Protecting the US dollar from other competitors seeking to emerge as the unit of account in international trade and as a store of value is existential to the financial stability of the US dollar.
It may be regarded as hyperbole to claim that the US is facing threats that are existential to that country and its way of life, but such may indeed be the case. The first threat is the US debt, which is now closing in on $40 trillion and counting. Should the debt begin to be called in by those holding them, after a point the US would have to default on it, thereby shaking up not only its own financial markets but those of the rest of the world. Small wonder that President Donald Trump cautioned BRICS not to adopt a BRICS currency, or he would impose 100% tariffs on them. As it turns out, even earlier the External Affairs Minister, S. Jaishankar, acting in consultation with Prime Minister Narendra Modi, had said that India was opposed to any effort to set up a BRICS currency.
The US dollar (USD) has long been not just by far the most popular medium of exchange in international trade, but also an even more popular store of value. Not just legally but illicitly as well, individuals from across the world have used the USD as a store of value. As a consequence, successive US administrations have papered over an ever growing deficit by the simple expedient of printing more dollars, taking advantage of the practically limitless international appetite for the dollar as a store of value. Were that appetite to flag, a crisis would erupt where the US national debt is concerned.
Hence the warning by President Trump to other countries not to attempt to create substitutes for the dollar. Of course, there is a country actively pursuing such a course, and that is China. It is hardly a secret that CCP General Secretary Xi Jinping would like to have the Chinese renminbi (RMB) replace the US currency as a unit of exchange and as a store of value. However, the RMB remains a long way away from that objective. As for the euro, from the start the reality of the European Union being an assortment of independent states has handicapped efforts at promoting the euro as an alternative to the dollar, a task made even more difficult by the increasing number of fissures that are not going away but developing into fractures which are appearing within the EU.
A significant cause of this has been the Russia-Ukraine war which began on 24 February 2022 and its attendant costs on the European taxpayer, including as a consequence of EU sanctions on Russia and damage to supply lines such as those caused by the sabotage of Nord Stream 2. Even Turkstream has been affected, but Turkey has joined Germany in not complaining, publicly at least, about such an action.
Protecting the US dollar from other competitors seeking to emerge as the unit of account in international trade and as a store of value is existential to the financial stability of the US dollar. As a lifelong businessperson, Trump is fully aware of this fact, just as he is to the need for the US to remain the global powerhouse for innovation and technology. In an era of hybrid war, technology plays a key role in all forms of conflict, and those chosen as the security chiefs by Trump know that not just in asymmetric operations but in a kinetic war, an edge over the opponent in technology would make the difference between winning and losing. Where an enemy with advanced capabilities is concerned, in wars of the future aircraft carriers are likely to be sitting ducks for hypersonic missiles. As for hyper-expensive weapons platforms such as fighter aircraft, they are on the way to being overtaken by drones, unmanned aerial vehicles and missiles. System controllers would play the key role in both defensive as well as offensive capabilities, a process which has been gathering steam since the early years of the 21st century
Where a country of the size and capabilities of China is concerned, it would need constant interaction between ground controllers linked to satellite spotters with airborne pilots to ensure that the location of hostile threats as well as possible targets get conveyed in real time. Flying an aircraft with advanced systems may seem relatively easier than piloting a less advanced aerial platform, but in reality, success especially in battle requires skill and coordination in a manner and depth that has no precedent in the past. The skill of the pilot almost as she or he almost instinctively acts and reacts to the situations which emerge makes the difference between success and failure.
The Chinese have picked up the gauntlet, stating that they are ready “for any kind of war”, but are they? Thus far, Chinese forces on the ground, sea and in the air have encountered serious challenges on very few occasions, many of them being encounters with their Indian counterparts. Where the China is concerned, while there has been much bluster, actual challenges to the opposing side have been few in number. A kinetic conflict on a significant scale would test their ability to sustain such a battle, which is why the effort will be to overawe the enemy sufficiently to prevent any serious challenge to PLA efforts at ensuring dominance.
In the case of Taiwan, the effort will be to use online resources to dissuade the US population from openly coming out in defense of the island country. Should Taiwan fall, so would US primacy in the Indo-Pacific, as countries on the frontline of PRC capabilities would write off the US as a security guarantor and begin a process of accommodation with Chinese dominance.
The ability of the US and its friends and allies to escalate the conflict in theatres much beyond Taiwan would be critical in victory, which is why it makes sense for Washington to establish security alliances with regional players and strengthen existing mechanisms such as the Quad. Given the transactional nature of President Trump, India would need to ensure a sufficient basket of incentives from Washington to come onboard with such a strategy. The size of that basket would be a test of statecraft and diplomacy, but one for which the Indian side under Prime Minister Modi is fully prepared. Numerous forecasts have placed 2027 as the year in which a kinetic conflict in the Indo-Pacific on a scale which would be critical to both the blocs competing for primacy in the era of Cold War 2.0, and by that time, it is anticipated that India will be ready to face such a monumental challenge to the future of the country.