By Ajith Rajapaksa –

From Feudalism to the Modern World Order

In feudal societies, laws were dictated by elites and enforced by lords. Justice was arbitrary, and exploitation rampant. The masses had no rights, independent institutions, or recourse against abuse. Modern democracy, civil rights, and a rules-based order emerged only with the shift from feudalism to capitalism. As nation-states and industrial economies rose, institutions were created to uphold law and order, first domestically, then internationally.

By the mid-20th century, bodies like the UN, WHO, IMF, World Bank, and WTO sought to promote cooperation, development, and peace. Imperfect and geopolitically influenced, these institutions nonetheless maintained stability during the Cold War, when U.S. and Soviet blocs balanced global power. That changed after the Soviet collapse in the late 1980s. The U.S. became the sole superpower and increasingly asserted influence, using military force, sanctions, and economic pressure against adversaries. For decades, it upheld the image of championing democracy and international norms, a reputation now visibly eroding.

America First: Trump’s Disruption of U.S Foreign Policy

Donald Trump’s 2016 election marked a major shift in U.S. leadership. His “America First” doctrine rejected multilateralism for nationalism, replacing diplomacy with confrontation. During his first term (2017–2021), Trump enacted sweeping conservative policies. Economically, he passed the Tax Cuts and Jobs Act, cutting corporate taxes and deregulating industries. He launched a trade war with China, withdrew from the Trans-Pacific Partnership, and replaced NAFTA with the USMCA.

On immigration, he imposed the Muslim travel ban, expanded the U.S.-Mexico border wall, and introduced controversial family separation policies. Trump sought to repeal the Affordable Care Act, eliminating its individual mandate. Environmentally, he exited the Paris Agreement, rolled back emissions rules, and promoted fossil fuels. His foreign policy included quitting the Iran nuclear deal, pressuring NATO allies, and brokering the Abraham Accords to normalize relations between Israel and several Arab states.

Trump 2.0: Nationalism, Deregulation, and the Mar-a-Lago Blueprint 

Since beginning his second term in January 2025, Donald Trump has aggressively pursued a hardline agenda cantered on nationalism, deregulation, and economic restructuring. His administration passed the sweeping $4.5 trillion “One Big Beautiful Bill,” which expanded tax cuts, slashed social safety nets, and imposed tariffs of up to 50% on many countries. Trump also announced plans for a 200% tariff on pharmaceutical imports unless manufacturers relocated to the U.S. within 18 months.

He withdrew the U.S. again from the Paris Climate Agreement, rolled back clean energy incentives, and dismantled federal diversity, equity, and inclusion (DEI) programs via executive orders. Trump introduced the “Mar-a-Lago Accord,” a blueprint aiming to weaken the U.S. dollar and reshape global trade to boost domestic manufacturing.

Internationally, Trump authorized the restart of arms shipments to Ukraine. On July 15, 2025, he announced a pact with NATO partners to supply Ukraine with Patriot missile systems and other military hardware, with the U.S. leading and European nations providing funding and weapons. He also warned Russian President Vladimir Putin that failure to reach a peace agreement within 50 days would trigger full tariffs on Russian exports and secondary sanctions on countries trading with Moscow. In addition, Trump ordered limited airstrikes on Iranian military infrastructure following renewed tensions in the Strait of Hormuz and signalled unwavering U.S. support for Israel’s military campaign in Gaza, providing additional weapons and diplomatic cover against UN resolutions calling for a ceasefire.

Domestically, Trump initiated a large-scale downsizing of the federal workforce, upheld by the Supreme Court, and continued rolling back transgender rights and abortion access, aiming to redefine America’s economic and political role.

