Legal experts are raising alarms over what they describe as an ongoing constitutional crisis, as President Donald Trump continues to defy legal norms and constitutional boundaries at an unprecedented pace. Erwin Chemerinsky, dean of the University of California, Berkeley’s law school, described the situation as dire, stating, “We are in the midst of a constitutional crisis right now.”
The crisis, scholars agree, is not a singular event but a cumulative slope of legal defiance. Over the past 18 days, President Trump has revoked birthright citizenship, frozen federal spending, shut down agencies, removed key government leaders, fired protected civil servants, and threatened deportations based on political views. These actions, legal experts argue, challenge the core principles of the U.S. Constitution.
Kate Shaw, a law professor at the University of Pennsylvania, warned that the administration’s disregard for judicial and congressional authority could deepen the crisis. Vice President JD Vance’s recent social media statement—”Judges aren’t allowed to control the executive’s legitimate power”—further underscored the administration’s confrontational stance. Legal scholars fear a potential standoff with the courts, a scenario that could erode the judiciary’s ability to check executive power.
The Supreme Court’s role remains uncertain. While its conservative majority has ruled favorably for Trump in key cases, experts speculate that the justices may seek to assert their authority by striking down one of his more extreme orders, such as his directive denying citizenship to children of immigrants. However, history suggests that the Supreme Court has often been cautious about issuing rulings that the executive branch might ignore, recalling instances such as President Andrew Jackson’s refusal to enforce a landmark court decision in 1832.
Pamela Karlan, a Stanford law professor, expressed concern that Trump’s actions go beyond isolated unconstitutional moves, instead reflecting a broader disregard for the Constitution itself. “It’s a constitutional crisis when the president of the United States doesn’t care what the Constitution says,” she noted.
Meanwhile, Chief Justice John Roberts has subtly warned against defying judicial authority, writing in a year-end report that “elected officials from across the political spectrum have raised the specter of open disregard for federal court rulings.” Legal analysts argue that should Trump continue to flout court decisions, the nation may be on the brink of a full-fledged constitutional showdown.
As Trump moves to reshape the scope of executive power, legal scholars fear that judicial pushback—if it comes—may arrive too late to undo the damage. Whether the Supreme Court will serve as an effective check remains an open question, but the crisis, experts warn, is deepening by the day.
Here, we’re not just talking about a technological shift; this is a philosophical battle over the future of business and society, powered by Artificial Intelligence (AI).
At the heart of this divide are two competing visions:
The Cavaliers: Visionaries of tech aiming for Artificial General Intelligence (AGI)—AI with human-like thinking and reasoning skills, capable of changing industries.
The Roundheads: Use-case driven, AI builders, [distilling] domain-specific AI [that deliver] quick wins in the business.
Key Strengths
Challenges
Breakthrough Potential– AGI could solve problems beyond human capabilities, such as disease prediction and global logistics.
High Costs – Developing AGI requires massive financial investments and computing resources
Cross – Industry Applications– Unlike narrow AI, AGI can operate across multiple domains without retraining.
Uncertain Business Model – Many AGI projects remain theoretical, lacking a clear commercial application
Disruptive Innovation – If successful, AGI could outperform human experts in fields like law, healthcare, and engineering.
Ethical & Regulatory Risks – AGI could lead to join displacement, bias, and loss of human control
For businesses, this is not an abstract debate. The choice between grandiose AGI ambitions or practical AI tools will dictate their success in an subsequent AI-driven world.
The Cavaliers: AI as Superintelligence Human-Like
What the Cavaliers Believe? Cavaliers see AI as the supreme generalist — a system that can think, reason and adapt in every domain. Their goal is to simulate human-level intelligence which, eventually, will result in more general AI that surpasses human performance in almost all cognitive tasks. It requires massive computing, deep neural networks, and a lot of machine learning research. Though still theoretical, advocates say AGI will transform fields from medicine to finance, and beyond.
OpenAI’s AGI Ambitions:
Big investments in LLMs OpenAI, as well as other companies, are spending billions upon billions developing LLMs like their upcoming GPT-5, which is projected to power an AI future where computers can do every cognition task that a human can. but not everyone agrees, saying the reasoning capabilities of such systems are no match for a human brain, meaning there’s a long way to go before we see AGI in action.
The Roundheads: AI as a Business-Optimized Tool
What the Roundheads Believe
Roundheads develop AI models that are practical, scalable, and deliver an immediate business edge. Rather than pursuing AGI, they concentrate on domain-specific AI applications that enhance efficiency, lower costs, and automate complicated processes.
Stability AI: An Industry-Focused Strategy
One such trendsetter is Stability AI, dedicated to interviewing AI-powered content. Stability AI arrived as a business-savvy option, providing enterprise-level yet cheap AI models, diverging from resource heavy AGI plans.
Key Strengths 💪💪
Challenges 💣💣
Business – Ready Solutions– AI is tailored for specific industries, such as finance, healthcare, and marketing.
Limited Scope– These AI models excel in one task but lack flexibility across industries.
Cost – Efficiency– Smaller, domain-specific AI models are cheaper to develop and deploy.
Scaling Challenges – Companies may need multiple AI models for different tasks, increasing integration complexity.
Proven Impact – Roundhead AI solutions already drive automation, efficiency, and business intelligence.
Missed Breakthroughs – By optimizing current industries, Roundheads may fail to pioneer the next disruptive AI innovation
Which AI Philosophy To Follow?
There isn’t a “right” AI strategy — the best path forward will be unique to your industry, business model and risk appetite…
Key Recommendations for Businesses
Roundhead AI Practical business-ready solutions If you need immediate ROI . If you’re betting on more breakthroughs down the road , Fund Cavalier AI research for the long haul.
If you want to be more hybrid= Combine productivity-maximizing narrow AIs with AGI exploratory research
The AI revolution isn’t merely a technology one, it’s a question of making the right strategic products. Or if you lean toward the Cavaliers’ vision or the Roundheads’ efficiency, your AI strategy will determine your competitive edge for the next ten years…
Luca Collina is a transformational and AI Business consultant at TRANSFORAGE TCA LTD. York St John University awarded him the Business – Postgraduate Programme Prize and CMCE (Centre for Management Consulting Excellence-UK) for his paper in Technology and Consulting Research Prize. Author/External Collaborator of CMCE.
This final part on the trends and prospects of de-dollarization in the global economy explores how international institutions aided the dollar in gaining global dominance, BRICS’ successful initiatives for increased financial stability, the impact of de-dollarization, and finally, how to end financial hegemony.
