People line up to receive food for furloughed federal workers in Maryland, the US, on October 21, 2025. Photo: VCG

Editor's Note: 

For the US, which is about to celebrate its 250th birthday, the atmosphere this year is far from celebratory. The smoke of the war against Iran has not only impacted the global economy and disrupted international order but has also caused the major pillars of American economic hegemony to shake simultaneously. Scholars have noted that US economic hegemony rests on five pillars: economic strength, dollar hegemony, military hegemony, political hegemony and rule hegemony. For years, the major pillars of American economic hegemony have been steadily loosening under America's domestic and foreign policies. The war against Iran has merely thrust this structural decline into the spotlight. How much longer the US can sustain its economic hegemony has become a topic of ongoing heated discussion in global public opinion.

Dollar status and military hegemony waning

"The dollar's status is gradually waning." This is how South Korea's Hankyoreh assessed the impact of the military action against Iran on the US. In the past, whenever a global crisis struck, capital would habitually flow into dollar assets for safety, a pattern that had almost become an "iron law" of the market. However, in this conflict, that rule failed for the first time. Due to the blockade of the Strait of Hormuz, oil exports from Middle Eastern producing countries were obstructed and revenues plummeted. Liquidity strains forced them to reduce holdings of US Treasuries. At the same time, soaring international oil prices imposed heavy fiscal burdens on oil-importing countries. To resist pressure from currency depreciation, some nations also chose to sell off US debt.

The large-scale sell-off of US Treasuries is a market reflection of the shaking of dollar hegemony, and the war against Iran has served as a catalyst for its further decline. For years, the global trend of "de-dollarization" has continued to advance. This is not due to any single unexpected event or short-term US policy misstep but the result of multiple structural factors intertwined over the long term. The US has long leveraged the dollar's status in international payments, reserves, investment and financing to exert economic pressure and impose unilateral sanctions on other countries, prompting more and more nations to actively seek to reduce their dependence on the dollar.

Meanwhile, the US government's direct interference in the Federal Reserve's decision-making independence has led the outside world to begin questioning this "anchor of dollar credibility." As doubts about the dollar's credibility spread, central banks around the world have accelerated their purchases of gold, as if quietly stockpiling for a "post-dollar era."

Dollar hegemony is only one pillar of US economic hegemony. He Weiwen, executive council member of China Association of International Trade, pointed out in an interview with the Global Times that, in addition to dollar hegemony, US economic hegemony is also built on four other pillars: economic strength, political hegemony, military hegemony and rule hegemony. Over the years, these pillars have continued to loosen.

In the dimension of economic strength, America's former advantages are steadily narrowing. The Wall Street Journal has pointed out that over the past half-century, the growth of America's economic pie has been slow. After inflation adjustment, the annual income of ordinary American households has grown by less than 1 percent per year. In 2025, the median weekly wage for full-time male workers was $1,325; after inflation adjustment, it is roughly the same as the income level in 1979.

The relative decline in economic strength is only one side of the issue. The loosening of military hegemony reveals America's difficulties from another dimension. Although the US still maintains its position as the world's largest military power, in this military operation against Iran, US forces consumed about one-third of its Tomahawk cruise missiles. The rapid depletion of precision-guided munitions has drawn external attention to its sustained combat capabilities. More critically, NATO, once seen as the world's strongest deterrent force, has shown clear internal fissures. European countries exhibit obvious distrust toward the US government. Now marking its 77th anniversary, NATO is deeply mired in a crisis of division, and the foundations of its continued existence are widely questioned.

Political prestige slumped; technological strength weakened

Construction continues on the Federal Reserve building in Washington, D.C., on December 15, 2025. Photo: VCG

At the level of political influence, America's decline is even more evident. He Weiwen noted that strong comprehensive national power has given the US enormous dominance in world affairs, compelling many small and medium-sized countries to submit to its will. British scholar Susan Strange once argued in the 1980s that America's real power stems from its central role in major international institutions and strategic alliances. This institutional hegemony once made Washington's dominant position far exceed mere material advantages. After the end of the Cold War, the US relied on multilateral institutions such as NATO, the Group of Seven and the International Monetary Fund to extend its influence globally.

However, in recent years, the US has pursued unilateralism and the "law of the jungle," making enemies everywhere and constantly clashing with its allies, resulting in a sharp decline in its political prestige. This shift toward coercive hegemony is rooted in a short-sighted international outlook. America's opportunistic and unstable image has eroded the trust of its allies.

