The West is falling apart
The unity of the NATO states only exists on the condition that Europe completely submits to the interests of the US.
The war in Ukraine is exacerbating the contradictions within the Western world of values. The unity and solidarity that have been demonstrated are crumbling under the pressure of differing interests. The EU in particular is increasingly having to submit to US hegemony.
[This article posted on 1/29/2025 is translated from the German on the Internet, https://www.manova.news/artikel/der-westen-zerlegt-sich.]
Lack of competitiveness
Donald Trump wants to restore America to its former glory. During his first term in office, he forced new trade conditions on export-oriented countries that were pushing their way into the huge US market. Agreements with Mexico and Canada, as well as with other countries such as South Korea, were changed in favor of the US economy. The Europeans, too, had to submit to new conditions and tariffs, particularly in the automotive and steel industries, in order to remain on the US market. Trade barriers in the form of tariffs were erected against Chinese goods, and some were denied access to the US market for reasons of national security.
What had begun under Trump’s presidency, Biden did not reverse. He too largely maintained the tariffs and even extended the sanctions. Despite the unbreakable friendship between the US and Europe, as well as other partners within the Western community of values, tariffs against them also remained in place. Why should Biden give up the advantages his predecessor had already gained over the US economy’s competitors for no reason? This is about material values; other values do not carry as much weight.
However, the international competitiveness of American products changed little and continued to decline, as trade balances show. Consumer prices in the US had already been rising steadily under Trump’s tariff policy. Under Biden’s presidency, sanctions against Russia were added to the tariffs. The US’s orgy of sanctions was not limited to Russia. More and more countries and business sectors, such as international banking, were caught up in the maelstrom of anti-Russian sanctions.
The European and thus also the German economy in particular subjected themselves to considerable restrictions. The entire leadership of the political West felt obliged to impose such self-restraint in the fight against Russia in the spirit of shared values.
Even the destruction of the Nord Stream pipelines and the sharp rise in the price of fossil fuels, not least due to the US, a partner sharing the same values, did not lead European politicians to rethink their position in the interests of their own economies and populations.
Expensive sanctions
The US took a completely different approach: in addition to seeking to inflict a strategic defeat on Russia, it forced its so-called values partners to side more and more closely with the US in the conflict with China and to restructure their supply chains. Under the pretext of national threats, Chinese companies were increasingly subject to sanctions. However, these sanctions did not only affect the Chinese.
They also forced companies from the political West to restrict their business relations with China. Companies in the chip industry in particular face secondary sanctions if they do not comply with US requirements. The companies were rarely able to compensate for these lost revenues by tapping into new markets.
Revenue lost in China is missing from companies’ balance sheets, because no other country in the world has such a high demand for chips. The actual revenue of Western companies lags behind the potential that demand could offer.
As a result of the supply ban, China is now moving toward developing more and more of its own advanced products. The development gap between Western and Chinese companies is narrowing. All these measures have not prevented China from becoming a leader in many areas of modern industry. The West’s dependence on China is growing rather than shrinking.
To counter this growing dependence, the EU and the US decided to promote the development of their own future industries. However, they did not do this together, as one might have expected from a political bloc with shared values. They promoted their development plans separately and in competition with each other. With subsidies amounting to hundreds of billions, both the US and the EU are trying to make investments attractive to companies in their own economic areas. This subsidy race is leading to a renewed expansion of debt in the countries of the political West.
The US has the advantage here. It has the larger market and greater financial power. The result is the deindustrialization of Europe.
On the other hand, the exodus of European companies is not leading to a significant improvement in American competitiveness. The Chinese economy is exporting more and more. The trade balance of Western countries with China is sliding deeper and deeper into the red, which means that the export revenues of Western companies are dwindling.
The countries of the political West are becoming poorer and China richer.
Contradictory Trump
Now, as the newly elected president of the US, Donald Trump wants to turn the tide. America is to become great again. However, this did not really work out during his first term in office, despite higher tariffs on imports from US companies’ competitors. They did not make America greater, only life more expensive. This is because import tariffs lead to higher consumer prices, which the media and so-called experts refer to as inflation.
