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Jun 02, 2025
Khushi Mishra & Dr. A. Adityanjee

End of Pax Americana: An International Perspective

For much of the 20th and early 21st centuries, the international order operated under the broad shadow of Pax Americana—a term that implied not just military supremacy, but the cultural, economic and institutional dominance of the United States. From shaping the post-WWII Bretton Woods institutions to setting the terms of global diplomacy, America attempted to fashion a world order in its image with some success. However, today, that benign shadow of all-pervasive Uncle Sam is receding. Not with a dramatic collapse but through slow erosion—an unravelling marked by shifting power centres, declining institutional legitimacy, and ideological fragmentation. The end of Pax Americana is not a future possibility but a present condition, albeit starting with a slow decline. And its consequences stretch far beyond the U.S., rippling across continents, alliances, and geopolitical imaginations. Cracks in the Foundation The U.S. was not just a superpower but the architect of a system that promised liberal democracy, free markets and so-called rules-based multilateralism. After the break-up of the former Soviet Union, it became the sole hyperpower in the nineties. However, cracks began to show long before the term "American decline" entered the mainstream. The unnecessary war in Iraq and the prolonged occupation and nation-building in Afghanistan revealed the limits of hard power. The 2008 financial and banking crisis exposed vulnerabilities in the very model America exported. Domestically, political dysfunction and extreme political polarisation and racial strife eroded the internal coherence necessary to sustain global leadership. The Trump administration 1.0 did not invent this decline—it merely amplified it. Unilateral withdrawals, erratic diplomacy, and an “America First” posture ruptured long-standing alliances and triggered a recalibration among both adversaries and allies. Trust, once the bedrock of American hegemony, began to fade. Doubts about the cognitive competence of a series of US presidents have contributed to the lack of confidence in the US decision-making at the highest level. Trump 2.0 administration’s MAGA (Make America Great Again) policies are contributing to the pervasive lack of faith in US decision-making process by the international community and the comity of civilised nations. Multipolar Drift and the Return of Strategic Autonomy As the U.S. retreats from the centre, other players have moved in—not to replicate American leadership but to reconfigure the playing field altogether. China’s rise is not simply about GDP or military capacity but about narrative control. Beijing offers an alternative to Western liberalism—development without democracy and influence without direct intervention. However, China’s debt trap BRI scheme and wolf warrior diplomacy have not gained it any new friends. The US has tried to face the economic challenge from rising China by de-risking and decoupling its economy and has instituted near-shoring, friendshoring and onshoring. Despite economic constraints, Russia has strategically asserted itself through information warfare, military entrenchments and diplomatic offensives. Meanwhile, middle powers and regional powers like India, Brazil, Türkiye, European Union, Saudi Arabia, Iran and South Africa are asserting strategic autonomy. No longer content with junior-partner status, they are reshaping regional alliances, experimenting with new institutional arrangements, and occasionally resisting U.S. pressure outright. In this emerging order, power is no longer unipolar or bipolar or even cleanly multipolar—it is diffused, competitive and unpredictable. We are heading towards an era of nascent oligo-polarity Europe and the Limits of Transatlantic Dependence In Europe, the end of Pax Americana feels less like liberation and more like abandonment. The postwar European project was built on the twin foundations of American security and economic partnership. As U.S. foreign policy became more transactional, Europe began grappling with an uncomfortable reality: the transatlantic safety net may no longer hold. Calls for “strategic autonomy” are gaining momentum, particularly in France and Germany. From digital sovereignty to independent defence capabilities, the EU is slowly inching towards a more self-reliant posture. However, internal divisions and bureaucratic inertia make this transformation uneven and uncertain. Europe, once a pillar of Pax Americana, is now navigating its future in a more volatile world. Voices from the Global South In the Global South, reactions to the unravelling of American primacy are more complex. For many, the liberal international order was less about freedom and more about hierarchy. Structural adjustment programs, conditional aid, and numerous but selective military interventions without UN Security Council approval left deep scars. Yet, the same U.S.