VIII. The Role of Dollarization in Global Capitalism
Marxist monetary theory critiques dollarization by examining its mechanisms, consequences, and alternatives (Siddiqui, 2023a). The global monetary system, dominated by the US dollar, has evolved through three distinct phases: the gold-dollar framework, the oil-dollar structure, and the institution-dollar scheme. In the 1980s, the rise of neoliberalism, reinforced by the Washington Consensus, imposed free-market policies on the Global South. The globalization of financial markets further entrenched dollarization, particularly after the collapse of the Soviet Union and the Eastern Bloc in 1991. Concurrently, debt crises in developing countries gave the US opportunities to impose macroeconomic policies enforcing fiscal and monetary “discipline.”
Alex Callinicos broadens the definition of new imperialism by examining the economic and geopolitical strategies of Western nations to sustain their global dominance. His analysis underscores the role of international institutions—such as the International Monetary Fund (IMF), World Bank, and World Trade Organization (WTO)—in perpetuating neoliberal economic policies. Callinicos highlights how the US and the European Union (EU) use these institutions as instruments of imperialism. Through economic, diplomatic, and even military means, they enforce policies that entrench dependency and consolidate their influence over developing nations. Callinicos’ perspective extends the understanding of imperialism, emphasizing the contemporary mechanisms of control and dominance in the global financial system (Callinicos, 1989).
Joseph Stiglitz (2003) offers a critical analysis of the international financial system, advocating for closer economic and trade cooperation among nations to mutually benefit both developed and developing countries. He critiques the “one-size-fits-all” approach to economic policy commonly propagated by international financial institutions, such as the International Monetary Fund (IMF) and the World Bank. Stiglitz calls for the reorganization of global economic relations, founded on mutual respect, shared values, and common objectives, to ensure more equitable and sustainable development.
According to Thirlwall’s model, the economic growth rate of dollarized countries is lower than that of countries with sovereign currencies. Moreover, the economic growth in dollarized nations tends to be more unstable, as these countries are highly susceptible to falling into debt traps. Marxists argue that dollarization is a key method through which the power of the US dollar as the dominant global currency is expanded. The US, by imposing restrictions on fiscal policies in dollarized countries, exacerbates their economic vulnerability and dependence (Cheng and Lu, 2024).
IX. De-Dollarization and Its Impacts
De-dollarization refers to the process of moving away from the US dollar in global transactions. This shift can involve several strategies, such as diversifying foreign currency reserves, settling trade in alternative currencies, and establishing regional payment systems. By reducing the use of the dollar in international trade and financial transactions, de-dollarization diminishes the global demand for dollar-denominated assets, which currently dominate international capital markets (Siddiqui, 2023b).
De-dollarization presents a significant opportunity for countries, especially in the Global South, to gain greater control over their economic futures.
De-dollarization presents a significant opportunity for countries, especially in the Global South, to gain greater control over their economic futures. By reducing dependency on the US dollar, these nations can shield themselves from external financial shocks and policies that may not align with their own developmental goals. Furthermore, the shift towards a multipolar global economic order, as advocated by BRICS, could create a more balanced financial system, better representing the interests of the Global South.
The objective of de-dollarization is to challenge the US dollar’s hegemony in global trade and finance, promoting economic sovereignty and independence for countries outside the dollar’s sphere of influence. By encouraging the use of local currencies and establishing alternative financial institutions, such as the New Development Bank (NDB), BRICS aims to redistribute global economic power and build a more inclusive, multipolar financial system. If successful, this policy could enhance the financial sovereignty of the Global South and create an international economy that serves their interests.
X. BRICS’ Achievements in Financial Cooperation
One of BRICS’ most significant achievements in the area of financial cooperation has been the establishment of the New Development Bank (NDB) and the Contingent Reserve Arrangement (CRA). These initiatives aim to foster greater financial stability and reduce dependency on the US dollar in international transactions. For instance, the share of the US dollar in Russia–China bilateral trade settlements decreased from nearly 90 percent in 2015 to 46 percent in 2020. Furthermore, Russia and China have launched their own cross-border payment mechanisms, providing alternatives to the US-dominated Society for Worldwide Interbank Financial Telecommunication (SWIFT) network (Cheng and Lu, 2024).
Currently, BRICS accounts for about half of the world’s GDP and over 20 percent of global trade. As a result, BRICS’ de-dollarization efforts are not only reshaping financial relations within the bloc but are also having significant implications for the global economy.
China, a major importer of energy from Russia, Iran, and Venezuela—all BRICS members—is focused on boosting trade within the BRICS framework. Such trade is anticipated to move away from reliance on the U.S. dollar. Furthermore, China’s strategy to ban imports of U.S. oil aims to expand trade within BRICS and foster alternative currency arrangements, potentially undermining the dollar’s dominant global position.
Between 2016 and 2022, the use of the Chinese Renminbi (RMB) in cross-border transactions increased dramatically, rising from 20 percent to nearly 50 percent. Notably, trade payments involving Russia have contributed to this surge in RMB usage. In 2022, the share of Russian exports invoiced in RMB rose to 16 percent. Although most of these transactions involved Chinese firms, some RMB payments were also made between Russian entities and businesses in India and Southeast Asia.
In 2023, Russia took additional steps to promote the use of the rubble among BRICS economies. For example, the Russian central bank began publishing an official exchange rate for the rubble against the dirham (UAE currency) and the Egyptian pound. However, despite these efforts, economic sanctions imposed by the US and EU on Russian financial institutions, including those related to the rubble, have complicated these initiatives. Moreover, the US sanctions on Russia and Iran have led these countries to settle transactions using the RMB.
Despite these shifts, the US dollar remains the dominant global reserve currency, accounting for about 58 percent of global reserves in 2024. While the use of the dollar in global trade is showing signs of decline, such as a reduction in its share of allocated reserves from 59% in 2021 to 57% in 2022, this decline is gradual. Data shows that the dollar’s share of reserves has been falling by an average of 0.6 percentage points per year since 1999, with larger drops occurring in 2002, 2005, 2010, and 2015. However, despite these fluctuations, the total amount of US dollars held in global reserves continues to increase, and the dollar still comprises a significant portion of foreign exchange reserves, as illustrated in Figure 1b.
BRICS’ efforts to reduce dependency on the US dollar, along with the growing usage of alternative currencies such as the RMB, reflect a broader trend toward de-dollarization. While the US dollar remains a dominant force in global trade and finance, these developments indicate a gradual shift toward a more multipolar global financial system. However, the challenges posed by US sanctions and the long-standing dominance of the dollar suggest that this shift will be slow and complex.
Figure 1a: US dollar share of global foreign exchange reserves and the US dollar index, 1999-2022 (in %; index January 2006=100)
XI. The Impact of De-Dollarization and the Rise of Alternative Currencies
In recent decades, the strong performance of emerging economies and the rising share of these countries in global output have led to an increase in the holdings of non-dollar reserves. The Russian-Ukrainian War of 2022, which resulted in the freezing of Russia’s foreign exchange reserves by the US and EU, has raised concerns about the security of assets denominated in US dollars within the global financial system. This development has prompted other countries to seek alternatives, such as gold and other commodities, for their reserves (Siddiqui, 2022b).
