The ongoing shifts in global geopolitics present a formidable challenge to the USA’s long-held dominance. The declared intention of France to recognise Palestine, Britain’s similar intentions, China’s rise as an economic superpower, India’s independent foreign policy, Russia’s defiance on Ukraine, and the U.S.-EU trade deal suggest a changing world order. How do these developments affect the American power worldwide?
China’s Rise As a Rival Economic Power
China has become a rival economic superpower to the USA through a combination of strategic reforms and aggressive global outreach. Starting in the late 1970s, Deng Xiaoping’s economic liberalisation policies opened China to foreign investment, manufacturing, and trade. China became the “world’s factory” by offering cheap labour and infrastructure, attracting global businesses. It invested heavily in infrastructure, education, and technology, and later moved up the value chain into high-tech industries like AI, 5G, and green energy.
China’s Belt and Road Initiative expanded its economic influence across Asia, Africa, and Europe. It built financial institutions like the Asian Infrastructure Investment Bank (AIIB) to challenge Western-dominated institutions. Meanwhile, its massive foreign currency reserves, trade surpluses, and global export dominance enabled it to challenge the U.S. economic order.
Today, China rivals the U.S. in GDP (in purchasing power parity), manufacturing output, and tech innovation—making it Washington’s top economic competitor.
France’s Independent Stance on Palestine
France was always a maverick among NATO and EU members. It has a history of acting independently or divergently within NATO and the EU, often prioritising its national interests or asserting strategic autonomy. This stance stems from France's desire to maintain sovereignty, global influence, and a distinct foreign policy. In 1966, Under Charles de Gaulle, it withdrew from NATO’s Integrated Military Command. However, it rejoined the command in 2009 under Nicolas Sarkozy. Again, in 2003, under Jacques Chirac, it opposed the U.S.-led invasion of Iraq, refusing to join the coalition. In 2005, French voters rejected the proposed EU Constitution in a referendum, reflecting skepticism about deeper EU integration. France has advocated for an independent EU defence policy, especially under Emmanuel Macron, who called for a European Army in 2019. The intention is to reduce reliance on NATO and the U.S.
France has always pursued bilateral relations with countries like Russia and China, sometimes diverging from NATO and EU consensus. He engaged with Vladimir Putin on Ukraine issues and maintains trade ties with China.
So, it came as no surprise when France announced recognition of Palestine. It was a clear break from the NATO’s USA-led narrative that aligns with Israel. Successive U.S. Presidents have viewed Israel as a strategic ally. The former Senator Jesse Helms described it as “America’s aircraft carrier in the Middle East” because of its military foothold in the region. France has signalled a willingness to prioritise its own diplomatic agenda. This can result in the weakening of NATO’s unified front on various contentious issues.
Defence contracts and strategic influence go together. France is USA’s rival in the defence equipment market. Its independent foreign policy enhances its ability to market its defence products to nations seeking alternatives to the U.S. influence, particularly in the Middle East and Africa.
France’s support for Palestinian statehood could strengthen its diplomatic ties with Arab states. This may increase demand for French military hardware over American systems. This may erode U.S. strategic influence in regions where defence contracts are a tool of geopolitical leverage.
Defence industry is a big contributor to the U.S.A.’s GDP. It needs exports to maintain the economies of scale. France’s ability to leverage its independent foreign policy to secure contracts in different parts of the world reduce U.S.A.’s potential export revenues. For example, France’s Rafale fighter jet has gained traction in markets like Qatar and India, competing with U.S. systems like the F-35. This competition could lead to job losses in the U.S. defence sector and reduce the economic benefits derived from military exports.
Britain’s Recognition of Palestine and Trade Agreement with India
Britain’s announcement of its intent to recognise Palestine further complicates America’s position in the Middle East. As a key ally and fellow NATO member, Britain’s move aligns it closer to France and the broader European sentiment, which has increasingly emphasised a two-state solution. This signals a growing European consensus that diverges from Washington’s pro-Israel stance. This may weaken U.S.A.’s diplomatic leverage in the Middle East. Although The U.S. has traditionally led mediation efforts in the Israeli-Palestinian conflict, its perceived bias has eroded its credibility as a neutral broker. If Britain and France push for Palestinian statehood, the U.S. may not be able to counter them.
Moreover, Britain’s recent Free Trade Agreement (FTA) with India reflects a broader trend of allies diversifying their economic and strategic partnerships. The FTA strengthens UK-India ties. India is a growing market for defence and technology. The UK-India FTA could divert trade and investment opportunities in these sectors away from the United States. Britain’s early mover advantage through the FTA could reduce U.S. market share. This will adversely affect such American sectors like aerospace and IT.
