Military Might Or Greenback? Why The World Is In Awe Of The United States Of America

The western Japanese city of Hiroshima was flattened on August 6, 1945, when the United States dropped a uranium bomb, wickedly codenamed Little Boy. Roughly 78,000 people were killed—nay, vaporised instantly. Tens of thousands more would die by the end of the year due to burns and radiation exposure. On August 6, 2025, thousands of people gathered in Hiroshima to commemorate the 80th anniversary of the world’s first wartime use of a nuclear bomb—as survivors, officials and representatives from 120 countries and territories marked the milestone with renewed calls for disarmament and peace. Hiroshima had been chosen as a target partly because its surrounding mountains were believed by US military strategists and planners to amplify the bomb’s force. Three days later, Nagasaki was the target of the US ire, this time round being pulverised with a plutonium bomb. With that the US had avenged the Japanese bombing of Pearl Harbour, though the ostensible reason for use of the nuclear weapon was to bring the simmering WWII to an end. The disproportionate use of retaliatory force stunned the world, but no one, including Japan, bestirred to accost the US. No Nuremberg-like trial was demanded for the trial of the then US president Harry S Truman.

In 1944, at the beginning of the end of WWII, the US established the Bretton Woods twins, the World Bank and the IMF, in order to be able to control the world finances, with the US dollar positioning itself as the world’s reserve currency and the default currency to pay with by importing nations as well as by travellers across the globe. Its lynchpin was the gold exchange standard for the members of the Bretton Woods twins—one ounce of gold for every bunch of 35 US dollars. But in August 1971, the US president Nixon announced that the US would end on-demand convertibility of US dollars into gold. The entire idea was diabolically cunning. For, the US never had enough gold to underwrite its currency. It was a simple bluff and bluster which worked well enough to enthrone the greenback to the international reserve currency status. But in the late 1960s, the world, especially France, got wind of the US bluff and started demanding gold for dollars. The last straw was the first Gulf War in 1971, with oil becoming gold, emboldening the oil-exporting nations to demand gold in return for petrodollars. The abrupt end of the gold exchange standard too went unquestioned, with the world inured and hooked to the greenback.

Fast forward to 2025. Donald Trump is sworn in as the 47th US President on January 20, 2025, and immediately sets about disrupting the world and status quo. While his abolition of the ancient and time-honoured son of the soil principle of citizenship—those born in the US automatically acquire US citizenship—did cause blisters in the hearts of wannabe citizens, it at least could be condoned as the domestic affair of the US, though it upset the applecart of many a foreigner who had made the US their home on the back of green cards and other residence and job permits. Soon, he announced he would end all the wars raging, including Russia-Ukraine and Israel-Palestine. When he failed, the Pakistan misadventure in Pahalgam that invited Indian precision military strikes on Pak terror pads, Trump jumped into the fray and claimed credit for ending the 4-day conflict, which he repeated ad nauseam. When Prime Minister Modi refuted his claim on the floor of the Lok Sabha in his reply to the Operation Sindhoor debate, he effectively poured cold water on Trump’s another vain clamour for the Nobel Prize. Piqued, he turned his ire on his friend-turned-foe, Narendra Modi, using tariff war to settle personal scores.

On July 30, President Donald Trump imposed an additional 25% import duty on imports of goods into the US with effect from August 1, 2025. Not content with the stiff duty, he has also vaguely announced a stiff penalty for India daring to import oil and arms from Russia in defiance of his and NATO’s stance of boycotting all trade deals with Russia for not ending its three-year-old war with Ukraine. He had given dark hints that such a penalty, along with a tariff, could be as high as 100% on the three defiant nations—India, China and Brazil. His obsession with tariffs has already started backfiring, what with the resultant reduced imports translating into inflation on the back of supply-side shortages. Those in the know, therefore, aver that it won’t be long before Trump climbs down his high horse. Moreover, his record of rolling back his decisions and announcements has earned him the moniker TACO—Trump Always Chickens Out. It is, therefore, possible that the crushing tariff of 25% on imports from India may be a short-lived phenomenon.

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Japan and the EU have gotten away with a slap on their wrists—a 15% tariff on the back of heightened investments in the US in step with the MAGA initiative of Trump. However, the hastily cobbled-up US trade deals with Vietnam, Japan, and the EU are beset by confusion regarding timing, implementation, and investment conditions, so much so that they are labelled “flimsy napkin deals” by some. The devil is in the detail. The purported US $550 billion Japanese investment pledge is disputed, with discrepancies in the figure and concerns over the terms and control of the funds. Yet the question why the world is in awe of the US has reared its head again. The question might seem rhetorical in the face of its military might and the numero uno status of the greenback, although on a reduced scale.

Was India led up the garden path? Did PM Modi put Trump on a pedestal by his “abki baar Trump sarkar” pitch in September 2019 that came unstuck? Backslapping camaraderie between two world leaders dubbed as a bromance ended as abruptly as it began. But then, to the credit of the Modi government, it has not succumbed to the high-pressure tactics of the Trump administration. After all, every country has its enlightened self-interest in mind. The US itself buys uranium and fertilisers from Russia, a fact he conveniently claims to be unaware of.

S Murlidharan is a freelance columnist and writes on economics, business, legal and taxation issues.