Furthermore, the growing use of sanctions by the US and EU as political tools has pushed countries to explore alternative international payment and trade systems. US sanctions can freeze assets, reduce trade, and limit financial transactions, effectively isolating a country from the global economy. The US can leverage its control over the global financial system and the dominance of the dollar to enforce these measures unilaterally. As a result, countries are increasingly wary of their reliance on the US dollar for international trade and reserves.
China, which has not participated in sanctions against Russia, has become an alternative to the US dollar for countries seeking to diversify their financial holdings. Russia’s efforts to pivot towards the Chinese RMB are a key example of this shift. As shown in Figure 2, new estimates for 2022 suggest that the Bank of Russia holds nearly a third of the global RMB reserves reported by central banks. However, due to Russia’s financial and geopolitical challenges, the composition of its reserves has remained largely unchanged since 2021, when Russia’s reserve composition ceased to be reported.
The US can leverage its control over the global financial system and the dominance of the dollar to enforce these measures unilaterally.
In 2022, RMB reserves accounted for only 2.7% of the world’s allocated reserves. If we exclude Russia’s share, which is an outlier due to its exceptional financial and geopolitical circumstances, the RMB’s share falls to about 1.6%. This relatively small share highlights that the RMB is still far from being a serious alternative to the US dollar on a global scale. Despite China’s economic rise, the country’s internationally traded assets and liabilities make up only about 4% of global totals, which limits the RMB’s ability to challenge the dollar.
Other countries, such as Brazil, have also reduced their dollar reserves in favor of the RMB. Brazil’s dollar reserves decreased from 86.03% to 80.34% in 2021, while the share of RMB reserves rose from 1.21% to 4.99%. Similarly, countries like Nigeria and Iran made similar shifts in previous years. These changes indicate that there is growing interest in diversifying away from the US dollar, but the shift is still gradual and limited.
Russia, one of the world’s largest producers of oil, has been at the forefront of de-dollarization efforts. In 2013, 95% of Russia’s oil and gas exports to BRICS countries were traded in US dollars. However, since 2014, the Russian central bank has steadily reduced its dollar reserves. As of now, the US dollar makes up only 16.4% of Russia’s reserves. The euro represents 32.3%, while gold constitutes 21.7% (driven by the purchase of $40 billion in gold over the past five years). The RMB now accounts for 13.1% of Russia’s reserves.
The gradual acceleration of de-dollarization can be expected as the US faces the challenge of servicing its enormous national debt, currently at $34 trillion. A reduction in foreign holdings of US Treasury securities and US dollar deposits could trigger significant economic consequences for the US. While this scenario is unlikely to unfold in 2024, world events will continue to be closely monitored by the US government and the Federal Reserve. The US may adjust its approach to trade sanctions, which could further impact the global demand for US debt.
Figure 2: Countries holding Chinese RMB in reserves (as a share of total RMB holdings, 2022)
XII. The US Dollar’s Continued Dominance in Global Financial Markets
The US dollar remains the dominant currency in the world’s largest and most liquid financial markets, including the biggest stock and bond markets (see Figure 3). It is the primary currency used within the world’s dominant payment network, SWIFT, which consists of 11,000 member institutions across 200 nations and territories, processing over 42 million transactions per day, totalling nearly $5 trillion in daily average transaction value (IMF, 2024).
Despite the rise in the economic share, productivity, and exports of the Global South, the US dollar’s dominance persists. In 2020, the dollar constituted 58.9% of foreign exchange reserves globally, 33.8% of marketable US Treasury debt was held by foreign entities, and 60.8% of international foreign currency banking claims and liabilities were denominated in US dollars. Financial transactions and assets in the global markets are primarily traded in dollars, highlighting the dollar’s continued significance.
The dollar’s position as the world’s leading currency is further solidified by its status as a “safe haven” asset. This is due to the US’s unique macroeconomic advantage, as it enjoys exorbitant privilege: the ability to issue debt in its own currency, reducing the risk of default. This privilege allows the US to borrow in dollars and repay in dollars, with the Federal Reserve capable of issuing currency as needed to service national debt.
Trade and transaction data from the past decade underline the US dollar’s central role in international finance. The US accounts for about 25% of global GDP, but its share of global trade and services is smaller, at around 10%. Despite this, the US dollar plays a dominant role in global trade, capital markets, and international debt. For example, in July 2024, SWIFT payments in US dollars reached a new high of 45.6% of all international financial transactions, marking a 13-percentage-point increase since 2012. Meanwhile, the Chinese RMB reached a record high of 3% of global payments (UNCTAD, 2023)
China has made significant strides in internationalizing the RMB through the development of institutions such as the Cross-Border Interbank Payment System (CIPS), UnionPay, and the Digital Yuan. These efforts promote the use of the RMB in bilateral trade, including increasing oil purchases and sales in local currencies through SWAP agreements (Siddiqui, 2021). The shift toward local currency trade is further supported by China’s strategic initiatives like the Shanghai Cooperation Organisation (SCO), the Asian Infrastructure Investment Bank (AIIB), the New Development Bank (NDB), and the Belt and Road Initiative (BRI) (Siddiqui, 2019b).
In the international credit card market, UnionPay’s use has surged, accounting for 45% of all credit cards in circulation in 2020. This move offers an alternative for countries under US and EU sanctions, such as Russia, Iran, Cuba, and Venezuela, enabling them to bypass US-dominated financial systems.
At the 2022 summit in Uzbekistan, members of the Shanghai Cooperation Organisation (SCO) agreed to expand trade in local currencies. This strategic move challenges the dominance of the US dollar and is emblematic of the growing shift toward alternative currencies in global trade. The SCO, comprising major emerging economies such as China and Russia, represents a significant portion of the world’s population and economic output. The expansion of local currency trade within the SCO reflects a broader trend aimed at reducing reliance on the US dollar and undermining its global dominance (Siddiqui, 2023d).
Mainstream economists view that the international monetary and financial system is supposed to facilitate all trading countries with payments arrangement within which trade can be carried on, but in real world is quite different (Siddiqui, 2019c).
The international financial system promotes US hegemonic interests. Under current international payment system, for trade between two countries, they first have to acquire US dollars in order to exchange commodities among themselves. It means lack of US dollar for any country would keep the country away from international transactions. This is what happens when developing countries trade among themselves. The de-dollarisation would reduce their reliance on the US dollar as a medium of circulation, and holding reserves for international transactions.
XIII. Conclusion
The US dollar hegemony allows the US to extract trillions of dollars annually from the Global South, diverting resources that could otherwise fuel domestic investments and economic growth. This ongoing extraction undermines the economic expansion of these nations (Siddiqui, 2024c). De-dollarization, in contrast, offers the Global South an opportunity to regain control over their economic future by reducing dependency on the US dollar. This shift could help shield these countries from external financial shocks, as well as promote a more equitable global financial system that better protects the interests of the Global South.
