Thomas Piketty: Imagine a World Without the US

The United States is no longer a reliable country. For some, this is nothing new. The Iraq War, launched in 2003 – resulting in over 100,000 deaths, lasting regional destabilization, and the return of Russian influence – had already shown the world the wrondoings of American military hubris. But the current crisis is new because it challenges the very core of the country’s economic, financial, and political power. The US appears disoriented, led by an unstable and erratic leader with no democratic counterweight.

To envision what comes next, we need to comprehend the ongoing turning point. If Trumpists are pursuing such a brutal and desperate policy, it’s because they don’t know how to respond to the country’s economic decline. Measured in purchasing power parity – meaning the real volume of goods, services, and equipment produced each year – China’s GDP surpassed that of the US in 2016. It is currently more than 30% higher and will reach double the US GDP by 2035. The reality is that the US is losing control of the world.

Peter Navarro speaks with Donald Trump during a briefing.

More serious still, the accumulation of trade deficits has pushed the country’s public and private external debt to unprecedented levels (70% of GDP by 2025). The rise in interest rates could lead the US to have to pay substantial interest flows to the rest of the world, something it had so far escaped thanks to its grip on the global financial system. It is in this context that we should interpret the explosive proposal by Trumpist economists to tax interest payments to foreign holders of US securities. More directly, Trump wants to refill his country’s coffers by seizing Ukrainian minerals, along with Greenland and Panama.

Trump, a thwarted colonial leader

From a historical perspective, it is worth noting that the enormous US trade deficit (about 3-4% of GDP on average each year from 1995 to 2025) has only one precedent for an economy of this size: It correspondents roughly to the average trade deficit of the major European colonial powers (United Kingdom, France, Germany, and the Netherlands) between 1880 and 1914. The difference is that those countries held vast external assets, which brought in so much interest and dividends that it was more than enough to fund their trade deficit while continuing to accumulate claims in the rest of the world.

Trump is essentially nothing more than a thwarted colonial leader. Like the European powers of the past, he wants the “Pax Americana” to be rewarded by subsidies from a grateful world in order to eternally finance its deficits. The problem is that American power is already declining, and the era no longer lends itself to this type of brutal and unrestrained colonialism. Lost in his backward references, Trump seems unaware that the US built itself in 1945 on a break with the European colonial order and on the creation of a different development model based on democratic ideals and a significant educational advantage over the rest of the world. In doing so, he undermines the moral and political prestige on which his country’s leadership has been built.

What to do in the face of this collapse? First, address the countries of the Global South and propose the establishment of a new social and environmental multilateralism to replace the now-defunct liberal multilateralism. Europe must finally support a thorough reform of the governance of the International Monetary Fund and the World Bank in order to move away from the current plutocratic system and give countries like Brazil, India and South Africa their rightful place. If it continues to ally with the US in blocking this inevitable transformation, then the BRICS [Brazil, Russia, India, China, and South Africa] will inevitably build a parallel international architecture led by China and Russia.

Europe’s responsibility

If Sub-Saharan Africa had benefited from better terms of trade over the past decades, it could have invested in its infrastructure, education, and health. Instead, its governments are forced to struggle in heroic conditions with extremely limited resources: barely €200 per child per year in purchasing power parity for primary and secondary education (€60 at current exchange rates), while each child in the Global North is entitled to 40 or 50 times more (€8,000 in Europe, €10,000 in the US).

Similarly, Europe made a grave mistake in 2024 by opposing the fiscal justice proposal promoted by Brazil at the G20 and by voting – alongside the US –against the establishment of a framework convention on fair taxation at the United Nations. All of this was done to preserve the OECD’s monopoly – and that of the club of rich countries – over issues deemed too important to be left to the poorest.

Europe must finally recognize its role in global trade imbalances. It is easy to stigmatize China’s objectively excessive surpluses. Like the Western powers before it, China abuses its power to underpay for raw materials and flood the world with manufactured goods. This strategy also barely benefits its population, who would greatly benefit from higher wages and a proper social security system.

But the fact is that Europe also tends to underconsume and underinvest in its territory. Between 2014 and 2024, the balance of trade (goods and services) of the US recorded an average annual deficit of about $800 billion [€705 billion]. Meanwhile, Europe achieved an average surplus of $350 billion, almost as much as China, Japan, and South Korea combined. It will take much more than Germany’s military budget revival or the current discussions of a modest carbon border tax for Europe to finally contribute to promoting a different development model – one that is social, environmental, and equitable.

Editor: Li Jingyi