The true 'mega risk' is not a single policy but a fundamental shift in the US global role. The post-1945 global economic system, including free trade and dollar dominance, has been built on a foundation of US security and leadership. If that leadership is withdrawn, the entire international order could change fundamentally.
The post-WWII global framework, including international law, was a fragile agreement primarily enforced by the US. Its erosion is leading to a "might makes right" reality where nations like Russia, China, and the US act unilaterally in their perceived self-interest, abandoning the pretense of shared rules.
The era of a strong, passive dollar designed to attract foreign capital is over. The US now actively manipulates the dollar's value to suit strategic needs, rewarding allies and punishing enemies. The currency has been drafted into foreign policy as a tool of statecraft, moving from a stable 'King' to an active 'General'.
The post-1980s neoliberal consensus of small government and free trade is being replaced by a mercantilist approach. Governments, particularly the U.S., now actively intervene to protect domestic industries and secure geopolitical strength, treating trade as a zero-sum game. This represents a fundamental economic shift for investors.
By dismantling the post-WWII global order, the Trump administration forces allies to realign with China. As the U.S. retreats from global partnerships, China is positioned to dominate key industries like renewable energy, making the 21st century "the China century" by default as the world moves on without America.
The US is no longer the undisputed best option but simply the least bad one. This decline is evidenced by the shrinking role of the dollar in global trade and savvy investors like Warren Buffett diversifying away from the US, signaling a need for individuals to rethink their own financial strategies.
The US's global power is eroding due to debt and inflation. Trump's aggressive foreign policy is not random; it's a high-risk strategy to press America's current advantage and re-establish dominance before rivals like China can take over. The only alternative is accepting a managed decline.
For decades, a tacit global agreement existed: the U.S. buys the world's goods and provides security, and in return, the world finances U.S. debt by buying Treasuries. As U.S. policy shifts towards protectionism and reduced global policing, other nations may no longer feel obligated to fund U.S. deficits, pushing borrowing costs higher.
Marco Rubio articulated Trump's foreign policy as a 'spheres of influence' model, a modern Monroe Doctrine. This framework cedes global leadership, envisioning a world where the U.S. controls the West, Russia controls its territory and Europe, and China controls Asia. This marks a fundamental shift from America's post-WWII role as a global superpower to a regional one.
The "military backs the dollar" thesis is being challenged by Russia's performance against NATO, the disruption of naval power by cheap Houthi drones, and China's chokehold on rare earths. This erosion of credible power projection directly weakens the dollar's foundation of global dominance.
The aggressive, go-it-alone tactics of the 'America First' doctrine alienate both allies and adversaries. This pushes them to build alternative payment systems and trade alliances, speeding up the very de-dollarization and decline in U.S. influence that the strategy aims to prevent.