By replacing the US-controlled international payment systems such as SWIFT, the Global South can gain economic sovereignty and independence. Breaking the US monopoly on international payments would be a significant step toward strengthening the economic independence of these nations.
Breaking the US monopoly on international payments would be a significant step toward strengthening the economic independence of these nations.
The US dollar has long been the dominant reserve currency, functioning as the primary medium of exchange and unit of account in international transactions. This dominance has enabled the US to exert significant control over the global financial system and influence the economic policies of other nations. As the global reserve currency, the US can finance its deficits by simply printing more dollars, enabling it to borrow and spend without facing the usual consequences, such as inflation or currency depreciation. This immense advantage allows the US to acquire resources from other countries, invest overseas, and finance its current account deficits with relative ease.
Furthermore, the US uses the dollar to maintain its hegemony. It can make dollars available to countries it favours while punishing those whose policies do not align with US interests, as seen in the recent freezing of assets and sanctions against Iran, Russia, and Venezuela.
A new financial architecture that replaces the US dollar’s hegemony is essential in the evolving global economy. However, this transition must avoid replacing one currency’s dominance with another. Instead, the new system should ensure that the burden of adjustment in achieving payment balance falls on surplus countries, not deficit countries, as was the case under the Bretton Woods system and continues today.
The US dollar provides the US with a unique advantage: by printing more dollars, the US can acquire global resources, invest abroad, and manage its trade deficits. This ability to manipulate the currency makes it a powerful tool for exerting pressure on other countries. For example, the US has used its control over the dollar to coerce countries into accepting its policies or to punish those that oppose it.
The debate over de-dollarization reflects broader tensions in the changing global economy. While the US dollar’s dominance is deeply embedded in the international system, the rise of emerging economies and initiatives like those of BRICS suggest a potential reconfiguration of the global monetary system. The success of these efforts remains uncertain, but they represent a challenge to decades of US economic dominance and the pursuit of a more balanced global economic order.
In short, achieving the removal of the dollar’s hegemony is an important goal, but it is not sufficient on its own. Equally important is the elimination of financial hegemony. To accomplish this, adjustments must be made so that surplus countries—not deficit countries—bear the burden of correcting current account imbalances. Surplus countries must also increase domestic consumption through wage increases and reduce their exports. These measures would encourage growth in deficit countries, boosting their exports and creating more output and employment. By addressing imbalances and fostering a more equitable distribution of economic power, both surplus and deficit countries could benefit, leading to a stronger global economy with increased aggregate demand, output, and employment.
Dr. Kalim Siddiqui is an economist specializing in International Political Economy, Development Economics, Trade and Economic Policy. Since 1989, he has been teaching economics at various universities in Norway and the UK. Dr. Siddiqui’s research interests encompass a wide range of topics, including political economy, international trade, and economic history, South Asia, and emerging economies. He has presented papers at international conferences across numerous countries, reflecting his global engagement in the field. His scholarly pursuits span six broad domains: Political Economy, Development Economics, Economic History, Economic Policy, Globalization, and International Trade. Dr. Siddiqui has made significant contributions to research in areas such as trade policy, globalization, and political economy. His work has been published in chapters of edited books and articles published in peer-reviewed journals. For inquiries, Dr. Siddiqui can be reached at: [email protected]
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Panama has rejected claims that it agreed to allow US government vessels to transit the Panama Canal for free, contradicting a statement from the White House.
The US State Department announced on X that American government ships could now pass through the canal “without charge fees, saving the US government millions of dollars a year.” However, the Panama Canal Authority (ACP) swiftly refuted the claim, asserting that it had not adjusted its toll structure and retained full authority over transit fees.
The controversy comes amid renewed tensions over US influence in the region. Secretary of State Marco Rubio, currently visiting Latin America, urged Panama to curb what he described as China’s “influence and control” over the canal, warning that the US would take necessary steps to protect its interests.
Panama’s President José Raúl Mulino rejected allegations of foreign interference, affirming that the canal remains under full Panamanian control. While Panama has signaled willingness to collaborate with the US Navy on transit priorities, it has not agreed to waive fees.
Former US President Donald Trump has repeatedly criticized the 1977 treaty that transferred control of the canal from the US to Panama, calling it a “big mistake.” His recent remarks on “taking back” the waterway have reignited diplomatic friction, but Mulino remains firm that Panama’s sovereignty over the key trade route is non-negotiable.
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The newly opened international airport in Nuuk has seen an influx of visitors lately, as journalists and political figures alike arrive to witness firsthand the growing geopolitical interest in Greenland. Among them is Tom Dans, a private equity investor and Trump supporter, who is vocal about Greenland’s strategic significance to the United States.
Dans, an American with Arctic interests, argues that “Greenland is the front door for North America,” reinforcing the island’s importance in U.S. national security and resource expansion. However, the sentiment on the ground is more divided.
Greenland, legally a part of the Kingdom of Denmark, has long been supported by Danish financial grants and infrastructure. Yet, tensions over its colonial history and aspirations for self-determination remain. Influencer Qupanuk Olsen, who has built a large following showcasing Greenlandic and Inuit culture, openly criticizes Danish influence, pointing to historical injustices such as forced contraceptive implants on Inuit women in the mid-20th century.
“Why should we just be taken by another colonizer?” Olsen asks, skeptical of U.S. intentions despite its growing economic and military presence on the island. The U.S. already operates an Arctic base in Greenland and has vested interests in its untapped mineral resources.
Meanwhile, local politician Aqqalu C. Jerimiassen, leader of the Atassut party, warns against a hasty break from Denmark, citing Greenland’s reliance on Danish welfare support, including healthcare and education. “We might be ready someday, but not today, not tomorrow,” he says.
With elections approaching, Greenland’s future remains uncertain. What is clear is that the island stands at a pivotal moment, caught between its colonial past, its present under Danish rule, and a future that could see closer ties to the United States—or full independence.
Microplastics, tiny plastic particles from primary and secondary sources, pose a significant threat to aquatic ecosystems and human health. The particles spread unnoticed in the environment, are absorbed by organisms and cause physical and toxic damage. Advances in sensor and IoT technologies are enabling more precise real-time monitoring that supports the analysis of pollution patterns and the development of effective countermeasures. These innovations are critical to controlling the spread of microplastics and minimizing long-term risks.
Introduction
Microplastics are a pervasive environmental problem that threatens both ecosystems and human health. These tiny plastic particles enter the environment through various sources such as cosmetic products, textiles or the decomposition of larger plastic waste. They spread unnoticed in aquatic habitats, are ingested by organisms and have harmful physical and chemical effects. At the same time, their small size makes them difficult to detect and monitor, which makes combating microplastic pollution a major challenge [1].