India’s Independent Foreign Policy
India’s pursuit of an autonomous foreign policy complicates U.S. geopolitical strategy, as it balances relations with multiple global powers. India has deepened defence and technology ties with Israel, including joint missile development, while maintaining robust relations with Russia, a key supplier of military hardware like the S-400 system and energy resources. Despite U.S. pressure to isolate Russia over the Ukraine conflict, India engages actively with Moscow through BRICS summits and bilateral trade agreements, such as discounted oil purchases, which surged to $65 billion in 2024. This reflects India’s intent to avoid over-reliance on any single power, including the U.S..
As a cornerstone of the Quad—comprising the U.S., Japan, Australia, and India—India’s alignment is critical to countering China. However, prioritising its own interests, such as economic ties with Russia or neutrality in great power rivalries, could undermine U.S.-led initiatives. India’s growing economic might, projected to surpass Japan by 2030, and military clout amplify its global influence. Its refusal to fully align with the U.S. may inspire other nations, like Brazil or South Africa, to pursue independent paths, eroding American hegemony and fostering a multipolar world order.
Russia’s Defiance in the Ukraine Conflict
Russia has emphatically rejected America’s global dominance. It signals a strategic pivot toward a multipolar world. Russia’s actions carry significant geostrategic implications for U.S. security interests. The Ukraine conflict has exposed vulnerabilities in NATO’s cohesion. Already experts in Europe are debating over resource allocation straining member states.
By forging stronger ties with China, India, and non-Western nations through frameworks like BRICS, Russia is constructing alternative alliances to counter Western influence and bypass sanctions. These measures promise to stabilise its economy and prolong its ability to resist U.S. sanctions. This dynamic may limit the economic pressure the U.S. can exert on Russia.
Russia’s energy deals, alongside efforts to bolster gold reserves and promote non-dollar trade, undermine the U.S.-dominated financial system. This may also erode American economic leverage, weaken the dollar’s global dominance, and embolden other nations to pursue independent geopolitical strategies, reshaping global power dynamics. Are we looking at a broader global realignment, which challenges the Western-led order established post-World War II?
The U.S.-EU Trade Deal
The recent U.S.-EU trade deal underscores the importance of transatlantic energy security. The EU is the largest buyer of U.S. natural gas and oil. This strengthens the U.S. energy sector, particularly in light of Europe’s efforts to reduce reliance on Russian energy following the Ukraine invasion. However, the trade deal has been described as disadvantageous to the EU. It has raised concerns in Europe about U.S. protectionism. The EU is the U.S.A.’s largest trading partner. Of course, it remains to be seen whether the deal’s terms would strengthen or strain transatlantic relations. Let us not forget that millions of jobs in the USA depend on trade with the EU.
Geopolitically, the trade deal is a double-edged sword. On one hand, it reinforces U.S. economic influence in Europe, countering China’s growing presence. On the other hand, it risks alienating key allies if the deal is deemed as exploitative. The EU’s shift toward “economic statecraft”, i.e., using economic tools for geopolitical ends , suggests it may respond with countermeasures, such as tariffs or increased trade with non-U.S. partners. This could weaken NATO’s cohesion and reduce U.S.A.’s strategic leverage in Europe.
The U.S.-EU trade deal may face challenges due to global trade fragmentation. Since 2018, geopolitical tensions, particularly between the U.S. and China, have driven a decline in trade between rival blocs. The trade between aligned countries has increased. However, Europe’s growing emphasis on strategic autonomy could limit its long-term benefits. For instance, the EU’s focus on diversifying supply chains and reducing reliance on external powers may lead to increased trade with Asia or the Global South at the expense of the United States.
Dollar Dominance and Financial Stability
Countries like China and Russia are increasing gold reserves and reducing holdings of U.S. Treasury bonds to hedge against sanctions risk. If this trend continues, it could weaken the dollar’s status as the world’s reserve currency. This will increase borrowing costs for the U.S. and potentially destabilise its financial markets. Additionally, India’s independent stance and its trade with Russia could further diversify global trade away from dollar-based transactions, amplifying this risk.
Conclusion
Geopolitical and geostrategic shifts are posing a challenge to U.S. global dominance. These shifts suggest a multipolar world, where nations are self-focused. This diminishes U.S. sway in areas such as the Middle East, Europe, and South Asia. These changes might negatively affect the U.S. economy in sectors such as trade, energy, and defence, and potentially devalue the dollar. GDP growth might slow down due to fewer trade opportunities because of global fragmentation. The Congressional Budget Office projects that trade restrictions and geopolitical tensions could reduce U.S. economic output by 1-2% over the next decade. The U.S. should change its foreign policy by collaborating with allies, enhancing the economy through trade, and addressing the causes of global division. If this is not done, the weakening of American power may speed up, with long-term impacts on its global influence and economic health.
Dollar Dominance, China, Russia, India, Quad, European Union (EU), United States, Congressional Budget Office, Middle East, Europe, South Asia, Pakistan, Palestine, Ukraine, Israel, U.S. Treasury bonds, F-35, Rafael Fighters, S-400 system
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