The dollar still reigns supreme. Increasing global instability has been driving investors to the still relatively safe haven of the dollar, which further reinforces its dominance over other currencies. The US establishment thinktank the Atlantic Council says, “Over the past eight decades… dollar dominance has long been associated with the United States’ exorbitant privilege to finance large fiscal and current account deficits at low interest rates. This has helped the United States run a large defense budget and conduct extensive military operations abroad.” But in 2025 the dollar’s grip on the world economy began to loosen. The FT reported last summer that the dollar had lost a tenth of its value in the first half of the year. Despite stabilising later, the dollar’s fluctuating value remains an economic weakness. This matches a longer-term downward trend in the dollar’s share of foreign exchange reserves.

And while US stocks and shares are riding high, partly due to the weaker dollar which helps US exporters sell their products at lower prices, nevertheless (apart from the tech companies) the economy looks very unhealthy. Unemployment is high. Agriculture is in crisis, partly because tariffs have shut off China’s huge market for American soya beans. The price of gold is soaring – usually a sign of trouble.

If dollar dominance continues to erode, it could lead to a loss of confidence in the dollar’s reserve currency status, which could in turn trigger a collapse of the market for US Treasuries – Treasuries are government bonds based on debt, and a bedrock of the US financial system. If investors start hedging, i.e. betting against the risk of dollar depreciation, it could make Treasuries unattractive and lead to a financial crisis. The FT reported (1/3/26) that Treasuries are “now clearly unsafe.”

A further vulnerability is that Trump’s tariffs could lead to a decline in the global use of the dollar as countries seek a way out of economic strangulation, which could damage confidence in the US as a safe place to invest, and that would mean a reduction of US global influence. US power rests on the strength of the dollar dominating the world’s economies, which means it will seek to maintain dollar supremacy at all costs. The US oligarchs won’t accept a gentle decline of their empire, and the US is using the weapons of sanctions, tariffs – and increasingly war – to protect their profits. These are high-risk weapons for the US, and lethal for the rest of us.

American tariffs have been applied massively over the past year, alongside sanctions. Some of the harshest tariffs have been against China, initially set at 100% and later lowered to 34% in the face of China’s counter-measures.

Tariffs of 50% were imposed on India, including a 25% punishment for its continuing purchases of Russian oil; 50% on Brazil, under fire for sentencing former coup president Bolsonaro; and 30% on South Africa, in part for taking Israel to the International Court of Justice. Like sanctions, tariffs function as both economic coercion and an attack on national sovereignty. Their arbitrary imposition is used to create a deliberate climate of economic uncertainty, enhancing US control.

Even close US allies in Europe haven’t been spared. The EU agreed in summer 2025 to 15% tariffs on European exports to the US, entirely unreciprocated, while steel and aluminium exports will face tariffs of 50%. The deal marked a strategic capitulation by the EU, which, far from giving the individual European nations collective strength, has deprived them of any national levers – such as subsidising their own industries – to defend their economies.

The tariffs are the culmination of a process of vassalisation whose most dramatic representation was the sabotage in 2022 of Germany’s part-owned Nord Stream cheap energy pipeline from Russia - an act of war Berlin accepted without demur. One German minister went so far as to say that the pipeline should never have been built at all, a low point in grovelling German Atlanticism. Many EU countries are now energy dependent on the US, committed under the terms of the trade deal to spending €750 billion on very expensive US fossil fuels.

What are the results of the European submission to the US? The US economy has grown to roughly twice the size of Europe’s, from a position of rough parity in 2008. Germany, in recession for the past 3 years, is de-industrialising. Two million fewer German cars were made in 2024 than 2017. France, also in difficulties, has been downgraded by the Fitch ratings agency because of the huge size of its national debt.

And Europe is paying more than the US for NATO’s war against Russia. Europe and the UK have so far spent $95 billion on Ukraine compared to the Americans’ $75 billion. Altogether, Europe is planning to spend €6.4 trillion on arms spending over the next decade, $600 billion of which will go on buying US-made weapons.

The EU’s traditional fiscal restraint has given way to major borrowing. The EU’s war loan to Ukraine of €90 billion agreed in December 2025 was forced through without unanimous agreement of member states after a larger loan pushed by unelected EU Commission president Ursula von der Leyen was rejected by a divided EU. The most important objection came from Belgium, where the Euroclear bank is headquartered, which feared that the proposed theft of Russian reserves could lead to a backlash from the money markets and legal action by Russia.

All this spending is what US War Secretary Pete Hegseth calls “international burden sharing”. It’s a division of labour. The Europeans continue America’s Ukraine war, and pay for it, in line with US strategy, while the US focuses on China. Despite its control, the US can’t afford to let up its pressure on Europe. When Germany became too competitive industrially for US liking through its cheap Russian imports of natural gas and coal, which was half its total supply, the US initiated its proxy war in Ukraine in part to sever Germany from Russia for good.

