By Kalinga Seneviratne*
BANGKOK, Thailand | 5 January 2026 (IDN) — The US President Donald Trump’s Tariff War on the rest of the world in 2025 should go down in history as the year when the ‘American Dream” unraveled as a Debt Trap. In 2008, the so-called subprime lending crisis gave a hint of it, but 2025 was the year it exploded into a full-blown crisis, focusing on the sustainability of the American economy.
And as the new year dawned, the US government’s desperation to fix the debt crisis took a dramatic new turn, with the kidnapping of Venezuela’s sitting President Nicolas Maduro by American special forces. Trump left no stone unturned when he said in a triumphant press conference that the US oil companies would fix Venezuela’s “broken infrastructure” and “start making money for the country. Nobody guessed that the “country” he mentioned was not Venezuela, but his own.
In late November, the US’s ambassador to the city-state of Singapore, Anjani Sinha – a hand-picked Trump appointee – said in an interview with Straits Times that for many years, the American taxpayer has underwritten Southeast Asian security, and hence, contributed to Singapore’s prosperity. It is time they “help us to rebalance the economy”.
This raised eyebrows in the normally pro-American leadership and the intelligence of the city-state, and it riled many Singaporeans, with some netizens expressing their outrage and labeling the ambassador as a “debt collector.
Ambassador Singha’s comments had substance and reflected Trump’s rhetoric, in which he tries to blame the rest of the world for “taking advantage of the US’s generosity” by opening its markets to foreign products. Thus, it is now time to stop these “unfair trade” practices by imposing heavy tariffs on such imports to raise tax revenue for the US Treasury to help pay off the debts, though his rhetoric does not say the last part.
If America really wants the rest of the world, especially its allies, to help it resolve America’s multi-trillion-dollar debt crisis, Trump needs to be humble about it – not indulge in Gangster Diplomacy.
It is now clear that the ‘American Dream’ has been built on the accumulation of debts to finance a lavish lifestyle, both at an individual level and at the national level. In simple words, it is all about living beyond one’s means. If America is buying more than what it’s selling to the rest of the world, whose fault is it? If countries can buy products that are of equal or better quality and far cheaper from others, such as China, are others to be blamed for running up a trade surplus with the US?
In July 2025, Trump said that South Korea would invest upfront USD 350 billion in return for lower tariffs, but in September, South Korea said that such an investment – with the US controlling how it is spent – would plunge the South Korean economy into crisis. “It is objectively and realistically, not a level we can handle,” South Korea’s National Security Adviser Wi Sung-lac said in a Singapore television interview.
India has also been riled by Trump’s demands that it stop buying Russian oil and instead buy American oil (which is more expensive), and also open up its agricultural markets, which may result in Americans dumping their farm products and driving millions of Indian farmers into poverty. India has stood its ground against Trump’s rhetoric, which many Indians saw as insulting and undignified.
Trump has also been courting his Gulf allies – Saudi Arabia, Qatar and the United Arab Emirates (UAE) – even making an official visit to all three countries. They are the US’s biggest arms purchasers, and the military industrial complex in the US is the country’s lifeblood. With tensions and conflicts intensifying across the globe – with the US playing a major role in triggering many of them – it is an industry that is keeping the American Dream (economy) alive.
When Saudi Arabia’s Crown Prince Mohammed bin Salman visited Washington in November, it was announced that the wealthy kingdom would invest up to nearly USD 1 trillion in the United States. But, the South China Morning Post (SCMP) reported on December 28th, that it is not a feasible target, and the announcement in Washington was more about optics than a binding commitment.
Niu Xinchun, director of the Institute of Middle East Studies at the China Institutes of Contemporary International Relations, told SCMP that how much Riyadh could realistically invest in America was “a question that is hard to answer, pointing out that global oil prices remained low amid a supply glut. “With international oil prices remaining depressed and the country’s domestic spending expanding too aggressively, Saudi Arabia is struggling to balance its revenues and expenditures,” Niu said, noting, that Riyadh had made deals and commitments with the US worth US$450 billion during Trump’s visit in 2017, but they had not been fully realised.
The problem with the US economy could be explained by simple economics. When the nation spends more money than it earns during a given year, that creates a deficit. To pay for this deficit, the federal government borrows money by issuing Treasury bonds, bills and notes. Many of these bonds – up to about 40 percent – are now held by Japan, China, and Gulf countries.
According to the US Treasury, the national debt stood at $36.6 trillion as of 18th July 2025. With a rapidly ageing population, the US government’s spending on social security, healthcare and other benefits are increasing while the income tax base is decreasing. At the same time, the defense budget is increasing to fund America’s never-ending wars.
Any cuts to the defense budget are met with strong resistance from lawmakers on Capitol Hill who see a strong military as essential to national security. It is America’s seemingly powerful military might – that is demonstrated by never-ending bombing campaigns around the world – that allows Trump to get away with the brand of Gangster Diplomacy he practices, and sometimes intimidates smaller countries such as what happened with Malaysia recently[1].
During Trump’s whistle-stop visit to Kuala Lumpur at the end of October, a trade deal signed between the US and Malaysia was criticized as a surrender to American intimidation. As Singapore’s Straits Times noted, “a clause requiring Malaysia to align itself with the US on matters of economic restrictions or sanctions against a third country has raised alarm bells on both sides of the political divide in Kuala Lumpur, with critics warning that it may threaten the country’s independence and longstanding neutrality stance”.
Jeffrey Sachs, the director of the Center for Sustainable Development at Columbia University, is a staunch critic of the US economic model and its military spending. “To surmount the debt crisis, America needs to stop feeding the Military-Industrial Complex (MIC), the most powerful lobby in Washington,” he argues. “America’s annual military spending is now around $900 billion, roughly 40% of the world’s total, and greater than the next 10 countries combined”.
“Yet instead of peace through diplomacy and fiscal responsibility, the MIC regularly scares the American people with comic-book style depictions of villains whom the U.S. must stop at all costs. The post-2000 list has included Afghanistan’s Taliban, Iraq’s Saddam Hussein, Syria’s Bashar al-Assad, Libya’s Muammar Gaddafi, Russia’s Vladimir Putin, and, recently, China’s Xi Jinping. War, we are repeatedly told, is necessary for America’s survival,” he noted in a commentary published on his blog site[2]. “A peace-oriented foreign policy would be opposed strenuously by the military-industrial lobby but not by the public. Significant public pluralities already want less, not more, U.S. involvement in other countries’ affairs, and less, not more, US troop deployments overseas”.
*Dr. Kalinga Seneviratne is the author of Global News Media: Countering Western Hegemony in International News (Atlantic, 2025) and is a regular contributor to IDN-In Depth News. [IDN-InDepthNews]