Nevertheless, Trump has already threatened most of America’s trading partners with new or higher tariffs, even before taking office. It is true that tariffs theoretically also increase government revenues, which could be used to balance the chronically underfunded US federal budget, currently running a $2 trillion deficit. At the same time, however, he wants to cut taxes, which in turn means a reduction in government revenues.
So what does Trump want? Relief for the federal budget or relief for American taxpayers? Is he even aware of this contradiction?
He probably recognizes the problem of budget deficits, which limit the ability of American politicians to act. Perhaps he even recognizes that the American government is increasingly dependent on borrowed money. Currently, interest rates on ten-year government bonds are already at 4.8 percent. If investors on the financial markets stop buying them, American glory will quickly come to an end.
Then, many things in the US will no longer be financeable to the extent we have known them, and even more money from the budget would have to be made available to service the debt, which currently stands at 36 trillion dollars.
This would then probably also have an impact on the US defense budget or mean a decline in the standard of living in the US. However, both are pillars of American hegemony. The deficits must be reduced if the US does not want to lose its appeal to buyers of US government bonds.
It is doubtful whether Trump recognizes this when he advocates unlimited borrowing. Shortly before his re-election, in the dispute over raising the debt ceiling, he proposed completely abandoning these restrictions. In doing so, he advocated unlimited borrowing. How seriously this should be taken will become clear once he is in office. In any case, these highly contradictory statements point to a high degree of political confusion or a lack of understanding of economic interrelationships.
The others pay
It seems clear that Trump is doing everything he can to halt the decline of the American economy and global hegemony. Biden had attempted to do this by increasing the earning power of the American economy. Through subsidies, he encouraged American companies to invest more in the US instead of overseas. This was achieved through support programs such as the Chips Act and the Inflation Reduction Act (IRA), which were also intended to encourage foreign companies to invest in the US. His primary target was modern industries in which the Chinese are now leading the way.
Trump seems to want to take a different path and link the resurrection of America to its former greatness with territorial expansion. This is indicated by his plans to annex Canada, Greenland, and the Panama Canal.
It is difficult to discern the reasoning behind this and how mature these plans are. What he is thinking is still completely unclear at this point. However, it is obvious that he has little interest in his partners and allies.
Perhaps it is also his idea of greatness to be able to act ruthlessly without being hindered by the interests of others. In any case, it is becoming increasingly clear that the strengthening of the US is to come at the expense of others. Anyone Trump cannot bring into US territory and thus under the control of the American government, such as his overseas partners in values or his main enemy China, will have to pay more if they want to do business with the “wonderful economy” of the US, i.e., pay higher tariffs on imports.
Canada and Greenland, with their natural resources and economic power, are to become part of the US and thus contribute to the country’s resurgence, but also in the interests and for the protection of the so-called free world, as Trump puts it. Panama is to forego revenue by reducing fees for transport between the east and west coasts of the US in favor of the American economy. This is how Trump’s ideas can be interpreted as long as no clearer ideas are expressed or the actions of the new administration provide any insight into what plans the new president has and how he intends to implement them.
Trump’s measures are aimed at China, as can be seen time and again from his statements. Control over Canada, Greenland, and the Panama Canal also includes control over China’s trade routes and thus its flow of goods.
He has not ruled out the use of force to enforce these plans. This applies both to force in the form of sanctions and to the use of military force.
After initial outrage from Western allies, there are increasing signs that they will once again submit to the US, despite their resentment. Denmark is already showing willingness to talk to the US about Greenland, and the Europeans want to negotiate with him, but also show strength. We have already seen this in relation to Russia. Even in the mainstream media, there is growing understanding for Trump’s demands.
Because before submitting to Russia and China and thus jeopardizing their own freedom, Western leaders would rather submit to the US. But tensions and conflicts among leaders are growing nonetheless, as is unease among parts of the population.
Rüdiger Rauls, born in 1952, is a reproduction photographer and author of several books. The best known are “How Does Money Work?”, “The Future of Socialism”, “Colony, Corporation, War” and “The Development of Early Societies”. He runs the blog “Political Analysis — A Materialist Interpretation of World Events and Processes”.