But European leaders had their own reasons for warmongering too, eyeing the rare earths, abundant agriculture, cheap labour, and the lucrative weapons market of Ukraine. So, while they’re waging war on the US’s behalf, each is also chasing its own interests.

All in all, we’re witnessing the formation of a disciplined US military and economic bloc preparing for world war. While Trump’s peace proposals appear to counter Europe’s aggressive escalation of the Ukraine conflict, they are simply a tactical shift in the face of NATO battlefield defeats, calling for an “expeditious cessation of hostilities in Ukraine,”. Meanwhile it is pushing arms spending and opening a new phase of the conflict in the form of attacks on Russian oil tankers in international waters. The US is expanding the conflict, not de-escalating. The aim of any ceasefire is to give Ukraine time to re-arm itself, as the Minsk treaties succeeded in doing.

The same war preparations are happening in the Pacific where Japan, Taiwan, South Korea, the Philippines, Australia and New Zealand are being drawn into the US noose more tightly. South Korea has been forced to invest $350 billion in the US economy in order to lower punishing US tariffs. Taiwan has been sold $10 billion of new US arms, provoking protests from China. Japan, like Germany, is re-arming rapidly, tearing up its postwar peaceful constitution, and expressing nuclear ambitions. It too has been forced to accept 15% tariffs.

Under the latest US National Security Strategy, China is openly identified as the primary long-term rival and the First Island Chain, extending from Japan to Taiwan and beyond, is becoming a series of US bases.

This war readiness and bloc formation goes hand in hand with the US-orchestrated campaign of violence across the world, what commentator Thomas Fazi calls “permanent destabilisation and engineered chaos”.

We’ve seen its military attack on Venezuela as it asserts hemispheric control and heading off Chinese investment, coming hard on the heels of its bombing raids in northern Nigeria and threats to seize Greenland. There’ve been attempted colour revolutions in Nepal, Indonesia and the Philippines, as well as conflicts provoked between Pakistan and India, Pakistan and Afghanistan and Cambodia and Thailand. There has been destabilisation in Georgia, Serbia, and Moldova. And in the Middle East, we’ve seen Israel’s total destruction of Gaza and bombardment of Lebanon, Syria and Iran. When Merz the German Chancellor says Israel is “doing the dirty work for us”, he’s right, Zionist atrocities and adventurism are not outliers, they are what imperialism does, its defining features.

Overall, extreme adventurism is serving the US well. The successful western regime-change in Syria weakened Russian and Iranian regional influence and gave Israel free passage to attack Iran through Syrian airspace, control over Druze areas in the south and an opportunity to create its so-called David’s Corridor through to Iraq as part of its Greater Israel project. Turkey, a NATO ally that helped instal the ISIS Syrian regime, has achieved far greater control over Syria’s north-east, rather than just a buffer zone, while the US occupation of Syria’s oilfields continues.

Meanwhile, the US has gained greater control over central Asia, once Russia’s sphere, by helping Azerbaijan create a transport corridor carved out of Armenia’s territory along Iran’s northern border. Azerbaijan is now directly connected to its western enclave of Nakhchivan, and that gives its sponsor Turkey greater regional influence, fulfilling its Ottoman ambitions, and gives the US a route for transporting central Asian energy westwards bypassing Russia and Iran.

What links all the US’s destabilising moves is the strategy of over-extending and encircling Russia, encircling China and choking off its energy supply, and asserting control over its own ‘backyard’ in Latin America. It is a continuation of the 1990s Wolfowitz doctrine which advised stamping out strategic rivals while integrating Germany and Japan, “into a U.S-led system of collective security…”

But the problem for the US is that promoting wars, instability and economic chaos – what Mark Zuckerberg called “moving fast and breaking things” – is creating difficulties for itself and its allies, which they cannot easily evade.

In Europe, Macron’s warfare not welfare policies have made his position precarious with poll ratings down to 15%. Starmer’s government is also deeply unpopular for similar reasons. Poland is politically split, with a pro-EU parliament and a new Eurosceptic president. Romania is also divided after a soft coup last year removed the anti-EU presidential candidate Georgescu, whom at least half the population support. One commentator noted that the “liberal order in Romania…stands on alarmingly fragile ground.” Hungary, Slovakia and the Czech Republic all oppose the Ukraine war, and Austria is defying the EU by blocking sanctions against Russia.

In most European countries, it is the nationalist Right that is expressing people’s disaffection and desire for national sovereignty, but underlying the ongoing political crises is a loss of faith in bourgeois democracy in general.

