Global Perspectives

In the final instalment of this G2 trilogy, attention turns to the United States, still the only country able to sustain a serious claim to superpower status across military reach, financial depth, technological leadership and institutional influence¹.

That position is no longer uncontested, nor is it exercised without cost or qualification. Yet within a world increasingly defined by the gravitational pull of Washington and Beijing, the United States remains the actor most capable of setting the terms to which others must respond.

The practical question, therefore, is not whether American power endures, but how it is now being used, what constraints increasingly accompany it, and how those changes are being transmitted by means of markets, regulation and cross-border capital flows.

A history

The United States has never been a quiet participant in the international system.

At those moments that have mattered most, it has not simply adjusted to changing circumstances but altered the framework itself. Bretton Woods embedded American financial leadership in the post-war order. The ending of dollar convertibility in 1971 constituted a decisive break in the global monetary regime. The painful restoration of monetary credibility after the inflationary shocks of the 1970s showed that American policy, when sufficiently determined, could reset expectations far beyond its own borders.

The Federal Reserve’s response to the crisis of 2008 then demonstrated, once again, that American institutions retained the capacity to stabilise not only the domestic economy but the wider financial order². Set against one another, these episodes reveal a pattern that remains highly relevant today. Faced with structural strain, the United States has repeatedly chosen not simply to adjust to the environment, but to reshape it.

That instinct still matters because the United States continues to command a combination of strengths that no rival has yet assembled in comparable form. The dollar’s share of disclosed official foreign exchange reserves stood at 56.77 per cent in the fourth quarter of 2025, while the renminbi remained at 1.95 per cent. The Federal Reserve’s own review of the dollar’s international role continues to point to the same underlying supports: the size of the US economy, strong property rights, the rule of law and financial markets whose depth and liquidity remain unmatched.

SIFMA’s latest Fact Book offers a useful measure of what that means in practice, noting foreign gross activity in US securities of US$134.7 trillion in 2024 and long-term fixed income issuance of US$10.4 trillion. On the hard-power side, SIPRI calculates that US military expenditure reached US$997 billion in 2024, accounting for 37 per cent of global military spending³.

These are not disconnected attributes. Together, they explain why repeated predictions of imminent American eclipse still arrive well before the evidence does.
Nor should American influence be understood simply in terms of scale or coercive capacity. Much of what has proved most dynamic in the modern global economy has been shaped by US research, entrepreneurship and capital formation.

US spending power

The National Science Foundation reported in February 2026 that research and development performed in the United States totalled US$937 billion in 2023 and was expected to rise again to US$993 billion in 2024. That is the sort of spending power that helps explain why the United States remains central to so many strategic industries. The point becomes clearer still in semiconductors, where industrial policy, technological rivalry and supply-chain resilience now intersect. In March 2025, TSMC announced that it intended to expand its US investment to US$165 billion, including three new fabrication plants, two advanced packaging facilities and an R&D centre in Arizona⁴.

This is more than a corporate expansion story. It is a concrete example of how the United States is attempting to convert technological dependence into strategic resilience.

Yet the setting in which American strength is exercised has become distinctly less forgiving. China has moved from integration within a Western-led order to selective rule-shaping of its own. Europe has become more strategic and more defensive in its economic thinking. A wider group of countries across the global south is increasingly willing to engage on its own terms rather than simply within a Western frame.

In that environment, Washington has become more explicit in aligning economic policy with national strategy. The shift is visible in tariffs, export controls, semiconductor policy and the reorientation of supply chains. The White House’s trade policy in 2025 framed reciprocity, domestic production and national security as mutually reinforcing aims, while the WTO warned that reciprocal tariffs and spreading trade policy uncertainty might produce a 1.5 per cent decline in world merchandise trade volume in 2025⁵.

Present tensions

That introduces one of the defining tensions of the present period. The United States continues to enjoy the privileges associated with issuing the world’s primary reserve currency, a position built on openness, legal certainty and confidence in the stability of its institutions. At the same time, it is increasingly willing to intervene, direct and condition economic activity in pursuit of strategic ends.

Those two realities are able to coexist for longer than many critics assume, not least because the attractions of American markets remain so formidable. Yet they do not sit together without strain.

A state that asks the world to trust the openness of its financial system while increasingly using access to that system as an instrument of statecraft⁶ is operating with an internal tension that allies and rivals alike will study carefully. That tension does not amount to decline. It does, however, reveal that American power is now being exercised in a harder and more political age.

The change is visible not only in policy substance but also in political tone. Recent American rhetoric has been more direct, more geographical and more openly transactional than the language of stewardship that frequently accompanied earlier phases of US leadership.