However, with technological innovations such as real-time sensors and IoT-based monitoring systems, more effective control is within reach. These developments open up new opportunities to analyze the spread of microplastics, assess their dangers and initiate targeted countermeasures. The following analysis highlights the sources, impacts and innovative approaches to monitoring microplastics and shows how technological advances can make a significant contribution to solving this global problem.
Background Information on Microplastics
Due to their size, they spread unnoticed in the environment and are difficult to remove, which poses specific risks to the environment and health.
Microplastics are plastic particles smaller than 5 mm that occur as fibers, fragments or pellets. They are created by the decomposition of larger plastic waste or are produced directly in small sizes [1]. Due to their size, they spread unnoticed in the environment and are difficult to remove, which poses specific risks to the environment and health. A distinction is made between primary microplastics, which are intentionally produced for industrial and cosmetic purposes, and secondary microplastics, which are produced by the decomposition of larger plastic parts [2].
Primary microplastics are found in cosmetic products and cleaning agents, while secondary microplastics are created by the fragmentation of plastic bags, bottles or fishing nets. Both types pose challenges for environmental monitoring, as they easily enter bodies of water and spread deep into the ecosystem.
Sources of Microplastics
Microplastics come from many sources, including cosmetic products containing microbeads, which are used as abrasives in scrubs and toothpastes and are released into the environment via wastewater [2]. Synthetic textiles such as polyester release microfibers every time they are washed, polluting rivers and oceans. Plastic waste such as bottles and bags break down into smaller fragments due to sunlight and waves, which constantly increases the amount of microplastics. Other sources are tire abrasion caused by vehicle use and industrial processes in which plastics release microplastics [3].
Fig.1 shows the image of microplastics after different time interval.
(Images of polystyrene particles after 0, 800 and 2,000 hours of exposure to sunlight and mechanical stress caused by stirring) [4]The image shows microscopic images of polystyrene particles exposed to different conditions, namely solar radiation and mechanical stress caused by stirring. The three images document the changes in the particles after 0 hours, 800 hours and 2,000 hours.
0 hours: The particles have a relatively smooth and regular shape.
800 hours: After 800 hours of sun exposure and mechanical stress, a clear fragmentation and erosion of the particles can be seen. Some particles already show cracks and irregularities.
2,000 hours: After 2,000 hours, the particles have disintegrated even further and the surface structure is greatly altered. The particles have become significantly smaller and more irregular.
This shows the influence of environmental conditions on the degradation of plastics such as polystyrene over longer periods of time. The decomposed particles remain in the environment in the form of microplastics and can, for example, remain in bodies of water over the long term, where they are difficult to break down and cause ecological damage.
Effects of Microplastics on Water Bodies and Ecosystems
The ecological impact of microplastics on aquatic habitats is severe. Microplastics are ingested by fish, mussels and other organisms as they resemble natural food sources and cause physical damage such as digestive organ injury and blockages. The particles can also accumulate in the animals’ tissues, leading to reduced growth, lower food intake and increased mortality.
Microplastics also adsorb pollutants that can have toxic effects via the food chain. This chemical pollution affects the health and behaviour of affected animals and could significantly reduce biodiversity in water bodies.
Impact on Human Health and the Food Chain
Research is increasingly focusing on the potential impact of microplastics on human health. Microplastics enter the human body through the food chain, mainly through the consumption of seafood and fish, as well as through drinking water, salt and other foods such as honey. This exposure carries the risk of inflammatory reactions that could affect the immune system, as well as the uptake of toxic chemicals that can cause long-term health damage.
There is initial evidence that microplastic particles may cause cell damage, but the exact mechanisms and consequences are not yet fully understood. The ubiquitous presence of microplastics in the environment and food highlights the urgency of taking measures to reduce exposure. At the same time, there is a significant need for research to better understand how microplastics affect the human body and what long-term risks could result.
Technological Approaches to Monitoring Microplastics
The use of sensors and IoT devices to monitor microplastics in water bodies has gained considerable importance in recent years. These technologies enable the continuous and precise collection of data that is essential for analyzing the distribution of microplastics. For example, sensors have been developed that are able to detect microplastic particles in real time and measure their concentration. This offers the advantage that researchers and environmentalists can react quickly to pollution events [7].
The integration of IoT devices into microplastic monitoring has also made significant progress. These devices can wirelessly transmit data to central servers where it can be analyzed in real time. This reduces the need for manual sampling and minimizes the risk of contamination during the transportation of samples. In addition, the collected data can be used immediately for further analysis and decision-making processes.
Another advantage of using IoT devices is the ability to integrate them into a network of monitoring stations. This enables comprehensive monitoring of large geographical areas and the identification of pollution sources. For example, sensors can be installed along rivers to monitor microplastic inputs and track their origin. This not only facilitates monitoring, but also the enforcement of environmental regulations [8].
The use of IoT technologies thus represents a promising solution for tackling microplastic pollution, as it not only enables data to be collected and analyzed quickly, but can also effectively monitor the spread and origin of microplastic particles, see Fig. 2.
Figure 2: Illustration of the possible IoT technology
Data Analysis and Processing
The application of big data analytics in microplastics monitoring offers numerous advantages, especially when dealing with the enormous amounts of data generated by modern monitoring technologies such as sensors and IoT devices. These analyses make it possible to efficiently process large amounts of data from various sources, such as rivers, wastewater plants and industrial discharges, identifying complex patterns and trends that would be difficult to detect using traditional methods. Big data can be used in a variety of ways to gain a deeper understanding of microplastic distribution, which is particularly crucial for the development of effective countermeasures.
An outstanding advantage of big data analytics is the ability to process and analyze data in real time. This means that environmental protection agencies and researchers can respond immediately to pollution events by using automatically generated alert systems that trigger notifications as soon as certain thresholds of microplastic concentration are exceeded. This real-time data allows decisions to be made more quickly and preventative measures to be implemented more effectively. Such algorithms are particularly important in areas of high environmental relevance, as they enable quick and targeted actions, such as diverting water flows or initiating clean-up measures.
Another field of application of big data analysis is the identification and quantification of the main sources of microplastic pollution. By comprehensively analyzing data collected from different geographical and industrial sources, researchers can locate and quantify the hotspots of microplastic emissions. These findings are invaluable not only for developing general strategies to combat microplastics, but also for taking targeted action at the places where pollution originates, such as industrial wastewater or agricultural drainage systems [9].
In addition to identifying sources of pollution, big data also offers the opportunity to develop predictive models that show future microplastic distribution trends. Using machine learning algorithms and other advanced analytical techniques, researchers can create forecasts based on historical data and current measurements that make it possible to identify potential problem areas in advance. These predictive models not only help to monitor the current situation, but also provide a valuable basis for the long-term planning and implementation of environmental protection measures. By combining big data and predictive models, decision-makers can respond to future challenges in a more targeted and resource-efficient manner.
