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Andrew Sheng

On Tuesday, US President Donald Trump’s State of the Union address was a long and rambling preparation for the congressional midterm elections in November.
If, as Trump claims, America “is back, bigger, better, richer and stronger than ever before”, what does it mean for the rest of the world?
Is the global economy as a whole bigger, better, richer and stronger than ever? Or are we in what Canadian Prime Minister Mark Carney argued in his stunning speech at the World Economic Forum in Davos last month: “a rupture in the world order, the end of a pleasant fiction and the beginning of a harsh reality, where geopolitics … is submitted to no limits, no constraints”.
Who is writing fiction and who is increasingly recognising harsh reality?
Those used to Trumpian language and behaviour accept the truth of Carney’s quote from former Czech president Vaclav Havel, that everyone is “living within a lie”. Everyone is entitled to live with their own lies, but Trump’s words and actions have brutally awakened many to accept that living within a lie is to accept one’s fate as vassal or serf.
Those who wake up will have to strengthen themselves, seek new allies or partners, diversify and help co-create a new order. Even the meek Europeans have finally woken up to accept the dictum that “there are no permanent friends or enemies, only permanent interests”.
In his State of the Union speech, Trump emphasised American exceptionalism, saying: “Today, our border is secure, our spirit is restored, inflation is plummeting, incomes are rising fast. The roaring economy is roaring like never before. Our enemies are scared, our military and police are stacked. And America is respected again, perhaps like never before.” If so, why are people still dedollarising and gold prices soaring higher than ever?


Seasoned investors such as Ray Dalio, founder of the hedge fund Bridgewater Associates, have questioned the state of global finance, especially whether US debt and fiscal deficits are sustainable. The Congressional Budget Office’s latest forecast estimates that the federal budget deficit in the 2026 fiscal year will be US$1.9 trillion and will grow to US$3.1 trillion by 2036. The deficit is projected to rise from 5.8 per cent of GDP in 2026 to 6.7 per cent in 2036, greatly exceeding the average of 3.8 per cent over the past 50 years. With US national debt at US$38 trillion and net interest outlays already at 3.3 per cent of GDP (at least double the share in 1945 when America had a debt-to-GDP ratio of slightly over 100 per cent of GDP), the US fiscal position is clearly unsustainable.
Since the US dollar remains the dominant global reserve currency, what happens when the rest of the world, which holds American assets worth US$26 trillion, decides to reduce foreign exchange losses as the US dollar depreciates or reduce their exposure to US Treasuries for fear of sanctions or possible default/confiscation for geopolitical reasons?
The New York Times noted in January that Europe has leverage over the United States since it is one of the largest investors in the US. What if Asian, European and Middle Eastern economies decide to substantially cut their Treasury holdings? China, for example, had reduced its Treasury holdings to US$683 billion by the end of 2025, the lowest since 2009.
Foreign investors selling Treasury paper will only keep US interest rates high. The buyer of last resort is the Fed. Monetising fiscal deficits would cause inflation to remain elevated. In essence, the US cannot solve its debt problems through monetary policy without risking higher inflation.
Furthermore, it cannot unilaterally devalue the dollar, since the rest of the world will not agree to another Plaza Accord – the 1985 agreement among major central banks to help other currencies, especially the Japanese yen, appreciate against the dollar – without some quid pro quo.

Simply speaking, as long as the US continues its fiscal deficit and growing debt trajectory, global financial stability is threatened. American prosperity cannot be bought by incurring more debt which foreigners may not be willing to continue holding.
In this deeply entangled global economy, networked through supply chains and financial interdependency, complex systems theory suggests the emergence towards another order, which can often be chaotic.
Complex systems are networks of small parts that interact to produce outcomes that cannot be easily predicted. Theoretical biologist Stuart Kauffman theorises that complex biological systems evolve through interactions of adaptation or mutation at the border between order and chaos. We cannot exactly predict how the system as a whole may evolve, since different parts of the system network may adapt very differently.
The global geopolitical order comprises very complex networks of trade, finance, data, technology, social, political and biological systems. Large dominant powers now confront middle powers that seek different alliances, as well as smaller powers that can foster technology breakthroughs to help them punch above their weight. Technological advances have facilitated the activities of rogue non-state players, such as cyber scammers, drug cartels and terrorist groups.
When the US embarked on independence in 1776, the promise of liberty, freedom and democracy was an isolated beacon in a sea of European imperialists. Now, 250 years later, the US is isolating itself by imposing steep tariffs on others. The age of isolationism or a “world minus one” is only just beginning.