Trump’s leadership style remains unpredictable and contradictory, marked by personal alliances and disregard for norms. He has openly praised authoritarian figures like Hungary’s Viktor Orbán despite Orbán’s clashes with the EU over democratic erosion. While citing human rights to sanction Cuba, Trump has been silent on Gaza’s humanitarian crisis. In a surprising move, Israeli Prime Minister Netanyahu nominated Trump for a Nobel Peace Prize despite his controversial global stance. Trump reportedly threatened Brazil with economic penalties if it pursued legal action against former president Jair Bolsonaro, a close ally accused of crimes. His disregard for accountability surfaced again when he was ordered to pay $5 million in damages after a defamation lawsuit, underscoring a pattern of rule-breaking and exceptionalism.

These contradictions are troubling and dangerous. Trump’s foreign policy is highly transactional: treaties are discarded, global institutions undermined, critics targeted, while allies accused of corruption or authoritarianism are shielded. The once flawed but functional U.S.-led world order is faltering, with rules rewritten or ignored. Alarmingly, few world leaders have resisted; allies hedge their bets, and institutions upholding international norms are sidelined or politicized. As Trump returns to the global stage, the international system appears more rudderless than ever.

Crisis of Democracy and Inequality in the U.S.

Professor Kishore Mahbubani, a respected diplomat, argues that the United States is a failing democracy. Although democracy is meant to serve all people, data shows that since the 1970s, income and wealth have become increasingly concentrated among the richest 1%, while the bottom 50% have seen their income and wealth shrink. The middle class has also diminished significantly.

A striking sign of this failure is that life expectancy in the U.S. is declining, even as it improves in many developing countries. While Americans retain the right to vote, the government is largely controlled by elites and powerful interest groups, leaving most people with little influence on policy.

Meanwhile, major U.S. corporations, especially tech giants like Google, Apple, Meta, and Microsoft, made enormous profits totalling over $400 billion in 2024. Other sectors such as finance and energy also remained highly profitable. However, these gains have mainly benefited shareholders and executives rather than ordinary workers. Since the 2017 tax cuts, companies have prioritized stock buybacks over wage increases. Professor Mahbubani warns that for the U.S. to recover, it must shift focus toward improving the lives of its bottom 50%, or risk further decline.

Deindustrialization, Debt and Populist Rebellion

One of the central challenges facing the United States is deindustrialization, driven by decades of offshoring manufacturing to low-cost regions like China. This shift has caused widespread job losses, wage stagnation, and declining living standards for American workers, particularly in rural and industrial heartland states. The erosion of well-paying manufacturing jobs has widened the economic gap between urban elites and working-class communities, fuelling the populist backlash that helped propel Donald Trump to power in 2016.

Alongside this, the U.S. faces a mounting debt crisis. National debt has surpassed $36 trillion, with over $25 trillion owed externally, making the U.S. the most indebted nation in the world. As of 2025, Japan is the largest foreign holder of U.S. debt ($1.1 trillion), followed by the United Kingdom and China, each holding around $0.75 to $0.78 trillion.

Trump’s Economic Playbook: Protectionism, Deregulation, and Dollar Diplomacy

Donald Trump’s economic strategy centres on reviving U.S. manufacturing, reducing trade deficits, and reasserting American dominance in global markets. His approach combines aggressive tariffs, deregulation, and strategic withdrawals from international agreements. By imposing steep import duties and renegotiating trade deals, Trump aims to pressure companies to relocate production back to the United States, reduce reliance on China, and protect domestic industries.

To cut costs, Trump has scaled back U.S. contributions to global organizations like the WHO and foreign aid programs, arguing that America should not fund “other people’s problems.” He withdrew from the Paris Climate Agreement to prioritize fossil fuel expansion, positioning the U.S. as a global energy leader while rolling back environmental regulations to boost business and create jobs.

Tariffs under Trump serve a dual purpose, economic and geopolitical leverage. They not only shield U.S. industries but also pressure allies in Europe, Canada, Australia, Japan and Korea to increase defence spending, effectively subsidizing America’s military-industrial complex.

Trump has also floated controversial ideas such as promoting cryptocurrency to attract foreign reserves and deliberately devaluing the dollar to enhance export competitiveness. To further advance this agenda, Trump announced “Crypto Week” (July 14–21, 2025), a national initiative aimed at positioning the U.S. as a global leader in digital assets and blockchain innovation.

