Demolishing the Shining City: HowAmerica Is Forfeiting Global Leadership

Demolishing the Shining City: How America Is Forfeiting Global Leadership

Tariffs, War Crimes, and Institutional Destruction Are Accelerating the Rise of China and Europe

By Jason C. Kay • December 6, 2025

A decade ago, the suggestion that foreign nations might flee the U.S. dollar for the euro on grounds of stability would have seemed absurd — the kind of fevered speculation reserved for goldbug newsletters and fringe economic blogs. Today, it is the sober assessment of central bank reserve managers worldwide. According to the Official Monetary and Financial Institutions Forum’s 2025 Global Public Investor survey, 65% of central banks now express concern about the independence of the Federal Reserve, 47% worry about deterioration in the rule of law in the United States, and nearly 60% plan to diversify away from dollar-denominated assets within the next two years. The dollar’s share of global foreign exchange reserves has fallen to approximately 56% — a 30-year low — while the euro’s share has risen to over 21%.

This is not the result of any single policy failure. It is the cumulative consequence of an administration that has systematically dismantled the institutional foundations of American credibility: weaponizing trade policy through unprecedented tariffs, gutting regulatory agencies designed to protect consumers and maintain financial stability, threatening the independence of the Federal Reserve, purging intelligence agencies of career professionals, and — most devastatingly — committing what legal experts and members of Congress are now calling war crimes on the high seas.

The Tariff Catastrophe: A Self-Inflicted Wound

On April 2, 2025 — declared ‘Liberation Day’ by President Trump — the administration invoked the International Emergency Economic Powers Act to impose sweeping tariffs that raised the average applied tariff rate from 2.5% to approximately 17.9% by September, the highest level since 1943. According to the Tax Foundation, these tariffs represent the largest U.S. tax increase as a percentage of GDP since 1993, amounting to an average burden of $1,200 per American household.

Federal courts have ruled the IEEPA tariffs illegal. On May 28, a panel of judges at the U.S. International Court of Trade unanimously found the tariffs exceeded presidential authority — a decision upheld by the U.S. Court of Appeals. Yet the tariffs remain in force as the administration appeals, leaving businesses and trading partners in a state of paralyzing uncertainty.

The Peterson Institute for International Economics has documented how this uncertainty has eroded trust in the United States — not among adversaries, but among allies. Canada’s economy contracted 1.6% in Q2 2025 due to falling exports, forcing Prime Minister Mark Carney to describe the relationship with the United States as a ‘rupture.’ The European Union faces a widening trade deficit with China as Beijing redirects exports diverted from the American market. The primary beneficiary of this chaos, as the Peterson Institute observes, is China — which now presents itself as the upholder of the current trading system, even as it practices substantial state intervention.

Murder on the High Seas

If the tariffs represent an economic wound, the administration’s military strikes in the Caribbean represent a moral one. Since September 2, 2025, the U.S. military has conducted at least 22 strikes on vessels alleged to be carrying drugs, killing at least 87 people. The administration designated the targets as ‘narcoterrorists’ but has publicized no evidence to support these classifications.

The September 2 strike has become the focus of bipartisan congressional investigation. According to reporting by The Washington Post’s Alex Horton, after an initial strike killed nine of eleven people aboard a boat from Venezuela, two survivors were observed clinging to the wreckage. Admiral Frank ‘Mitch’ Bradley, commander of Joint Special Operations Command, ordered a second strike that killed them. The survivors were unarmed, in the water, and — according to Bradley’s own congressional testimony — did not appear to have communications equipment.

Senator Tim Kaine stated that if the reporting is accurate, this ‘rises to the level of a war crime.’ Senator Angus King was more direct: ‘If the facts are, as have been alleged, that there was a second strike specifically to kill the survivors in the water — that’s a stone-cold war crime. It’s also murder.’ Time magazine reported that experts say Defense Secretary Pete Hegseth could be subject to criminal charges under the Uniform Code of Military Justice or the U.S. War Crimes Act of 1996. The Pentagon’s own Law of War Manual prohibits firing on shipwrecks and explicitly states it is ‘prohibited to conduct hostilities on the basis that there shall be no survivors.’