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United States

Trump’s State of the Union report underlines shift to ‘world minus one’

US President Donald Trump delivers the State of the Union address to a joint session of Congress at the US Capitol in Washington on February 24. Photo: The New York Times via AP

Currency traders work near a screen showing the foreign exchange rate between US dollar and the South Korean won at the Hana Bank headquarters in Seoul, South Korea, on February 23. Photo: AP 

Normalisation of Trump’s chaos can only go so far

US President Donald Trump delivers the State of the Union address during a joint session of Congress in the House Chamber at the Capitol in Washington on February 24. Photo: TNS

Traders work on the floor of the New York Stock Exchange during morning trading on February 24. Photo: Getty Images/AFP 

At 250, the US should promote its values in Asia, not spectacle

US Ambassador to Poland Thomas Rose (second right) and President of the Kosciuszko Mound Committee Piotr Dobosz (left) participate in the ceremonial unveiling of a plaque commemorating the 250th anniversary of the US Declaration of Independence on Kosciuszko Mound in Krakow, Poland, on February 12. Photo: EPA

The US embassy in Singapore in 2015. US embassies and consulates across the Asia-Pacific are asking companies to collectively give millions of dollars for America 250-themed spectacles. Photo: AFP 

US Vice-President J.D. Vance and second lady Usha Vance watch the opening ceremony of the Milano Cortina 2026 Winter Olympics at the San Siro stadium in Milan on February 6. Photo: AFP

How Saudi diplomacy is thwarting Trump’s desire for war with Iran

US President Donald Trump (left) shakes hands with Crown Prince and Prime Minister of the Kingdom of Saudi Arabia Mohammed bin Salman at the US-Saudi Investment Forum in Washington on November 19, 2025. Photo: AFP

Chinese Foreign Minister Wang Yi (centre) attends a meeting with the secretary of Iran’s Supreme National Security Council Ali Shamkhani (right) and Minister of State and National Security Adviser of Saudi Arabia Musaad bin Mohammed al-Aiban in Beijing, China, on March 10, 2023. Photo: China Daily via Reuters 

Despite Supreme Court ruling, Trump has legal cards for tariffs in hand

Illustration: Craig Stephens

Members of the media raise their hands to ask US President Donald Trump questions during a press conference at the White House in Washington on February 20. Photo: AFP

An employee monitors iron casting production at Fangda Dazhou Iron and Steel Group in Dazhou city, Sichuan province, China, on January 19. Photo: Xinhua

Opinion

World Opinion

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World

In his address to Congress, Trump emphasised that America ‘is back’. However, the US’ financial position tells a different story, one with global implications


In his address to Congress, Trump emphasised that America ‘is back’. However, the US’ financial position tells a different story, one with global implications.


Donald Trump

China

Switzerland

Canada

Ray Dalio

Mark Carney

Congressional Budget Office (US)

Bridgewater Associates

The New York Times

Expresses the views, ideas and conclusions of the author. (Eg. Enough of Crazy Rich Asians, think of crazy poor Hongkongers.)


Trump’s State of the Union report underlines shift to ‘world minus one’

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}In his address to Congress, Trump emphasised that America ‘is back’. However, the US’ financial position tells a different story, one with global implications

In his address to Congress, Trump emphasised that America ‘is back’. However, the US’ financial position tells a different story, one with global implications