US tariffs and sanctions have also had the unintended consequence of pushing the BRICS countries closer together. Not only Russia and China, but more widely. Trade between Latin American and China has increased from $12 billion in 2000 to $315 billion in 2020 and is on course to double again by 2035. Fifty-three African countries now have tariff-free access for their exports to China, which is the top trading partner of most African countries, up from $14 billion in 2000 to $290 billion in 2024. India, though it continues to appease the West, has refused to cut its re-exports of Russian and Iranian oil despite US threats.

It is US aggression that is unintentionally accelerating co-operation within the global majority. Trump was described by one analyst as “breathing new life” into the September 2025 Shanghai Co-operation Organisation summit, while China is becoming “the standard-bearer of a multipolar world led by the Global South” as 20 countries, including Russia and India, agreed to resist western economic bullying.

Meanwhile, Israeli barbarism has given rise to a great global movement, which isn’t going away, despite the so-called ceasefire. Israeli participation in football, in Eurovision, in culture in general, is being challenged. Judicial pressure and pressure at state level, including arms divestment, is mounting. Mainstream Jewish-American support for Israel has fallen – 61% now say Israel has committed war crimes according to a Washington Post poll – and the once uniformly Zionist US MAGA movement is split. Zionism is losing control over the global narrative, and is going to extreme lengths, such as buying TikTok, to try to win it back. As Arundhati Roy says “the carcass of Western liberal democracy is buried under the rubble in Gaza.”

In the Sahel, CIA-backed coup attempts and a $5 million bribe offered to Ibrahim Traore’s closest security to assassinate the Burkina Faso leader have only served to strengthen the Alliance of Sahel (AES) states between Mali, Niger and Burkina Faso which in December 2025 launched a joint military force. These patriotic military regimes have pushed the Americans out of their huge drone base in Niger and the French out of Mali and Chad, though they face continuing destabilisation by US and French forces as well as the western-backed Economic Community of West African States (ECOWAS), in particular Nigeria and Côte D’Ivoire.

Another unintended consequence has been a military treatybetween Saudi Arabia and Pakistan signed just a week after the Israeli bombing of Qatar. The Saudis, who have recently joined BRICS, are rightly fearful of their own allies and beginning to hedge their bets. (8) Meanwhile, Iranian society united in patriotic resistance to the western 12-day war against it and despite recent economic protests so far remains solid.

There’s been blowback too in Taiwan. A recall election in July 2025 resulted in a clear snub to the anti-China policy of the ruling party and surprise gains for the Kuomintang party which is pro-China. Its new young leader warned that Taiwan should reject becoming “the sacrifice of geopolitics” and take pride in being Chinese.

Meanwhile in South Korea, a declaration of martial law last year was overturned by popular protest and earlier this year the president was impeached.

All these examples are success stories. But as yet no unified, coherent counter-hegemonic alliance has emerged, unlike the old Socialist bloc. The BRICS summit in Brazil in July 2025 revealed a “sobering display of the bloc’s inherent contradictions….”, according to Business Day.

China still needs time to grow. Russia is preoccupied with Ukraine – hence its inability to save Assad in Syria. Iran is on the defensive and Venezuela a target. Both Russia and China abstained on the Gaza ceasefire motion at the UN Security Council, neither strong enough to form an active pole of resistance to US hegemony, particularly when the necessary potential allies such as the Palestinian Authority, Arab and other Muslim-majority states all supported the motion.

On the other hand, the fact that Russia and China have been capable of technological breakthroughs – such as Russia’s hypersonic missiles, and China’s advances in chip production. space exploration, sustainable energy, and AI – points to real problems for the US in future. And China is quietly undermining US hegemony, for instance by bringing Iran and Saudi Arabia together, and facilitating a ground-breaking summit of the Palestinian factions. In response to US tariffs, it has imposed retaliatory tariffs and halted rare earth exports, which the US depends on. The display of armed might in Beijing at last year’s victory over fascism parade was a clear sign of China’s growing strength and confidence, and a warning to the US against warmongering.

The question is, how fast and far the US will go in its economic and military provocations in order to stave off its own decline, and thus how much time any emerging counter-hegemonic grouping has to develop, expand trade links and weaken the dominance of the dollar.

The outlook for peace is not good. The growing constraints on democracy within the USA – mirrored by its allies in Europe – are a precondition for war. As Trump put it in September 2025, “We should use some of our American cities as training grounds for our military.” Here in the UK, the TUC motion reversing its pro-armaments line was positive, a response to political pressure against austerity. But it isn’t nearly enough when 80% of the world’s arms spending is by NATO and its allies, and when the US Department of War announced that its mission is, quote, “War fighting; preparing for war and preparing to win,”. At the same time all the old treaties and institutions are being torn up and undermined, as the fascists did before World War 2.