-led rules-based order also enabled global development financing, diplomatic recognition and conflict resolution mechanisms. As U.S. influence wanes, new opportunities and new risks emerge. China’s infrastructure-first developmental model through the Belt and Road Initiative offers an alternative, but it comes with its own dependencies and debt trap schemes. A previous version of the BRI project was named One Belt, One Road (OBOR), an acronym that was lampooned as ODOR (One Debt, One Road). China’s maritime claims against the exclusive economic zones of several ASEAN countries and its refusal to comply with the international tribunal verdict of 2016 does not inspire any confidence about its benign intentions as a rising superpower. Russia’s engagement, often transactional, fills security vacuums but seldom addresses long-term governance needs. The Global South is not passively watching this transition—it is actively negotiating, leveraging and resisting in ways that challenge old hierarchies. What Happens When the Centre No Longer Holds? The end of Pax Americana does not signal a complete collapse of the global order. There is an ongoing Cold War 2.0 between the reigning hegemon and the rising hegemon without a complete binary division of the comity of nations. Global South is hedging and not willing to take sides in this new Cold War 2.0. Whether these two competing nations will fall into Thucydides' trap is yet to be seen. We are witnessing the slow emergence of a multiplex world—a complex, culturally diverse, and normatively contested international system. In such a world, no single actor sets the rules. Power is negotiated, legitimacy is localised, and the global order is constantly in flux. Burgeoning US debt to the tune of $38 trillion also questions the stability of the post-World War II financial system. Several countries are selling the US Government treasury bonds and buying gold for fiscal stability. Financial transactions are no longer based on the supremacy and hegemony of the US dollars. Many countries are doing bilateral trade using regional and local currencies, bypassing the dollar. China has encouraged the use of the Yuan or Renminbi for international trade since the 2008 banking crisis in the US. China’s own economy is facing headwinds, with the housing sector insolvent and high unemployment among college graduates. The debt-to-GDP ratio for China is currently 300%. China’s attempts to browbeat Japan and other countries by leveraging its monopoly of rare earth and mineral supply chains have not endeared it to the rest of the world. De-dollarisation is not imminent. It is a slow and steady process, but it will not be replaced by Yuanization. Despite talks of a future BRICS currency, there aren’t many takers for it in the BRICS-plus grouping, barring China. This transition is not without danger. Without a stable hegemon, flashpoints can become firestorms. Institutions built for a different era may prove inadequate in managing 21st-century crises—from pandemics and cyber wars to climate change and artificial intelligence. At the same time, this flux creates possibilities for reimagining global governance beyond Western templates. It invites pluralism, regionalism and new solidarities. Conclusion Pax Americana was always as much a myth as it was a reality—one held together by narratives of exceptionalism and promises of liberal peace. That myth is now unravelling, not because America has disappeared, but because the world has changed irreversibly. The erosion of U.S. primacy is not merely a geopolitical event; it is a civilisational moment. It challenges us to rethink power without hegemony, order without uniformity, and progress without domination. No country in the world, however, wants the replacement of Pax Americana with Pax Sinica. China’s lack of transparency and failure to acknowledge its role in the lab-created Wuhan virus pandemic have made the world suspicious of China’s intentions. This is not the end of international cooperation, but it may be the end of a very aggressive and one-size-fits-all globalisation. As the world turns into a multipolar mosaic, the future lies not in nostalgia for the lost primacy of an American melting pot, but in constructing new frameworks—messy, plural, negotiated, and perhaps more just. The decline of Pax Americana might just be the invitation the world needed to imagine and create something better, based indeed on a genuinely rules-based order and not exceptionalism. References Acharya, A. (2017). The End of American World Order. Polity Press. Acharya, A. (2021). “Afghanistan and the End of American Primacy.” Foreign Affairs. Fukuyama, F. (2012). The Future of History: Can Liberal Democracy Survive the Decline of the Middle Class? Foreign Affairs. Haass, R. N. (2008). The Age of Nonpolarity. Foreign Affairs, 87(3), 44–56. Ikenberry, G. J. (2011). Liberal Leviathan: The Origins, Crisis, and Transformation of the American World Order. Princeton University Press. Krauthammer, C. (1990). “The Unipolar Moment.” Foreign Affairs, 70(1), 23–33. Leonard, M. (2020). “The Revenge of Sovereignty.” European Council on Foreign Relations.