Within the framework of international rules, following World War II, the US took the lead in establishing a host of international institutions including the United Nations, the World Bank and the International Monetary Fund. These bodies were tasked with overseeing international security and the global monetary system respectively, enabling Washington to shape the world order while maximizing its own national interests. Today, however, the US has repeatedly violated the principles of sovereign equality and the prohibition on the use of force against the territorial integrity or political independence of any state enshrined in the United Nations Charter on the political front, often bullying smaller nations and meddling in other countries' internal affairs.

The technological prowess and free trade policies that have underpinned US economic dominance are also being eroded. Eighty-one years ago, Vannevar Bush, science advisor to President Franklin Roosevelt during the WWII, issued a landmark report that established the strategic direction for US scientific research. The model of government-funded, academic-led research propelled the US to leadership in numerous fields. However, today, according to the US National Center for Science and Engineering Statistics, federal R&D spending as a share of GDP has fallen from 1.86 percent in 1964 to roughly 0.66 percent in 2021. At the same time, the US has tightened international scientific exchanges and stepped up screening of foreign researchers, citing so-called "national security concerns" - thereby undercutting the openness and appeal that have long sustained its research ecosystem.

Is the gradual decline irreversible?

A customer does last-minute gift shopping amid high inflation in Miami, Florida, on December 23, 2025. Photo: VCG

The US declared independence in 1776, but until the late 19th century, it remained a relatively marginal player on the world stage. World War I offered the first historic opportunity for the US to emerge as a major global economic power. For American corporations and the wealthy elite, the four-year catastrophe was a moment of immense financial opportunity. During the war, the US government suspended antitrust enforcement, ramped up support for scientific research and eased arms-sale restrictions - measures that, in retrospect, created institutional space for the rise of new technology industries after the war. By the war's end, the US had transformed from a debtor nation into a primary creditor to other countries, completing a dual reversal - from capital importer to exporter, and from debtor to creditor.

It was WWII that firmly entrenched America's economic supremacy. No previous event had driven wealth accumulation in the US on such an unprecedented scale and scope. According to the Securities Times, by the end of WWII, US GDP was several times greater than that of Britain, with its gold reserves hitting $20 billion, accounting for roughly two-thirds of the world's total global reserves of $33 billion. This overwhelming economic advantage laid the groundwork for the US dollar to emerge as the world's primary reserve currency. 

Between 1939 and 1945, America's economic output nearly doubled, while Western Europe's economy contracted by 18 percent. This shift in relative economic strength cemented the US' dominant position in the global economy, according to the Council on Foreign Relations.

"From my perspective, the US is still one of the most powerful economies in the world, but it no longer enjoys the overwhelming advantages it once did," Gavin Cooley, a 24-year-old American influencer, told the Global Times. Cooley believes that the greatest risk for the US is not competition itself, but failing to recognize how quickly the global balance is changing. "For decades, American economic leadership was treated as a permanent reality. Today, that assumption is being challenged," he said.

The US still holds a prominent leading position in the global economic landscape. In a commentator's article published by Egypt's Ahram Online in March, it was pointed out that the US accounts for roughly one-quarter of global GDP, with its economic volume exceeding $26 trillion. In the technology sector, US enterprises make up more than 70 percent of the total market value of the world's leading tech firms. Companies including Apple, Microsoft, Google and NVIDIA are not merely participants in innovation, but are shaping the technological evolution of artificial intelligence and advanced computing.

In terms of scientific research, US institutions consistently deliver a large number of globally influential research outcomes, firmly backed by an annual funding ecosystem worth hundreds of billions of US dollars, especially in artificial intelligence and biotechnology. Multiple estimates show the US leads the world in AI investment. "This is not merely a matter of scale. It is a system capable of reproducing its own dominance and shaping the architecture of the future," Ahram reported.

Yet advantage does not equal permanence. A commentary in The New York Times opens with the headline "America Is Officially an Empire in Decline." He Weiwen told the Global Times that the gradual decline of US hegemony is a certain and irreversible trend, but that this trend is a long historical process, not an abrupt change. At the same time, he noted, the decline in US political, military and rule-making influence is closely tied to its policy direction and, in particular, to who occupies the White House.

"If the US continues to rely on past advantages while other countries continue investing aggressively in the industries of the future, it risks seeing its economic influence gradually diminish over time. Whether that happens or not will depend on how successfully the country adapts to a much more competitive and multipolar world," Cooley told the Global Times.