The inaugural address of January 2025 framed purpose, power and national renewal in unusually stark terms. More revealing still was the 2026 National Defense Strategy, which stated that the United States would guarantee military and commercial access to key terrain, especially the Panama Canal and Greenland, and tied that posture to a revived Monroe Doctrine⁷.

None of the underlying interests is entirely new. What has changed is the candour with which they are now expressed, and the extent to which geography, access and leverage are once again being presented as central instruments of national power.

Energy offers another perspective through which to view both the reach of the United States and the limits upon it. The oil shocks of the 1970s showed how concentrated supply could become concentrated geopolitical leverage, while the Great Inflation revealed how costly it could be to restore stability once credibility had been lost. Those lessons have not become obsolete.

Current climate

The Strait of Hormuz remains one of the world’s most sensitive energy chokepoints. Yet the United States approaches this vulnerability from a stronger position than in earlier eras. EIA data show that US crude oil production reached a record 13.6 million barrels a day in 2025⁸. The country that issues the reserve currency, commands the dominant navy and is also the world’s largest oil producer possesses room for manoeuvre that few others can match. Even so, room for manoeuvre is not the same as immunity from consequence, and every serious disruption of supply still sends pressure across markets, alliances and fiscal calculations alike.

The war in Ukraine has underlined a related point: that power now depends as much on coalition as on capability. The conflict persists, with the United Nations warning in March 2026 that the situation was worse than ever. Europe’s response has been substantial. The European Defence Agency reports that defence expenditure by the 27 EU member states reached €343 billion in 2024 and is estimated to rise to €392 billion in 2025, while NATO’s own expenditure data show how quickly burden-sharing has moved up the agenda across the alliance⁹.

The alliance remains intact, but it is no longer carried by the older assumption that the United States will always lead in the same register and on the same terms. Strategic autonomy, burden-sharing and conditionality have moved from the margins of debate to the centre of policy. That does not weaken American centrality, but it does change its character.

The US and China

It is against that background that the US-China relationship now has to be understood. The older language of convergence has given way to the harder reality of structured competition. Trade continues, but under greater scrutiny; investment persists, but under tighter conditions; and technology, especially where civilian and strategic uses overlap, has become the principal field in which power is tested. The monetary imbalance remains instructive.

For all China’s scale and manufacturing weight, the renminbi still accounts for less than 2 per cent of disclosed official reserves, while the dollar remains above 56 per cent. Yet Beijing has become more willing to use its own economic strengths selectively. In April 2025, MOFCOM imposed export controls on certain medium and heavy rare earth items, and CSIS noted that the restrictions covered seven of the seventeen rare earth elements and magnets used in defence, energy and automotive supply chains¹⁰.

Taiwan sits at the sharpest point of that reality, not simply because of the sovereignty question itself, but because semiconductors have become part of the physical substrate of modern power. That is why the relocation of advanced fabrication capacity to the United States matters¹¹, and why strategic ambiguity continues to sit alongside practical support for Taiwan’s resilience.

Neither Washington nor Beijing has an interest in uncontrolled escalation, but neither is prepared to concede the strategic ground. The G2 world is therefore not simply bipolar. It is economically entangled and strategically adversarial at the same time, which is what makes it at once durable and unstable.

What this means for IFCs

For practitioners in international finance centres, the significance of all this goes beyond the theoretical.

Geopolitics is no longer a background variable to be noted in a risk register and revisited at the next quarterly meeting. A fund vehicle raising capital in the Gulf, deploying into Asia and banking in dollars cannot assume that politics and economics sit in separate compartments.

A fiduciary business accepting board appointments on cross-border holding structures must now think harder about sanctions exposure, export-control sensitivity, ownership chains, beneficial ownership transparency and the provenance of capital.

A private wealth platform serving internationally mobile families has to think not only about tax and succession, but about currency resilience, booking models, transaction routes and the possibility that a political shock can suddenly become a payments, liquidity or reputational issue.

The role of a well-governed international finance centre is not to compete with the great powers, but to help capital, the rule of law and governance travel between them in a frictionless and intelligible way. In a more fragmented environment, the premium rises on jurisdictions able to provide legal certainty, sophisticated professional services, credible courts, trusted administration and regulatory systems that are internationally legible rather than merely locally convenient¹³.

For practitioners, that means the value proposition has to be articulated with more precision than in the past. Efficiency still matters, but it is no longer enough. Substance, transparency, governance quality and the ability to operate credibly across divergent regulatory expectations matter more. In a world of rising friction, trusted intermediation becomes more valuable, not less.

This has practical consequences for how IFC firms position themselves. Boards will need to devote more time to geopolitical risk, not as an abstract macro theme but as a driver of domicile choice, investor comfort, capital raising, counterparty selection and deal execution.