Representative Adam Smith, ranking member of the House Armed Services Committee, described the video of the second strike shown to lawmakers: ‘Two shirtless people clinging to the bow of a capsized and inoperable boat, drifting in the water — until the missiles come and kill them.’

The Systematic Destruction of Regulatory Guardrails

The administration has not merely abandoned American moral leadership abroad; it has dismantled the domestic institutions designed to maintain financial stability and consumer protection.

On February 3, 2025, Treasury Secretary Scott Bessent was named acting director of the Consumer Financial Protection Bureau. His first act was to order staff to halt all rulemaking, litigation, enforcement, and communications. Within days, Russell Vought expanded this freeze to cover all supervision and examination activities, closed the bureau’s headquarters, and ordered employees to ‘stand down from performing any work task.’ Elon Musk tweeted ‘CFPB RIP’ with a tombstone emoji as his Department of Government Efficiency team gained access to agency systems.

Federal Judge Amy Berman Jackson issued a preliminary injunction on March 28, finding the administration’s efforts to shutter the agency unlawful and warning that ‘if the defendants are not enjoined, they will eliminate the agency before the Court has the opportunity to decide whether the law permits them to do it.’ The CFPB has returned $21 billion directly to over 205 million consumers who were illegally cheated by financial institutions. Its effective elimination leaves American consumers unprotected against predatory lending, credit card fraud, and the very practices that precipitated the 2008 financial crisis.

Threatening the Federal Reserve

Treasury Secretary Bessent has launched an unprecedented campaign against Federal Reserve independence. In a September 5 Wall Street Journal op-ed, he called for ‘an honest, independent, nonpartisan review of the entire institution, including monetary policy, regulation, communications, staffing and research’ and demanded the Fed relinquish its bank supervision authority. On December 3, at the New York Times DealBook Summit, Bessent announced the administration would ‘veto’ regional Federal Reserve bank presidents who have not lived in their districts for at least three years — a transparent attempt to stack the Federal Open Market Committee with administration loyalists.

President Trump publicly threatened Secretary Bessent at a November 20 investment forum with Saudi Arabia, stating: ‘The only thing Scott’s blowing it on is the Fed, because the Fed, the rates are too high, Scott, and if you don’t get it fixed fast, I’m going to fire your ass.’ The President called Federal Reserve Chair Jerome Powell ‘grossly incompetent’ and said he would ‘love to fire his ass.’

Deutsche Bank has spelled out a scenario where, if Trump were to remove Powell before the end of his term, both the dollar and the bond market could collapse. JPMorgan Chase CEO Jamie Dimon has stated that central bank independence is ‘absolutely critical.’ The OMFIF survey found that 65% of central bank reserve managers now fear for the independence of the Federal Reserve — the very institution whose credibility undergirds the dollar’s status as global reserve currency.

The Purge of Intelligence Professionals

Senator Mark Warner, Vice Chairman of the Senate Select Committee on Intelligence, delivered a floor speech on November 21 warning of ‘a deepening threat to our security as the Trump administration continues a sweeping political purge of the FBI, dismantles America’s cyber defenses, and hollows out the institutions responsible for protecting the homeland.’

According to Warner, thousands of FBI agents and senior leaders have been forced out for political reasons, including heads of the bureau’s counterterrorism, intelligence, cyber, and critical incident response units. More than one-third of the Cybersecurity and Infrastructure Security Agency has been fired or pushed out — even as ransomware attacks hit state and local governments in at least 44 states. The administration has removed leadership of the National Security Agency and Defense Intelligence Agency, left U.S. Cyber Command without a permanent commander, and disbanded the Foreign Influence Task Force responsible for safeguarding elections from foreign interference.

The administration has subjected FBI agents to lie detector tests asking whether they have ever criticized Director Kash Patel. The Director of National Intelligence, Tulsi Gabbard, has established a unit using AI software to review email and chat records of all U.S. intelligence agencies to detect employees who could ‘undermine President Trump’s agenda.’ When intelligence assessments contradict administration claims — as with a recent assessment finding the U.S. strikes on Iran set back its nuclear program only months rather than ‘completely and fully obliterating’ it as Trump claimed — the President publicly rejects his own intelligence community.