His administration previously accused China, Vietnam, and Germany of currency manipulation, even formally labelling China as such in 2019, the first time since 1994.

Lessons from History: Bretton Woods, Nixon Shock, and Plaza Accord

This is not the first time the United States has faced a deep economic crisis. When the Bretton Woods Agreement was signed in 1944 by 44 allied nations after World War II, the U.S. stood in an exceptionally strong economic and military position. This dominance allowed the U.S. dollar to become the world’s reserve currency and placed America at the centre of postwar global governance. At that time, the U.S. accounted for nearly 50% of global GDP and remained the only major industrial power whose homeland had escaped wartime destruction, giving it a massive production advantage. The country also held roughly 75% of the world’s gold reserves, an essential factor in making the dollar the anchor of the Bretton Woods system.

On August 15, 1971, the United States officially ended the gold backing of the U.S. dollar in a historic move known as the “Nixon Shock.” This decision was driven by mounting inflation and growing fiscal deficits, fuelled by the Vietnam War and expansive domestic spending programs. U.S. gold reserves were rapidly depleting as foreign governments increasingly exchanged their dollars for gold, eroding confidence in the dollar. Maintaining the fixed $35-per-ounce peg established under the Bretton Woods system became unsustainable amid widening trade deficits and economic strain.

By 1973, the U.S. and other major economies transitioned to floating exchange rates, marking the collapse of Bretton Woods and the dawn of the modern fiat currency era, where money is no longer backed by physical commodities like gold.

Plaza Accord

By 1985, the U.S. dollar had appreciated sharply, by nearly 50% between 1980 and 1985, driven by high U.S. interest rates, tight monetary policy, and growing investor confidence in the Reagan-era economy. This dramatic rise in the dollar’s value made American exports significantly more expensive and less competitive on the global market. Consequently, trade deficits surged, particularly with Japan and West Germany, putting considerable pressure on U.S. manufacturers and workers.

In response, five of the world’s largest economies, the United States, Japan, West Germany, France, and the United Kingdom, signed the Plaza Accord on September 22, 1985, at the Plaza Hotel in New York City. The primary goal of the agreement was to devalue the U.S. dollar to correct the imbalances in global trade. Under the accord, the central banks of the participating countries committed to coordinated interventions in currency markets by selling U.S. dollars and buying their own currencies, thereby weakening the dollar.

Following the agreement, the U.S. dollar fell by approximately 50% against the Japanese yen and the German Deutsche Mark over the next two years. This depreciation helped improve the competitiveness of U.S. exports. However, it also had unintended consequences, most notably in Japan, where the resulting economic overheating contributed to the formation of a massive asset bubble in the late 1980s.

The Mar-a-Lago Accord: Trump’s Answer to Global Imbalance

Once again, the U.S. economy faces trouble, and former President Donald Trump, now back in office, is working with advisors to restore order. They introduced a new initiative called the Mar-a-Lago Accord.

Mar-a-Lago, Trump’s personal residence and political headquarters, has become a hub for key Republicans, donors, and advisers, where campaign strategies and policies are crafted. Naming this economic strategy after Mar-a-Lago is symbolic, marking it as distinctly Trumpian in origin and spirit, similar to how the Plaza Accord of 1985 was named after the Plaza Hotel.

Unlike the cooperative nature of the Plaza Accord, the Mar-a-Lago proposal signals a more confrontational, unilateral approach to global economic adjustment. It evokes a “Plaza Accord 2.0” but on Trump’s terms.

The accord began forming in late 2024 and early 2025, developed by the Trump administration in response to what it sees as an overvalued U.S. dollar, a key factor in America’s persistent trade deficits. The plan was led by Stephen Miran, Chairman of the Council of Economic Advisers, with support from Treasury Secretary Scott Bessent and Vice President J.D. Vance. It builds on a November 2024 report diagnosing the strong dollar as a structural barrier to trade rebalancing.