Overall, the use of big data analytics is revolutionizing the way environmental agencies and researchers collect, process and apply data for microplastics monitoring. The ability to analyze data in real time and make predictions supports not only monitoring, but also preventative planning and implementation of pollution mitigation strategies [10].
Artificial Intelligence for Pattern Recognition
The use of artificial intelligence (AI) to recognize patterns in collected environmental data opens up new possibilities and significant advantages for monitoring microplastics in water bodies. AI systems are able to process large amounts of data quickly and efficiently, which is particularly important in complex and dynamic environments such as rivers, lakes and coastal areas. One of the main strengths of AI is that it is able to recognize data patterns and anomalies that would be difficult to identify using conventional methods.
Using specially trained models, AI systems can distinguish microplastics from other natural particles in water, such as organic debris.
By using AI algorithms that can operate in real time, it is possible to analyze large data sets, identifying patterns that indicate pollution sources or movements. Especially in environments where human observation and manual analysis reach their limits, AI offers a more precise and faster solution. Another important feature of AI is its ability to learn and continuously improve from the analyzed data. This means that AI models developed to monitor microplastics are constantly trained on new data and can increase their accuracy over time. This enables them to make increasingly precise predictions and continuously improve the efficiency of monitoring.
An outstanding example of the application of AI is the ability to distinguish between different types of particles. Using specially trained models, AI systems can distinguish microplastics from other natural particles in water, such as organic debris. This ability reduces the error rate in detection and ensures that the data collected for monitoring microplastics is much more accurate. This improves the quality of environmental monitoring as it is easier to quantify the actual amount of microplastics in a particular body of water.
Another major advantage of AI is the development of predictive models that make it possible to forecast future pollution trends and distribution patterns of microplastics. By analyzing historical data in combination with advanced analytical techniques, these models can help to proactively identify pollution events before they escalate. This is particularly invaluable for long-term ecosystem monitoring and protection, as decision-makers can take early action to minimize the impact of microplastic pollution [11].
However, the advantages of AI go beyond mere pattern recognition. AI-supported systems also offer a significant increase in efficiency in data processing. By automating analytical methods, researchers and environmentalists are able to analyze large amounts of data without human intervention. This not only saves time and resources, but also increases the accuracy and reliability of the results. This is particularly relevant in large-scale monitoring projects where it is important to process continuous data flows to obtain a comprehensive picture of environmental pollution.
Overall, the use of artificial intelligence for pattern recognition and predictive analysis is revolutionizing the way data is processed and used to monitor microplastics. It not only enables more precise and faster analysis of the pollution situation, but also provides the basis for strategic decisions and long-term planning to protect water bodies. By combining real-time analysis, predictive models and automated pattern recognition, AI offers a holistic solution that significantly improves the efficiency and effectiveness of monitoring measures.
Microplastic Sensor in the Industry
The RAMP-10 sensor offers an innovative solution for real-time monitoring of microplastics in water. Using high-speed Raman spectroscopy, it analyzes flowing particles directly on site and precisely determines their material and size distribution. Thanks to machine learning, the data can be processed without delay, enabling continuous online monitoring.
In contrast to conventional methods, the RAMP-10 does not require any physical modification of the sample or chemical additives. The particles remain in their natural state, allowing for unbiased analysis. This efficiency, combined with the ability to adapt to changes in concentration within microseconds, makes the sensor a powerful alternative to traditional laboratory methods.
The RAMP-10 is versatile and can be used in research facilities, laboratories or industrial quality assurance. Its flexible adaptation allows the specific classification and identification of different polymers, making it a valuable tool in microplastics monitoring, see Fig. 3 .
Figure 3: Photo of the switched-on device with user interface [11]
Potentials and Limits of IT-supported Monitoring
Technological innovations offer significant opportunities for monitoring microplastics in water bodies. Key benefits include improved accuracy, real-time monitoring and automation of data collection processes. These advances promise not only greater efficiency in the detection of microplastic particles, but also a more precise analysis of the distribution and movement of these particles in different water bodies.
The continuous development of sensors has led to significant improvements in the identification of microplastics. Modern sensor systems can detect particles in different layers of water and even determine differences in material composition. Spectral analyses and optical methods, such as Fourier transform infrared spectroscopy (FTIR), make it possible to precisely identify microplastic particles and analyze their chemical composition. In addition, laser systems are used that can detect the position and size of microplastics in real time [12].
Real-time monitoring is another significant advance in the IT-based monitoring of microplastics. Previously, monitoring processes relied heavily on manual sampling and time-consuming laboratory analysis, which often only provided sporadic data. Today, advanced sensors connected to IoT (Internet of Things) technologies enable continuous monitoring of microplastics in real time. These systems can be installed at strategic points in rivers or oceans and provide continuous data that can be analyzed immediately.
One example of this is the use of satellites and drones to detect microplastics in large bodies of water. Satellite images can detect microplastics on the water surface using special filter techniques. These images are used in combination with weather data and ocean current models to predict and analyze the movement of microplastics. This offers the advantage that pollution hotspots can be identified more quickly and containment measures can be initiated [13].
Automation is another area that greatly increases the potential of IT-based monitoring systems. Traditionally, the analysis of microplastic samples has been a manual and lengthy process, requiring researchers to take samples from water bodies, analyze them in the lab and then evaluate the results. However, the automation of data collection and analysis tools can greatly speed up this process.
Automation is another area that greatly increases the potential of IT-based monitoring systems.
Modern monitoring systems are able to process large amounts of data in a short space of time and automatically generate reports. For example, these systems can continuously monitor water quality and raise the alarm when certain thresholds are reached. With the introduction of cloud technologies, this data can be made accessible in real time across large distances. This not only facilitates monitoring, but also collaboration between international research teams and environmental protection organizations [14].
IT-supported monitoring systems also enable better integration of interdisciplinary approaches. For example, geographic information systems (GIS) can be combined with sensor data to create maps of pollution zones. These maps help to identify the sources of microplastics and take measures to combat pollution at its source. This is particularly beneficial in large river systems and oceans, where the sources of microplastics are often difficult to pinpoint. By combining technologies such as satellite imagery, weather models and real-time sensor data, more accurate predictions can be made about the spread of microplastics [15].
The global availability of IT-based monitoring systems allows not only national governments but also international organizations to monitor microplastic pollution on a global scale. This enables better coordination in the fight against plastic pollution, especially in developing countries where access to traditional monitoring methods is often limited. The use of drones and low-cost sensors in remote areas can help collect data that is crucial for environmental protection. The technologies also enable long-term sustainability strategies as they significantly reduce the resources required for sampling and laboratory testing while providing more comprehensive data.
