Following the Second World War, the United States emerged as the leading world power in nearly every aspect. While foreign countries such as the Soviet Union, Germany, and Japan were ravaged by years of brutal conflict, the American homeland was virtually untouched—except for the shocking attack on Pearl Harbor in 1941. America’s relative geographic isolation served as a buffer from the majority of the devastations of war. Wartime production had spurred home industry, causing unemployment to drop precipitously, and industry to flourish. Following the end of the war, through its military exports, economic aid, and its postwar boom economy, the U.S. was at the center of a new world order.

This unique position in the world allowed the U.S. to craft institutions that ensured American hegemony and global influence. A case in point is the Bretton Woods Agreement. Following the war, the United States and other Western countries organized a coalition of nations to structure what the postwar economy would look like. In essence, the agreement established the United States dollar as the world reserve currency, establishing what became known as “dollar hegemony” for the United States. Because the dollar became the world reserve currency, it means that there was always an infinitely high demand for dollars from investors, meaning that the United States could maintain current account deficits and borrow inexpensively without experiencing the same inflationary pressures or currency devaluations that would plague other countries, thereby enhancing its economic leadership and influence on global financial systems.

Additionally, the Bretton Woods agreement resulted in one of the most nefarious decisions in American economic history: the creation of the IMF and the World Bank. While the IMF was said to promote international monetary cooperation, and provide short-term financial assistance, its long-term legacy has left many economists ambivalent about its true impact on the world. The IMF mainly gives loans to developing countries that are experiencing debt crises. While it is true that these lines may get these countries out of short-term economic downturns, they are attached with specific stipulations called “austerity measures” that force governments to cut social spending, which is why Joseph Stiglitz writes in his Award-winning book Globalization and its Discontents, “Cutbacks in government spending, often demanded by the IMF as part of their structural adjustment programs, frequently led to reduced investments in health, education, and infrastructure. These are precisely the areas most needed for long-term economic development.” Regardless of the net economic effect of the IMF, the post-war economy allowed the United States to create an economic order through institutions such as the IMF that promoted American hegemony throughout the world.

Nearly half a century later, When the USSR collapsed in 1991, it didn’t just mean the end of the Cold War, but the beginning of a new world order, one in which the United States was the single superpower, the unchallenged hegemon, even more than it already was. Yet that post-Cold War period of uncontested American primacy appears now to be ending. A complex intersection of domestic and international trends is eroding the foundations of U.S. unipolar hegemony. Rising powers such as China, and India have grown increasingly confident in global affairs, as rapid domestic economic reforms have accelerated them into the future.

Among the external challenges to American preeminence is the spectacular rise of the People’s Republic of China. While China has spent the majority of world history as one of the worlds most  prominent nations, its “centuries of humiliation” between 1839 and 1949 marginalized China to the back of global affairs. During this period, China was effectively severed by a series of Western powers such as the United States, France, and Britain, who set up a series of economic zones in China for them to control, severely weakening China as a nation. However, since Deng Xiaoping’s liberal economic reforms in the late 1970s, China has transformed itself from an isolated, agrarian power to the world’s second-largest economy. This growth—widely regarded as the largest and longest economic expansion in modern history—has allowed China to project power far beyond its borders. With its Belt and Road Initiative (BRI), China is financing and building infrastructure across Asia, Africa, and Europe, thereby cementing its economic influence and challenging the dominance of Western-led institutions like the World Bank. Concurrently, China has taken on a more aggressive military stance. The modernization of its military, as well as aggressive military drills in the South China Sea and a firm stance on Taiwan, reflect Beijing’s desire to change the Indo-Pacific strategic balance. Today, the U.S. and China have a very antagonistic relationship, paralleling the adversarial relationship between the two great powers that defined the Cold War.

Similarly, India has seen an unprecedented rise in global prominence following the Cold War. Similar to China, India has spent much of world history as a prominent world power, but after centuries of Brutal British Rule in India, it was reduced to a subject, stripped of its resources and sovereignty. However, similar to China, after becoming free from foreign powers in 1947, India began to gradually liberalize its economy, leading to rapid GDP growth, and specifically the rise of India’s Information and technology sector, which has become a global hub for outsourcing and innovation. Since gaining its independence, the world’s most populous country has seen incredible economic success, having lifted hundreds of millions of people out of poverty, making its global influence and leverage undeniable.

While the rise of foreign powers can certainly be attributed to their own independent successes, equally significant are the domestic fault lines that have eroded America’s image on the world stage. Increasing economic inequality has created deep social divisions and sapped trust in institutions. Additionally, the rise of political polarization and foreign policy disasters have shown that the U.S. cannot hold onto its hegemonic status forever. What was formerly a beacon of democratic stability, the United States is today viewed in much of the world as inward-facing and unpredictable.

What eventually emerges from these overlapping challenges is a world no longer dominated by a single hegemonic power but instead by the intersection of multiple centers of influence. Instead of the bipolarity of the Cold War, the coming decades may resemble an even more fluid and unstable environment in which economic, military, technological, and normative power is diffused across regions and actors. As ​Professor Joseph Nye of Harvard University, argues, “A certain amount of relative decline is likely through the natural processes of the ‘rise of the rest.’ America’s share of world products will decline somewhat as the share of China, India, Brazil, Indonesia and others increases.”

That raises the question, what happens now? This emerging world order offers two competing futures. One is a multipolar world where great powers recognize their ability to coexist peacefully and prioritize cooperation on existential threats such as climate change. Multilateral institutions such as the United Nations, the G20, ASEAN, and the African Union can facilitate cooperation between great powers and have had some limited success in the past. To achieve this vision, America must make the shift from a posture of dominance to one of partnership—leading not by dictation, but by diplomacy and cooperation.

The alternative course is riskier and yet much more likely: a continuation to great-power competition, with economic coercion, arms races, and proxy conflicts. This mentality could trigger global hotspots such as Taiwan, the South China Sea, and Eastern Europe could trigger larger conflicts. Hegemonic transition periods have often been the most stabilized throughout history, and that can be the path that a hostile foreign policy can put us on.

The decline of American influence is clear as day. With increasing economic strife, as well as the rise of foreign powers on the world stage, a hegemonic transition period is coming. The only question is what will America do about it?

The decline of American Influence is clear as day. With increasing economic strife, as well as the rise of foreign powers on the world stage, a hegemonic transition period is coming. The only question is what will America do about it?