Inflationary Pressures and the Path Forward

The Federal Reserve Bank of St. Louis has documented that tariffs explain roughly 0.5 percentage points of headline PCE annualized inflation over the June-August 2025 period. The September CPI showed prices rising at a 3% annual rate — still above the Fed’s 2% target and climbing. The Yale Budget Lab estimates current tariff levels will push prices 1.7% higher overall. For households already strained by years of elevated prices, this represents a de facto tax increase that falls disproportionately on lower-income Americans.

Meanwhile, Europe and China are positioning to fill the vacuum. Chinese companies signed new Belt and Road agreements worth more than $124 billion in the first half of 2025 alone — exceeding the total for the entire previous year. The European Central Bank notes that trade diversion from U.S. tariffs is directing Chinese goods to European markets, potentially lowering eurozone inflation by 0.15 percentage points while simultaneously raising competitive pressure on European industry. The McKinsey Global Institute projects Europe emerging ‘at the center of trade rearrangement, both as an exporter to the US and importer from China.’

Conclusion: A Damage Beyond Reversal

The premise of left-wing pundits that prompted this analysis was simple: ‘This would be a phenomenal threat 10 years ago. Now, the world is fleeing our currency to the Euro, because Europe is stable and predictable.’

The evidence supports this assessment — though the full picture is more complex. Central banks are not rotating wholesale out of the dollar, but they are building optionality, diversifying holdings, and preparing for a more fragmented world. The OMFIF survey reveals ‘the tone has shifted from certainty to scenario planning, from conviction to caution.’ Trust, once lost, is not easily rebuilt.

The administration’s defenders argue that tariffs will bring manufacturing home, that deregulation will unleash growth, that assertive military action will deter drug trafficking. Perhaps. But the costs are already manifest: allies treating the United States as an adversary; central banks hedging against American instability; federal courts declaring administration policies illegal; intelligence professionals fleeing or being purged; and, in the waters of the Caribbean, unarmed men clinging to wreckage, waiting for the second missile.

There may be no going back. The architecture of American global leadership — built over 80 years through institutional credibility, predictable policy, rule of law, and moral authority — cannot be restored by executive order. It must be rebuilt through sustained demonstration of the qualities that made it possible in the first place: stability, predictability, and a commitment to principles that transcend any single administration.

While this administration is not in possession of those qualities, the question that keeps many awake at night is: will the US ever possess those qualities again?

jason c. kay is a fintech consultant and writer based in Charlotte, North Carolina. He holds advanced degrees in computer engineering and applied mathematics from MIT and has worked in financial services technology leadership for major institutions including Wells Fargo and Ally.

Sources

• Tax Foundation, ‘Trump Tariffs: The Economic Impact of the Trump Trade War,’ December 2025
• OMFIF Global Public Investor Survey 2025; UBS Reserve Manager Survey 2025
• Peterson Institute for International Economics, ‘Are Trump’s tariffs a path to a new world trade order?,’ August 2025
• Council on Foreign Relations, ‘Geopolitics of Trump Tariffs,’ September 2025
• The Washington Post, ‘Trump Venezuela boat strikes’ investigation, November-December 2025
• NPR, ‘Did the Trump administration commit a war crime in its attack on a Venezuelan boat?,’ December 2025
• CBS News, ‘Trump’s Venezuela boat strikes fuel war crimes allegations,’ December 2025
• Bloomberg, ‘Bessent Urges Independent Fed Review,’ September 2025
• Fortune, ‘Bessent backs new rules to give White House more power over Federal Reserve,’ December 2025
• NPR, ‘Treasury Secretary Bessent, tapped to run CFPB, orders staff to halt work,’ February 2025
• Senator Mark Warner Press Release, ‘A Deepening Threat: How Politicizing Intelligence Endangers National Security,’ November 2025
• Federal Reserve Bank of St. Louis, ‘How Tariffs Are Affecting Prices in 2025,’ October 2025
• European Parliament, ‘Dominance in Transition? The Future of the Dollar and the Euro,’ October 2025
• Atlantic Council, ‘Why the US cannot afford to lose dollar dominance,’ May 2025
• IMF World Economic Outlook, October 2025
• McKinsey Global Economics Intelligence, October 2025