Challenges and Limitations of Current Technologies
Monitoring microplastics in water poses a number of technical challenges. One key difficulty is the sensitivity of the sensors. Many of the sensors used today are not able to reliably detect the smallest microplastic particles, which can lead to incomplete data sets. In addition, the accuracy of the measurements is highly dependent on environmental conditions such as the turbidity of the water and the presence of organic particles. Such factors can distort the measurement results, as the sensors have difficulty distinguishing microplastics from other particles [6].
Another technical problem concerns the standardization of measurement methods. To date, there is no standardized procedure for monitoring microplastics, which is why studies often use different technologies and protocols. This makes it considerably more difficult to compare the results from different regions and studies. There is an urgent need for internationally recognized standards and protocols to increase the comparability and reliability of the collected data.
Data processing is also a key issue. As continuous monitoring generates immense amounts of data, powerful data processing systems and efficient algorithms are necessary to analyze this data in a meaningful way. Techniques such as big data analytics and artificial intelligence can help improve pattern recognition and data evaluation, but require significant technical resources and specialized expertise.
Long-term surveillance systems face additional challenges. Many current monitoring devices are not designed for continuous operation in harsh environments. Regular maintenance and calibration are necessary to keep the sensors functional, which increases operating costs and can affect monitoring efficiency [5].
Outlook and Future Developments
The future of microplastic monitoring in bodies of water will be shaped by technological advances in sensor technology and data analysis. New sensors with improved materials and optical technologies enable more precise detection of even the smallest particles that were previously difficult to detect. These innovations could significantly increase data quality and provide detailed insights into the composition of microplastic pollution.
An important trend is the miniaturization of sensors and their integration into IoT devices. These mini-sensors could create area-wide monitoring networks that enable almost seamless data collection over large geographical areas. Continuous real-time monitoring not only reduces costs, but also generates valuable data for analyzing pollution patterns [7].
The automation of sampling and data analysis also plays a central role. Automated systems that operate without human intervention ensure continuous monitoring of large volumes of water, increase data accuracy and minimize errors. These systems can operate around the clock while reducing operating costs.
In the future, hybrid technologies that combine optical sensors with chemical analysis methods could provide more comprehensive data. Such systems not only record the physical properties of microplastic particles, but also their chemical composition and origin. This enables the development of precise prediction models that can map current pollution and forecast future trends [8].
Overall, these technological advances promise more precise, cost-effective and comprehensive microplastic monitoring, which will make a significant contribution to better understanding pollution and developing effective countermeasures.
Conclusion: Future Prospects and the Role of IT-based Microplastic Monitoring
Microplastics are a serious environmental threat that not only endangers ecosystems but also human health. It originates from primary sources such as cosmetic products and synthetic textiles, as well as from the decomposition of larger plastic waste. The small particles spread unnoticed in aquatic habitats, where they are ingested by organisms and can cause physical and toxic damage. These effects not only affect the species concerned, but also extend through the entire food chain to humans, which underlines the urgency of countermeasures.
Technological advances in microplastic monitoring offer hope for more effective solutions. Sensors such as the RAMP-10 enable precise real-time measurements that allow an immediate response to pollution. The combination of sensor technology with IoT devices has the potential to create a comprehensive monitoring network that provides high quality data without manual intervention. Automated sampling and analysis methods minimize errors and costs, while hybrid technologies can provide more comprehensive information on the physical and chemical nature of microplastics.
Future developments in this area will be characterized by the continuous improvement of sensors, integration into IoT networks and the automation of processes. These advances are crucial not only to better understand the distribution and impact of microplastics, but also to develop effective measures to reduce pollution. Only through a combination of technological innovation, scientific research and decisive action can the environmental and health risks of microplastics be minimized in the long term.
Ahmad Zaiour is currently pursuing his studies in Business Informatics and Social Media & Information Systems at Leuphana University in Lüneburg, where he began his academic journey in 2023. With a strong interest in innovative technologies and their intersection with human interaction, he is expanding his expertise in systems that drive digital transformation and social connectivity. Ahmad is dedicated to understanding and leveraging the potential of information systems to create impactful solutions in a rapidly evolving technological landscape.
Dipl.-Phys. Axel André Schmidt is a graduate of Applied Physics from University of Hamburg, 1994/95 he developed a sophisticated online-oil-spill-in-water-monitor and joined DECKMA Hamburg GmbH, a well successful company on manufacturing oil-in-water measuring equipment for marine and industrial applications, respectively. Since 1996 he is head of research and development and generates not only the whole fleet of oil-in-water measuring instruments but also turbidity-meter and the first online micro plastics monitor based on Raman-scattering, worldwide. He is member of NEL´s Environmental Club (UK) since 2001, supports the club by several presentation, regularly. Moreover, he gives guest lectures on sustainable mobility at Leuphana University Lüneburg, since 2022.
Prof. Dr.-Ing. habil.Michael Palocz-Andresen is a full professor at the BUAP in Puebla. He has been working as a full professor for Sustainable Mobility since 2018, supported by the DAAD at the TEC Instituto Tecnológico y de Estudios Superiores in Mexico. He became a full professor at the University West Hungary till 2017. Currently, he is a guest professor at the TU Budapest, the Leuphana University Lüneburg, and at the Shanghai Jiao Tong University. He is a Humboldt scientist and instructor of the SAE International in the USA.
References
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5. Lusher, A. L., Welden, N. A., Sobral, P., & Cole, M. (2017). Sampling, isolating and identifying microplastics ingested by fish and invertebrates. Analytical Methods: Advancing Methods and Applications, 9(9), 1346–1360. https://doi.org/10.1039/c6ay02415g
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10. Montoto-Martínez, T., Hernández-Brito, J. J., & Gelado-Caballero, M. D. (2020). Pump-underway ship intake: An unexploited opportunity for Marine Strategy Framework Directive (MSFD) microplastic monitoring needs on coastal and oceanic waters. PloS One, 15(5), e0232744. https://doi.org/10.1371/journal.pone.0232744
11. Deckma Hamburg GmbH (Dipl.-Phys. Axel André Schmidt & M.Sc.Timo Nieder)
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By trying to weaponize the U.S. tariffs on America’s big trade partners against China, President Trump is basing bad economics on worse geopolitics. It could prove a costly prelude to a global downturn.
On February 1, President Trump imposed 25% tariffs and 10% duties on energy products on Canada and Mexico, and 10% tariffs on China. The three countries are America’s greatest trade partners and the United States has a trade deficit with each.
The Trump tariffs could cause Canada’s GDP could fall as much as 3%, while Mexico’s could suffer a 2% drop, by some estimates. A trade war between the U.S. and its two largest trading partners would also hit U.S. income, hurt employment and increase inflation.
Just two days after his tariff war proclamations, Trump took a back step. Following talks, levies against Canada and Mexico will be delayed for 30 days. But as Trump’s tariffs went into effect against China, Beijing announced a broad package of economic measures targeting the United States on February 10 – and more will follow if needed.