May 29, 2025
Viren S Doshi

One Big Beautiful Bill Act's Impact on Indian Americans and India

Trump Administration is in full swing to get the reconciliation bill, aptly named as OBBBA (One Big Beautiful Bill Act), passed through Senate now that it has been passed by the House of Representatives with a thin margin on May 22, 2025. Senate review of the Bill is ongoing, with a vote expected by July 2025. President Trump is pushing vigorously for timely approval by Senate. If the bill is passed, implementation remains set for January 1, 2026. It is going to be a landmark bill in the history of American legislation, putting the American nation into a new orbit on a new trajectory yet rooted in the sacrosanct cherished American values. While guarding American interests, the bill has certain impacts for the most law-abiding and progressive American community—the Indian Americans and America's natural ally, India. Here is a summary of this bill’s likely impacts on Indian Americans and India- The summary draws from sources like United Nations COMTRADE, Reserve Bank of India (RBI), and other recent data. Impacts of the Bill on India: India received $118.7–129 billion in global remittances (2023–24), with $32–33 billion (27.7–28%) from the United States (U.S.), per RBI’s March 2025 survey and World Bank 2024 data. Non-citizens (1.3 million of 4.5 million Indian Americans, including H-1B, L-1 visa holders and green card holders) remit 60–70% ($19.2–22.4 billion). Proposed 3.5% remittances tax (reduced from 5% before House passage) applies to non-citizen remittances, effective January 1, 2026, if approved by the Senate. Non-citizens are likely to reduce remitting by 5–10% due to this new tax. Resultant shortfall in Remittances to India could be 5–10% of $19.2–22.4 billion, that is $0.96–2.24 billion. This shortfall would be impacting Kerala, Uttar Pradesh, Bihar and other states straining rural economies and real estate sector of Indian economy apart from other fallouts. Rupee may depreciate by Rs 0.5 per USD, requiring RBI interventions ($683 billion reserves, 2024). Trade Risks: Along with this provision of the Bill, potential U.S. tariffs on $91.23 billion exports from India to US (pharmaceuticals $7 billion, information technology [IT] $33.2 billion, gems and jewellery $12 billion) threaten $191.8 billion trade. This can have compounding effect over and above on the buoyant economy of India. Besides, immigration policy and measures may reduce H-1B visas (270,000, 70% Indian) limiting talent flows impacting India further. This can have additional geopolitical implications. However, India stands to gain an edge in its rivalry with its unfriendly expansionist neighbour, CCP-occupied China as Trump Administration takes vigorous actions against unfair monopolistic practices of CCP-occupied China. On the other hand, Trump Administration would be expectedly continuing to flip Pakistan away from CCP-occupied China and would also continue to be in alliance with Turkey because of NATO. Improvement in America’s relations with Russia is likely to be a roller coaster ride and this too will have indirect impact because of its fall outs in US relations with NATO allies and Russian relations with CCP-occupied China. India, like Israel, has a long way to chart out its destiny amid these upheavals. The only solace could be the fact that an administration like the erstwhile Biden-Harris Administration would have proved disastrous in any case. Impacts of the Bill on Indian Americans (Approximate population 4.5 million): Tax Impact (3.5%): Non-citizens (1.3 million) face $672–784 million tax (@ $35 on $1,000) @3.5% of $19.2–22.4 billion, annually. As per regulations, money transfer firms must report transactions over $5,000 daily with enhanced Know Your Customer (KYC) compliance, potentially delaying transfers. Other impacts - Social Program Cuts: Medicaid, Supplemental Nutrition Assistance Program (SNAP), housing, Affordable Care Act (ACA), and education cuts target illegal immigrants, not legal immigrants/citizens. So this won't have much impact on Indian Americans. Immigration Enforcement: $46.5 billion for border walls, $6.1 billion for Border Patrol, heightened H-1B/green card scrutiny (78% high-skill) may impact the prospects of the Indian American community. Tax Benefits: Indian businesses gain from a 23% (rise of 3% from the previous 20%) pass-through deduction. Almost 500,000 Indian Americans’ businesses gain from a 23% pass-through deduction, saving ~$5,000 – $10,000 per business annually, supporting remittances and jobs. This is likely to save additional amounts, almost offsetting remittance tax burden and supporting jobs, including some of the jobs for non-citizens among the community. Economic Uncertainty: Visa/trade barriers may reduce job opportunities. Mitigation Strategies Advocacy / Diplomacy: Organisations of the community like the Hindu American Foundation have been actively lobbying for exemptions, leveraging a $1.6 trillion Gross Domestic Product (GDP) contribution by 2030. It is learnt that India’s Finance Ministry is exploring tax exemptions with its U.S. counterparts. Mexico and India are coordinating diplomatic pushback. Diplomacy also uses $191.8 billion trade leverage. Import Substitution ($38.99 billion goods, $25.9 billion services): Imports to India from US: Fuels ($13.6 billion), aircraft ($8.5 billion), medical equipment ($5.7 billion), machinery ($5.32 billion), defence ($4.3 billion), gems ($2.41 billion), plastics ($2.1 billion), agriculture ($2 billion). Substitutes: Domestic substitutes include Reliance Industries, Hindustan Aeronautics Limited (HAL) and Defence Research and Development Organisation (DRDO) via $2–5 billion Production Linked Incentive (PLI) schemes. Global substitutes are Qatar, the European Union (EU), Japan, Brazil, and Germany. Impact: Substituting $20–30 billion of imports saves $0.1–0.15 billion which is equal to 5–15% mitigation of the shortfall in remittances impacting USD forex reserves of India. Redirecting Exports ($91.23 billion goods, $33.2 billion services): Exports from India to U.S.: Pharmaceuticals, gems, textiles ($10 billion), IT, machinery ($10 billion), petroleum ($5 billion). Redirect $10–20 billion exports to EU, Japan, Association of Southeast Asian Nations (ASEAN); absorb textiles/electronics exports domestically. Impact: Reduces reliance on U.S. mitigating tariff impact. Taxing Outbound Transactions ($8.86–15.15 billion): Royalties/Intellectual Property Rights: $4–6 billion (Microsoft, Qualcomm). Equity Returns: $0.86–1.65 billion (dividends $0.56–0.9 billion, capital gains $0.3–0.75 billion) from U.S. Foreign Institutional Investors (FIIs) ($50–60 billion equities). Foreign Direct Investment (FDI) Profits: $4–7.5 billion (Apple, Amazon, $20–25 billion revenues). Tax: 5–10% tax on outbound transactions listed above yields $443–1,515 million (offsetting 60–100% tax burden, 20–100% of shortfall in remittances). Tax Collected at Source (TCS) increase (5% to 10–20%) or Liberalised Remittance Scheme (LRS) cap at $100,000 redirects $1–2 billion. This measure is fully “World Trade Organisation (WTO)-compliant”. De-Dollarisation: Expand Indian Rupee (INR) trade (United Arab Emirates [UAE], Russia, $3–5 billion, 2023–24) to $5–10 billion by 2030. Promote digital rupee, saving $0.1–0.25 billion. Diversify 50–60% U.S. dollar reserves ($683 billion, 2024) to euros and other currencies, or gold ($2–5 billion). Impact: Saves $0.1–0.25 billion (5–25% shortfall of remittances). Talent Retention/Repatriation: Retain 1–1.5 million workers via tech hubs (Bengaluru, Hyderabad), Indian Institutes of Technology (IIT)/Indian Institutes of Management (IIM), reducing H-1B migration (270,000 jobs). Repatriate 50,000–100,000 NRIs with probable tax holidays, Overseas Citizen of India (OCI) benefits ($0.25–0.5 billion value). Impact: Covers shortfall in remittances if they come back with their wealth. Citizenship by Investment: Offer OCI/citizenship for $1–5 million, attracting $0.5–1 billion FDI (20–100% shortfall). American Companies’ - e.g. Apple’s - Investment in India and Exports of their “Made in India” products and services from India: $22 billion iPhone production (FY25), targeting 25% global output by 2027, creates 200,000 jobs, $1.5 lakh crore exports. Tim Cook’s commitment (May 2025) leverages 40% cost advantage. Impact: Offsets 5–20% shortfall by earning from exports of their products and services. U.S. Substitution Challenges: Substituting India’s $91.23 billion goods and $33.2 billion services risks 20–30% cost increases ($20–30 billion) and this would entail increased dependence on CCP-occupied China, conflicting with U.S. decoupling goals set for decoupling from CCP-occupied China and also conflicting with diversification of supply chain into “China Plus One”. So US would not opt for substitution in most cases, while India can opt for substitution gradually as stated above. Economic Decoupling with Strategic Coupling: Full economic decoupling may require 10–15 years, though there are talks of increasing and possibly more than doubling of bilateral trade in the next 5 years. Partial to complete economic decoupling between India and the US minimises trade ($191.8 billion), investment ($68.93 billion U.S. FDI, $7 billion Indian FDI), and financial ties. Indian investment in the US is poised to rise, but decoupling would lead to reciprocal restrictions on Indian investment in the US, just on the lines Trump Administration is discouraging American investment in India. Trade, investment and currency (US Dollar) usage may decrease or increase, preserving and enhancing strategic ties (Quadrilateral Security Dialogue [QUAD], Initiative on Critical and Emerging Technology [iCET]) is important for both these partners committed to the common goal of just, democratic and free world order. Strategic Ties: Maintain defence ($22 billion deals), tech, clean energy collaboration as a permanent feature of US US-India relationship. Meanwhile, as a provisional diaspora action, Non-Resident Indians (NRIs) are advised to accelerate large transfers before July 2025 to mitigate the impact in the initial phase. Conclusion Indian Americans can mitigate a $672–784 million tax burden for 2026 by preemptive remittances in June 2025, which may be up to December 2025, and later this can be offset by relief in direct taxes proposed in the bill. Indian American Community can continue to be a powerful growth engine for the progress of the United States of America led by nationalistic patriotic leadership and also as the fulcrum for strong inalienable US India relations, both the nations being and continuing under nationalistic democratic leadership firmly opposed to Wokeists, Globalists, Colonialists, Communists, Leftists and Jihadis at home and across the globe. India can mitigate the $0.96–2.24 billion shortfall by - substituting $20–30 billion imports ($0.1–0.15 billion), taxing $8.86–15.15 billion transactions ($443–1,515 million), de-dollarising ($0.1–0.25 billion), redirecting $10–20 billion exports, repatriating talent ($0.25–0.5 billion), leveraging American investment in India, say Apple’s $22 billion investment, restricting Indian investment in US, and advocating diplomatically. Partial decoupling covers 50–100% of the shortfall while preserving QUAD/iCET ties. Full decoupling while enhancing strategic ties based on a common agenda can be a long-term goal due to trade interdependence. By the end of decade, we may have largely self-reliant nations India and US working in tandem as strategic partners to thwart the CCP - Jihadi - Globalist - Colonialist - Leftist transnational nexus. God bless the US, God bless India, God bless the US-India strategic partnership, God bless the Free World. Image source: The Financial Express