The United States is winning the game. Or at least that’s what it seems judging by stock market indices and the number of countries lining up to sign deals with President Donald Trump.
The American economy is growing faster than those of its allies. Stock markets continue to reach historic highs. Asian and Gulf countries have pledged to invest trillions of dollars during Trump’s presidency. The United Kingdom, the European Union and several Southeast Asian countries have offered non-reciprocal trade deals. Canada has backtracked on its plan to impose a tax on digital services. Japan made unilateral concessions on auto tariffs and Nippon Steel. European pharmaceutical companies are moving their production to the United States to avoid tariff retaliation. Add to that rising spending on AI and huge government deficits – facilitated by the dollar’s current status as the world’s reserve currency – and it’s clear that markets continue to bet on US liquidity and growth.
It’s an exciting time. But while the near-term outlook appears strong, the United States is systematically forgoing long-term strategic advantages for tactical gains, accruing costs that will not be fully visible until it is too late to reverse course.
The first example is immigration. For decades, the cornerstone of America’s technological and economic dominance, its soft power, has been its ability to attract the best minds from around the world. Many talented engineers, scientists, and entrepreneurs chose to come to the United States because it promised opportunity, openness, and meritocracy—a reasonable chance of realizing the American dream. Now the welcome mat is fraying. The Trump administration has an increasingly hostile policy towards immigration (whether legal or illegal, skilled or unskilled), nativist positions are spreading among Americans, and there is growing uncertainty about civil liberties (especially for non-white immigrants). Meanwhile, China has introduced new visas specifically designed to lure high-skilled workers away from the United States, and Canada is flooding airports with job offers. If the United States begins to be a less attractive destination for top global professionals than its competitors, the long-term economic damage it will cause is clear.
Then there are the universities. It is true that many humanities departments were intellectually isolated and politically sequestered. It is long overdue that something be done about these echo chambers of fringe ideologies. But the Trump administration has gone much further and made serious cuts to the research infrastructures of the best universities in the United States (and the world). These institutions are what keeps the United States at the forefront of advanced science and technology and attracts the best students from around the world, who, tomorrow, will be leading researchers, inventors and entrepreneurs. Weakening that ecosystem means undermining one of the most important pillars of the American economy. Government attacks on universities reflect the growing deterioration of public trust in science itself. The spread of vaccine skepticism, the popularity of conspiracy theories and the deliberate rejection of knowledge are not simply cultural extravagances, but a structural disadvantage when competing with countries where there remains strong faith in research and technology. These positions make Americans less able to believe in, much less lead, the next wave of innovation.
Let’s see what happens with artificial intelligence. The United States is rapidly advancing in consumer-related artificial intelligence (chatbotssocial media algorithms that make the most of participation, generative tools to present even more compelling content, ever-broader language models that pride themselves on being one step closer to superintelligence), because that’s what makes money. But these technologies are also fragmenting society, increasing misinformation and certainly contributing to a kind of collective psychosis. Instead, China has separated AI development from consumer-related applications to focus on industrial and defense uses, which carry fewer dangers of social fragmentation and more strategic advantages.
Energy is a similar case. The United States has become the most powerful petrostate in the world, producing more oil, gas, and coal than any other country. This isn’t necessarily a problem: Fossil fuels will continue to power data centers, agriculture, and heavy industry for several decades. The problem is that the United States has ceded the post-carbon energy advantage to China, which already holds first place in battery technology, solar power, next-generation nuclear power, and critical mineral supply chains. The United States doubles down on its commitment to the hydrocarbon sector and ignores the future of energy.
Let’s move on to trade policy. The Trump administration is imposing the highest tariffs set by the United States in a century, including a 200% tariff on pharmaceutical imports and a 50% tariff on copper, two sectors where the United States lacks the capacity to increase domestic production quickly enough to avoid shortages or inflation. The result is a regressive tax of about 17% on American businesses and consumers, forced to pay more for intermediate goods and final products. Add to that the sharp turn toward industrial policy and state capitalism, and you see that the United States is moving away from the free-market principles that have historically made its economy so competitive. Selective government intervention in certain sectors (for example, semiconductor or banking) can often be justified for specific reasons (such as national security or financial stability), but widespread protectionism and state intervention tend to make economies, over time, not more but less dynamic.
This short-termism extends to geopolitics. Most countries are willing to concede victories to President Trump – some Pyrrhic, others weighty – to avoid an open confrontation. But those same countries, at the same time, are working to ensure that they never find themselves in such a situation again. The European Union has signed trade agreements with Mercosur, Mexico and Indonesia. Brazil is intensifying its economic ties with Europe, China and Canada. India is working to stabilize relations with China and accelerate infrastructure projects that reduce its dependence on US markets. Saudi Arabia signed a nuclear deal with Pakistan to protect itself from a possible future security retreat by Washington.
These protective measures are not free: they require years of political capital, billions of dollars in investments and a new institutional architecture. Once established, they are difficult to reverse. But many countries have learned the hard way that American politics can change course with every election cycle, with almost no policy continuity or long-term strategic planning, and are building alternatives while appeasing Washington for the time being. Every four years there is a 50% chance that everything will change, not just the winners and losers, but also the rules of the game. This structural volatility is gradually undermining US influence, even as it benefits the world’s largest economy for now.
So when we ask whether the United States will continue to keep pace with its allies and adversaries, the answer depends on the time horizon. In the short term? Obviously. The United States remains by far the most powerful country in the world, so there is ample room for damage before structural decline is reached. Furthermore, artificial intelligence is about to change everything and the United States is one of the two great powers in this space (the other is China), as well as a privileged partner for much of the West and some areas of the Global South.
However, in the long term, the trajectory is worrying. The advantages that the United States has historically enjoyed over other countries – better physical and institutional infrastructure, more favorable demographics, driven in part by immigration, population tolerance of inequalities supported by the image of meritocracy, greater ability to engage in deficit spending – are taking a wrong and probably unsustainable path. China, despite having a weaker position in the world, is doing everything it can to take advantage of these changes. And, although Beijing needs to solve its own structural problems, it benefits from the increasingly real perception of having a long-term vision, while the United States only thinks about the next elections.
Most troubling is perhaps the one thing everyone agrees on in a deeply divided country: that the greatest threat the United States faces is domestic. What happens is they disagree about who that threat is. This decision to look inward ensures that Americans will devote much of their energy and attention to domestic political battles and not to the deep and patient investments – in people, institutions, research and infrastructure – needed to keep America competitive into the next generation.
The United States is giving up its long-term leadership in exchange for immediate victories; and at some point the bill will arrive. The question is not whether you will have to pay for your addiction to instant gratification. The question is how much you will pay and when.