So, will Canadian Prime Minister Justin Trudeau and Mexico’s President Claudia Sheinbaum be talking about economics with the White House? Perhaps in part. But the Trump administration would also like to build a North American trade bloc against China.
Spheres-of-influence games in the Americas
The Trump tariffs are legitimized by a victimization narrative in which America is depicted as a target of wrongful economic and geopolitical measures. Consequently, the White House portrays itself in a rightful crusade and the rest of the world as prime destabilizers.
The White House hopes to use geopolitics to force the two countries into a US-controlled North American bloc, to undermine China’s economic role in the Americas.
This time the tariff wars started with Trump’s heated exchanges with Colombian President Gustavo Petro. After Colombia refused to accept two US military aircraft with Colombian citizens deported from the US, Washington threatened tariffs and sanctions on Bogota. Since the US is Colombia’s largest trading partner, the potentially lethal battle ended with Colombia agreeing to accept deportees and Trump claiming victory.
The Colombian row was timed to take place before the major tariff wars with Canada, Mexico and China, as a demonstration effect to other trade partners, with the tacit message: “This is what will happen to you, too, unless you succumb.”
Trump is playing tariff chess. The White House hopes to use geopolitics to force the two countries into a US-controlled North American bloc, to undermine China’s economic role in the Americas. Hence, too, Secretary of State Marco Rubio’s visit to Panama and President José Raúl Mulino’s decision to end a key development deal with China, to avoid Trump’s threat to retake Panama Canal and “many casualties” as Rubio warned.
As the victors of World War II divided Europe in Yalta in 1945, Trump is paving a new spheres-of-influence trajectory in which U.S. dominance would extend across Central America, from Mexico to Panama – into Colombia.
The fentanyl story
According to Trump, the Mexico and Canada tariffs were imposed because these countries had not halted migration and drug trafficking over U.S. borders. Both countries rushed to assuage Trump’s border concerns, yet only to face diffuse, lingering demands. These tensions are not due to economic causes. They are dictated by geopolitics.
Trump also continues to blame China over America’s fentanyl crisis. In the US, synthetic opioids (mainly fentanyl-related substances) may have resulted in over 78,000 US overdose deaths between September 2022 and August 2023. Yet, China’s imposition of class-wide controls over all fentanyl-related substances changed trafficking patterns after 2019. According to congressional research, direct flows of such substances from China to the US have largely ceased since then.
Again, according to congressional research, around 2019 Mexico, as a primary source of, and transit country for, illicit drugs destined for the United States, replaced the China as the primary source of U.S.-bound illicit fentanyl, a synthetic opioid, and fentanyl analogues.
Yet, US government has unilaterally addressed China’s role in fentanyl and precursor trafficking. U.S. administrations seem to favor foreign scapegoats over the cold realization that America has a decades-long drug crisis in which the primary problem is the lucrative demand.
So, what’s the rationale for the tariff wars with these three countries? Trump has pledged the duties will prevail until the three countries halt fentanyl smuggling and illegal migration. It was a stunning admission that the Trump tariff wars are not about economics but about the weaponization of unilateral economic coercive power.
Trump tariff failures in the past
Since 1950, tariffs have never accounted for much more than 2% of US federal revenue; last year, the figure was 1.6%. Though these decades, Congress has delegated extensive tariff-setting authority to the President, who has been seen as more insulated from domestic protectionist pressures. Hence, the progressive decline in tariff rates. But today those days are gone.
In Trump’s view, the low-tariff, rules-based global trading system works against America. So, in his first term, duties paid on U.S. imports doubled to $74 billion in 2020.
Since tariffs no longer have effective economic rationales, they are today used selectively to protect certain domestic industries, advance foreign policy goals, or as negotiating leverage in trade negotiations.
Attributing its tariff policies to the trade practices of US trading partners and the US trade deficit, the first Trump administration imposed tariff increases under three U.S. laws:
Section 232 of the Trade Expansion Act of 1962 on U.S. imports of steel and aluminum, presumably due to concerns over “national security”;
Section 201 of the Trade Act of 1974 on U.S. imports of washing machines and solar products, due to concerns over domestic U.S. industry;
Section 301 of the Trade Act of 1974 on U.S. imports from China and from the European Union (EU), presumably due to intellectual property and subsidies concerns, respectively.
Ironically, Trump used the first law to shrink US trade, whereas the Kennedy administration originally relied on it to expand trade. The two other laws were used in the US against Japanese exports in the mid-‘70s, without success.
The objective of the Trump trade wars was to “bring jobs back to America.” But that has not happened and can’t happen with misguided economics.
Far bigger economic stakes
Half a decade ago, Trump tariffs on U.S. imports from China accounted for $396 billion or more than 90% of the trade affected. However, the first round of the Trump tariffs with Canada, Mexico and China would cover far more trade in dollar value.
Today Canada and Mexico and China supply currently more than two-fifths of all US imports.
Trump’s four tranches of tariffs on Chinese goods in 2018-19 covered imports valued at $360 billion at the time. Today Canada and Mexico and China supply currently more than two-fifths of all US imports. New tariffs on the two countries plus additional tariffs on China could cover imports valued at over $1.3 trillion in 2023.
That’s over 3.5 times more than half a decade ago. And it is just the opening salvo in a series of U.S. tariff moves that are anticipated in the coming weeks. Factor in the potential/likely retaliation rounds by US tariff targets and the final toll could prove far, far higher.
The second front of the trade wars could ensue in mid-February, when the Trump administration plans to impose tariffs on computer chips, pharmaceuticals, oil and gas imports, and steel, aluminum, and copper. The Trump administration is also hiking tariffs on the European Union, which has “treated us so horribly.”
And other trading powers with which the US has a major trade deficit, including Germany, Japan, South Korea and Vietnam, could be next in the firing line.
Darkening global prospects
U.S. inflation, at 2.9% in December, is still running higher than the Federal Reserve’s 2% target. The Peterson Institute has estimated that U.S. inflation would be 0.54 percentage point higher with the tariffs this year than without.
The threatened wave of tariffs could worsen trade tensions, lower investment, hit market pricing, distort trade flows and disrupt supply chains, and undermine consumer confidence. And that’s just an overture for what could ensue in the next four years.
At first, tariffs, tax cuts and deregulation may seem to boost the US economy. But they could set the stage for an inflationary boom followed by a bust. That’s when Trump’s economic policies “could hit the rest of the world, as the International Monetary Fund has warned.
The original commentary was published by China-US Focus on Feb. 7, 2025.
Dr. Dan Steinbock is the founder of Difference Group and has served at the India, China and America Institute (US), Shanghai Institute for International Studies (China) and the EU Center (Singapore). For more, see https://www.differencegroup.net/
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