Near Collapse of the $29 Trillion
The recent near-collapse of the $29 trillion U.S. government debt market—triggered by President Donald Trump’s abrupt imposition of punitive tariffs—marks not just a financial crisis, but a symbolic fracture in the post-war world order. Trump’s attempt to strong-arm global trade partners with what he called “liberation day” has backfired catastrophically. His economic nationalism, anchored in bullying tactics, has exposed not American strength, but American fragility.
Within hours of his boastful proclamation that world leaders were lining up to “kiss his arse,” Trump was forced into a humiliating retreat.
The markets compelled him to suspend his aggressive tariff regime for 90 days, cutting all duties—except on China—to 10%. The episode recalls the fate of former UK Prime Minister Liz Truss in 2022, whose own ideologically driven economic miscalculation triggered financial turmoil and ended her premiership. Now, it is Trump who finds himself boxed in, unable to reimpose the tariffs without provoking another debt crisis, and unable to attract foreign investment to absorb the avalanche of government debt needed to fund his planned tax cuts.
This collapse of U.S. economic credibility signals a pivotal moment: the emergence of a new global order, no longer reliant on American leadership. Liberal democracies—Europe, Britain, Canada, and others—have the opportunity to form a new trade architecture rooted in cooperation, regulation, and mutual benefit rather than coercion. But seizing this opportunity demands coordination, vision, and a willingness to reject the short-termism of “national interest” in favour of long-term global strategy.
This new alignment becomes even more urgent when viewed through the lens offered by former U.S. President Jimmy Carter, whose recent reflections add moral and strategic depth to the current crisis. Speaking candidly about U.S.-China relations, Carter contrasted America’s historical reliance on military power with China’s long-term focus on infrastructure, innovation, and development.
“The United States is the most warlike nation in the history of the world,” Carter remarked, “because it wants to impose states that respond to our government and American values… China, for its part, invests in railways, infrastructure, 6G, robotic intelligence, universities, and hospitals.”
His words are a devastating critique of U.S. hegemony-by-force. While the U.S. spent hundreds of billions on wars and regime-change efforts, China channelled its resources into becoming a strategic and economic powerhouse. As Carter pointedly asked, “How many kilometres of high-speed trains do we have in this country?” The answer is damning. America has squandered its global position by trying to bully the world into alignment rather than building partnerships through constructive investment.
Trump’s trade war is a continuation of this strategy—an economic version of military coercion. It is emblematic of the same hubristic mindset that assumes power can be sustained through force rather than legitimacy. But as Carter implies, bullying leads not to admiration or compliance, but to isolation, inefficiency, and decline. The U.S. today faces the consequences of that strategy: a brittle economy, deteriorating infrastructure, and diminished global leadership.
Meanwhile, China, for all its autocratic flaws, has positioned itself as a functional alternative by emphasising infrastructural diplomacy, technical innovation, and long-range strategic planning. However, the West must not fall into the trap of romanticising China’s rise.
As author Anne Applebaum warns, China is also the anchor of “Autocracy Inc.”—an alliance of regimes intent on undermining democratic norms, pluralism, and the rule of law.
Thus, the global community must look neither to the belligerent nationalism of Trump’s America nor to the centralised authoritarianism of Xi’s China. Instead, there is a unique opportunity for rule-of-law democracies to forge a third way. The European Union, despite the UK’s departure, is best positioned to lead this effort, leveraging its regulatory strength, commitment to standards, and global partnerships. The proposal for a Global Customs Union Council, comprising blocs like the Trans-Pacific Partnership, Mercosur, the Gulf Cooperation Council, and the Southern African Customs Union, signals what this new order could look like—multilateral, standards-based, and cooperative.
Britain, though outside the EU, must choose. Will it lend legitimacy to Trump’s failing regime by signing a substandard trade deal that sacrifices food and digital standards? Or will it recommit to European alignment, working towards a deeper agreement that boosts its own GDP while contributing to a more stable, rules-based international system?
The choice is emblematic of the broader crossroads facing the democratic world: continue down the path of unilateralism, force, and bullying—and reap further decline—or embrace collaboration, resilience, and shared growth. History, and Carter’s long view, suggest that only the latter can!