According to a detailed policy paper by Miran, the accord proposes that America’s trading partners help weaken the dollar. In exchange, they would retain access to the U.S. market and commit to providing low-cost, long-term financing to the U.S. government. To enforce compliance, the administration threatens higher tariffs or withdrawal of security guarantees.

Prospects and Challenges

Can this proposal become a reality? According to financial outlets like Bloomberg, certain segments of Wall Street are taking the proposal seriously. Major banks and analysts are actively modelling its potential impacts on markets, suggesting the proposal is more than just political posturing. Within Trump’s inner circle, several advisers have acknowledged the accord as a guiding strategic framework, even though the specifics remain opaque.

Despite this growing interest, there are significant barriers to implementation. Unlike the Plaza Accord, which involved longstanding U.S. allies, today’s top trade partners, including China, Mexico, and Vietnam, do not operate within formal U.S. security alliances. This makes meaningful currency coordination far less likely.

Economists also caution that the proposed tactics, currency devaluation, debt restructuring, and tariff threats, could backfire. They may trigger inflation, undermine confidence in U.S. financial leadership, or even erode the dollar’s status as the world’s reserve currency. Critics further highlight the core contradiction: it is difficult to weaken the dollar, maintain its global dominance, and lower inflation or interest costs all at once. This tension creates a policy puzzle with no easy solution.

Bottom Line

The MaraLago Accord remains a speculative strategy, more a high-level concept than an actionable policy. Its implementation would demand extraordinary international cooperation on currency alignment, strategic leverage over key trading partners, and confidence from global financial markets. Many analysts see it as politically aspirational and financially risky, with little chance of achieving broad consensus or full adoption.

The U.S.- China Economic Entanglement and Strategic Rivalry

Whether Trump can succeed is still uncertain. Even if he manages to temporarily reduce the debt or stabilize the system, the underlying structural flaws of global capitalism remain. Inherent to this system is the tendency for industries to relocate in pursuit of cheaper labour and resources. American corporations have profited immensely by shifting manufacturing to China, where production costs are low. This relocation fuelled decades of corporate growth, while China reaped its own rewards, lifting millions out of poverty and amassing trade surpluses.

Much of China’s dollar surplus has been reinvested in U.S. Treasury bonds and Wall Street, forming a deeply interdependent economic relationship between the two powers. For years, the U.S. and China thrived in a mutually beneficial partnership. However, China’s rapid rise, both economically and militarily, has unsettled Washington. It marks the first time in modern history that a rival economic power has emerged capable of challenging U.S. global dominance.

Roots of U.S.–China Economic Ties

The foundations of this relationship were laid in 1972 with President Nixon’s visit to Mao Zedong and further strengthened in 1979 through President Jimmy Carter’s engagement with Deng Xiaoping. While Nixon’s motive was to counterbalance the Soviet Union by engaging China, Carter deepened those ties by granting China “most-favoured-nation” trade status, an act that significantly boosted China’s economic transformation and job creation.

Towards Multipolar Future: BRICS, the Global South, and New Alignments

China’s ascent has created deep anxiety in the United States. Until now, no global actor matched the U.S. in both economic and military capacity. When the Bretton Woods Agreement was signed in 1944, Europe and the UK were weakened by war, leaving the U.S. in an unrivalled position. But the global balance of power is changing. Despite remaining the world’s largest economy and most powerful military, the U.S. now faces the emergence of the BRICS alliance, which, though still nascent, has the potential to become a formidable bloc. BRICS, initially comprising Brazil, Russia, India, China, and South Africa, has expanded to include Egypt, Ethiopia, Iran, Saudi Arabia, the United Arab Emirates, and Indonesia. These new members were integrated in 2024 and 2025, significantly broadening the bloc’s global reach and influence.

Experts predict that the next major wave of global economic growth will occur in the Global South. In such a scenario, the U.S. and its allies may have to adapt to a multipolar world, where power is more evenly distributed. To avoid future conflict and instability, world leaders must move toward a cooperative model of governance, one that prioritizes mutual benefit over domination. Only then can a sustainable, peaceful international order emerge.