Administrators and trustees will need stronger instincts around source-of-wealth and source-of-funds enquiries in sectors touched by dual-use technology, strategic minerals or sensitive data. Law firms and corporate service providers will need to show that neutrality does not mean passivity, and that cross-border structuring can remain commercially effective while still meeting ever more demanding expectations on sanctions, disclosure and regulatory cooperation¹⁴.

Those that can combine technical competence with strategic judgement should do well. Those relying on a thinner, older idea of offshore convenience may find the world moving on.

The new America

Beneath all of this lies the clearest long-term constraint on American power: debt. The United States still enjoys borrowing capacity that no other sovereign can replicate, and demand for Treasury securities remains strong, particularly in unsettled times. But elevated debt changes the texture of power even where it does not immediately diminish it.

The Congressional Budget Office projects that federal debt held by the public will rise from 101 per cent of GDP in 2026 to 120 per cent by 2036¹⁵. That does not point to imminent crisis. It does, however, narrow fiscal flexibility, increase sensitivity to interest costs and raise the premium on short, visible results over long, open-ended commitments. American power remains formidable. It is simply no longer as cheap as it once appeared.

The United States therefore remains central to the global order not because it is omnipotent, but because it still combines forms of power that no other state can match. It can attract capital at a scale others cannot, project force far beyond its shores and persist in shaping the frontier of innovation.

When it chooses, it still has the capacity to alter the operating terms of the wider system¹⁶. Yet it now does so in a world that is more resistant, more political and more crowded with capable actors than the one that followed the Cold War. The result is not retreat, but recalibration.

In a G2 world, the United States remains both anchor and agent of change: stabilising through the depth of its markets and institutions even as it unsettles the system through selective intervention, strategic purpose and a more openly transactional view of power.

For those operating in and around international finance centres, the lesson is straightforward. The commercial opportunity remains very real, but it increasingly belongs to jurisdictions and firms that understand how power, regulation and capital now interact, and that can translate that understanding into credible structures, sound governance and trusted execution across borders.

1. IMF, COFER, 2025 Q4 (link); Federal Reserve, The International Role of the U.S. Dollar: 2025 Edition (link); SIPRI, Trends in World Military Expenditure 2024 (link)
2. Federal Reserve History, Creation of the Bretton Woods System (link); Federal Reserve History, The Great Inflation (link); Federal Reserve History, The Great Recession and Its Aftermath (link)
3. IMF, COFER, 2025 Q4 (link); Federal Reserve, The International Role of the U.S. Dollar: 2025 Edition (link); SIFMA, Capital Markets Fact Book 2025 (link); SIPRI, Trends in World Military Expenditure 2024 (link)
4. NSF NCSES, U.S. R&D Totaled $937 Billion in 2023 (link); TSMC, Expansion of Investment in the United States (link)
5. White House, Fair and Reciprocal Plan on Trade (link); White House, National Emergency to Increase Our Competitive Edge (link); WTO, Global Trade Outlook and Statistics 2025 (link)
6. Federal Reserve, The International Role of the U.S. Dollar: 2025 Edition (link); White House, National Emergency to Increase Our Competitive Edge (link)
7. White House, The Inaugural Address (link); U.S. Department of Defense, 2026 National Defense Strategy (link)
8. EIA, World Oil Transit Chokepoints (link); IEA, Strait of Hormuz (link); EIA, U.S. crude oil production rose in 2025, setting new record (link)
9. UN Security Council briefing on Ukraine, 23 March 2026 (link); European Defence Agency, Defence Data 2024–2025 (link); NATO, Defence Expenditure of NATO Countries (2014–2025) (link)
10. IMF, COFER, 2025 Q4 (link); MOFCOM, Announcement No. 18 of 2025 (link); CSIS, The Consequences of China’s New Rare Earths Export Restrictions (link)
11. TSMC, Expansion of Investment in the United States (link); U.S. Department of Defense, 2026 National Defense Strategy (link)
12. Federal Reserve, The International Role of the U.S. Dollar: 2025 Edition (link); WTO, Global Trade Outlook and Statistics 2025 (link); CBO, The Budget and Economic Outlook: 2026 to 2036 (link)
13. Federal Reserve, The International Role of the U.S. Dollar: 2025 Edition (link); WTO, Global Trade Outlook and Statistics 2025 (link); CBO, The Budget and Economic Outlook: 2026 to 2036 (link)
14. WTO, Global Trade Outlook and Statistics 2025 (link); MOFCOM, Announcement No. 18 of 2025 (link); CBO, The Budget and Economic Outlook: 2026 to 2036 (link)
15. CBO, The Budget and Economic Outlook: 2026 to 2036 (link)
16. IMF, COFER, 2025 Q4 (link); Federal Reserve, The International Role of the U.S. Dollar: 2025 Edition (link); CBO, The Budget and Economic Outlook: 2026 to 2036 (link)