developed their industries, so that they are now among the leading exporters of advanced goods.
Germany poorer than Louisiana? It's more complicated
Americans first created the modern shape of economic relations in the world, and now accuse other countries of being disadvantaged by some aspects of it. It would be hard to find a greater hypocrisy.
Of course that the modern global order also has disadvantages from the point of view of Americans. The loss of some industrial jobs is one of them - but it was the U.S. that pushed for the liberalization of global trade, which allowed their companies to expand, while blocking the ability of fledgling companies from developing countries to grow peacefully.
It is also a fact that the U.S. is currently suffering from a host of domestic problems. The pauperization of the working class, the opioid epidemic, crime, the gigantic murder rate or the lack of access to medical care for the least affluent part of society are just a few. Almost all of the pathologies plaguing the US, however, are the result of domestic systemic solutions, adopted by Americans and maintained at all costs.
In terms of per capita income, the US is one of the richest countries in the world. According to the IMF, last year they achieved a GDP of as much as $87,000 per capita, which ranked them eighth in the world, although they have a population of as many as 335 million. Ahead of them are only small or even microscopic countries, lying on oil or gas or being tax havens - Brunei, Switzerland, Norway, Qatar, Ireland, Singapore and Luxembourg.
Leaving aside the tax havens of Ireland and Luxembourg, even the richest EU countries, Denmark and the Netherlands, are on average less wealthy than the huge U.S. - they recorded 83,000 and 81,000 to, respectively. per capita income. If compared to individual states, Denmark would not fit into the top 20 in terms of wealth. The twentieth state, New Hampshire, recorded a per capita GDP of $85 thousand in 2024. Germany, with a score of less than $71,000 per capita, would rank among the poorest states in the US, just below Louisiana (38th place), which is regularly used in pop culture to depict poverty and social pathologies in the US. Meanwhile, Germany is theoretically even poorer.
Theoretically, because the standard of living is not determined by GDP per capita alone, often artificially inflated by corporate profits. As is the case in Ireland, which, according to GDP per capita, is among the absolute top of the rich, as US companies benefiting from low taxation account for their profits there - and the inhabitants themselves are poorer even than the Germans mentioned above.
This does not change the fact that money in the US is in abundance. It flows there in a wide stream, and it is up to Americans to decide how it is distributed. Meanwhile, inequality in the US is gigantic - according to the OECD, the Gini index there is 0.4, the second highest after Costa Rica. According to the World Inequality Database, in the U.S. the top 10 percent of earners rake in almost half of the income earned over the Potomac. In EU countries, including Poland, it is usually about one-third.
What the sheriff gains
The U.S. benefits not only from the world economic order it has created, but also from its role as global sheriff. Yes, according to NATO data, they are among the leaders in terms of arms expenditures. In 2024, they spent less than 3.5 percent of GDP, putting them in third place, after Estonia (almost equal to 3.5 percent) and Poland (more than 4 percent), which leads by far.
The median spending on armaments in NATO was 2.11 percent of GDP in 2024, so most Alliance countries are already meeting commitments in this regard. In terms of the share of spending on equipment, member states are more than fulfilling their commitments. They should spend at least 20 percent of their budgets on equipment, meanwhile the median is 31 percent, and the US is even marginally below (equal to 30 percent) in this regard. Poland again leads the way (over 50 percent), with only two countries failing to meet their commitments - Canada (less than 20 percent) and Belgium (15 percent).
However, it is hard not to notice that a huge part of this military spending by member states goes to the US, which is, after all, the world's leading arms exporter. According to the U.S. State Department, in 2023 the U.S. sold as much as $81 billion worth of arms abroad, a year-on-year increase of... 56 percent.
Among the top buyers is, of course, Poland, which purchased, among other things, Apache helicopters ($12 billion), Himars launchers ($10 billion) or Abrams tanks ($3.75 billion). In addition to Poland, however, the list of top buyers includes many other European countries - Germany (Chinook helicopters - 9 billion and AMRAAM missiles for 3 billion), the Czech Republic (F-35 fighters - $5.6 billion), Bulgaria (Stryker armored vehicles - 1.5 billion) or Norway (supplies for MH-60R helicopters - $1 billion).
In other words, Americans demanding more arms spending are actually demanding more arms purchases from their companies. American weapons are so popular among NATO countries not only because they are so good - although they undoubtedly are. Above all, it guarantees compatibility with the forces of a key NATO member like the US.
If the United States ceases to act as a guarantor of security in Europe, its arms industry will lose many customers. Including Poland, which, in such a situation, could shift some of its planned purchases to South Korea (it has excelled in fulfilling its existing contracts) or France (the strongest army in the EU). Also, the development of nuclear power on the Vistula would then be better developed with the French, who would become the foundation of EU defense - having nuclear weapons and a well-developed arms industry.
The dominant role of the US in the Western world also gives them many other advantages. For example, the ability to influence the governments of allied countries not to make changes unfavorable to companies from the Potomac. Poland's withdrawal from the introduction of the digital tax was "informed" by Polish public opinion.... Vice President Mike Pence. The Americans also forced the blocking of the Lex TVN bill. They are taking similar actions in many other allied countries, which politely bend their necks, counting on the protective umbrella extended over them by Washington. If that umbrella is rolled up, the deference to American companies will also disappear.
It is also worth recalling that so far only once has Article 5 of the North Atlantic Treaty, which obliges allied states to assist a member state under attack, been used. That state was the US after the attacks on the World Trade Center and the Pentagon in 2001. The EU allied countries each sent several thousand troops to Afghanistan on a mission that lasted a total of two decades. Some U.S. allies also supported Washington during the Iraq war, which, as it later turned out, was based in part on false premises.
So, so far in practice, it is the US that has exclusively benefited from the support of its NATO allies. Of course, it can be noted that many other countries have not benefited from Article 5, because the US sufficiently deters potential aggressors. And this is probably true, but in return Washington has a privileged position throughout the West, quite arbitrarily shaping the global order according to its current needs.
When it was advantageous for the U.S. to liberalize trade, it pushed for the removal of tariff barriers in the GATT negotiations and later in the WTO. When this led to the flight of parts of industry, the offended Americans themselves began to break the rules they had established, imposing tariffs and threatening everyone around them with more.
The Trump administration seems to have missed the fact that the current US position is based on trust - in the dollar, the predictability of the government in Washington and the reliability of the US military. If Trump and his associates actually start breaking signed agreements and their own rules of the game, trust in them will be in ruins. So will the position of the dollar, the attractiveness of American weapons and the privileged position of the US in Western countries.
