The United States is systematically trading strategic advantages for tactical gains, and the costs are accumulating in ways that will not become apparent until it is too late.
By Ian BREMMER
The United States is winning. At least that’s what it looks like if you follow the market indicators and the parade of countries lining up to sign deals with President Donald Trump. The American economy is edging ahead compared to its allies. Stocks continue to hit new records. And Asian and Gulf countries have pledged trillions of dollars in foreign direct investment to the United States during Trump’s presidency. In addition, the United Kingdom, the European Union and several Southeast Asian countries have offered non-reciprocal trade deals.
Canada dropped plans to impose a digital services tax. Japan made unilateral concessions on auto tariffs and Nippon Steel. And European pharmaceutical companies are moving production to the U.S. to avoid punitive tariffs. While the labor market softens and consumer confidence is at a low ebb, spending (especially by wealthier Americans) continues to surge. Combined with a boom in artificial intelligence investment and massive deficit spending — enabled by the dollar’s status as the global reserve currency — markets continue to bet on U.S. liquidity and growth.
But while the short-term outlook looks strong, the US is trading long-term strategic advantages for immediate tactical gains, and the costs are piling up in ways that will not become apparent until it is too late to turn back.
Let’s start with immigration. For decades, America’s ability to attract the best and brightest from around the world has been the foundation of its technological, economic, and “soft power” dominance. But now, the welcome mat is being rolled out. The Trump administration is becoming increasingly hostile to immigrants (whether legal or illegal, skilled or unskilled), nativist sentiment among Americans is on the rise, and civil liberties (especially for immigrants of color) are increasingly precarious. The numbers speak for themselves: the number of international students coming to the U.S. is down nearly 20 percent from a year ago.
Meanwhile, China is introducing new visas specifically designed to lure skilled workers from the U.S., and Canada is filling its airports with recruitment campaigns. As America becomes a less attractive destination for top global talent compared to its competitors, the long-term economic damage will pile up.
Then there are the universities. The Trump administration has not only targeted humanities departments, which have often become intellectually insular and ideologically doctrinaire, but it has also dismantled the research infrastructure at America’s (and the world’s) best universities. These institutions keep America at the forefront of science and technology and attract the leading scientists, engineers, and entrepreneurs of tomorrow. Undermining this ecosystem will erode a key pillar of the American economy at a time when public trust in science is waning. Vaccine skepticism, conspiracy theories, and reflexive rejection of expertise are not just cultural traits. They are structural disadvantages when competing against countries where faith in science and technology remains strong, leaving Americans unpositioned to lead the next wave of innovation.
Take artificial intelligence. The US is moving fast on consumer AI – chatbots, social media that maximizes engagement, tools to produce ever more addictive “babble,” ever-larger language models that claim to be one step closer to superintelligence – because that’s where the money is.
But these technologies are fragmenting society, amplifying misinformation, and perhaps contributing to a kind of collective psychosis. China, by contrast, has steered AI development away from consumer applications in favor of defense and industrial uses, which carry less risk of societal fragmentation and more strategic benefits. The story of energy is similar. On the one hand, the US has become the world’s most powerful oil nation, which is not necessarily a problem, given that fossil fuels will continue to power data centers, agriculture, and heavy industry for decades to come.
But the US has effectively surrendered leadership in post-carbon energy to China, which already dominates battery technology, solar power, next-generation nuclear, and critical mineral supply chains. America is doubling down on the energy of the past at the expense of the energy of the future. Or take trade policy.
The Trump administration is imposing the highest U.S. tariffs in a century, amounting to a roughly 17 percent regressive tax on American businesses and consumers, who are forced to pay more for final products and input materials. Combined with a strong turn toward industrial policy and state capitalism, the U.S. is moving away from the free-market principles that made its economy so competitive in the first place. Targeted government intervention in some sectors (e.g., semiconductors, banking) may be justifiable in some cases (national security, financial stability), but broad protectionism and state direction tend to make the economy less, not more, dynamic over time. This short-term thinking extends to geopolitics.
Most countries are willing to give Trump a victory (some Pyrrhic, some significant) to avoid open conflict. But those same countries are also working to ensure they never find themselves in this position again. The EU has finalized trade deals with Mercosur, Mexico, and Indonesia. Brazil is deepening economic ties with Europe, China, and Canada. India is working to stabilize relations with China while accelerating infrastructure projects that make it less dependent on American markets. And Saudi Arabia has signed a nuclear deal with Pakistan to protect itself from possible future security neglect by Washington. Having learned the hard way that American policy can change course with every election cycle, these countries are now pursuing alternatives, while accommodating America in the meantime. And because these safeguards require large amounts of political capital, years of investment, and a new institutional architecture, they will be difficult to roll back once they are built.
The US will continue to be ahead of allies and adversaries for the foreseeable future. Its lead is too great to disappear overnight, and in the field of AI, it is one of the two major players and is still preferred to China by most of the world.
But the long-term trajectory is troubling. America’s historical advantages over its competitors—its physical and institutional infrastructure, its superior demographics fueled in part by immigration, its public tolerance of inequality supported by a perception of meritocracy, its greater capacity for deficit spending—are all going in the wrong direction. Despite being in a weaker position overall, China, known for its long-term planning, is doing everything it can to exploit these shifts. Perhaps most troubling is that everyone in a deeply divided America seems to agree that the country’s greatest threat is internal. They simply disagree about where it is. As a result, national policy will remain focused on domestic struggles, rather than making the deeper, more sustained investments—in people, institutions, research, and infrastructure—that long-term competitiveness requires. America’s short-term gains are real, but at some point, the bill will have to be paid.
