2025 Year in Review Part 1: De-Dollarization, Tariffs, and the End of the "Long 20th Century" – Explaining History

Episode Summary:As 2025 draws to a close, Nick reflects on a pivotal year in global history. From the economic shockwaves of the Trump tariffs to the accelerating shift of power back to Asia, this episode argues that we are witnessing the terminal decline of the Anglo-American world order.We explore the existential threat of "de-dollarization"—a process accelerated not just by Trump, but by the weaponization of the financial system under Biden. Nick also examines the hollowing out of the British state, now a vassal to American private equity, and the dangerous geopolitical flashpoints emerging in Venezuela. Is the AI bubble about to burst? Will the 2026 midterms offer a reprieve for democracy, or are we locked into a cycle of crisis?Key Topics:The Trump Tariffs: How protectionismProtectionism Full Description:Protectionism involves the erection of trade barriers ostensibly to “protect” domestic industries from foreign competition. As the global economy contracted, nations panicked and raised tariffs to historically high levels in a desperate attempt to save local jobs. Critical Perspective:This created a “beggar-thy-neighbor” cycle of retaliation. When one dominant economy raised tariffs, others followed suit, causing international trade to grind to a halt. Instead of saving industries, it choked off markets for exports, deepening the crisis. It illustrates how the lack of international cooperation and the pursuit of narrow national interests can exacerbate a systemic global failure. is biting the American consumer.De-Dollarization: Why the end of the dollar as the reserve currency is an existential threat to US power.The AI Bubble: Will artificial intelligence save the economy or concentrate wealth even further?Britain as Vassal State: The colonization of the UK economy by American private equity.Explaining History helps you understand the 20th Century through critical conversations and expert interviews. We connect the past to the present. If you enjoy the show, please subscribe and share.▸ Support the Show & Get Exclusive ContentBecome a Patron: patreon.com/explaininghistory▸ Join the Community & Continue the ConversationFacebook Group: facebook.com/groups/ExplainingHistoryPodcastSubstack: theexplaininghistorypodcast.substack.com▸ Read Articles & Go DeeperWebsite: explaininghistory.org Hosted on Acast. See acast.com/privacy for more information.

It is December 18, 2025. As we approach the end of another year, it feels less like a simple turning of the calendar and more like the closing of a historical epoch.

In this week’s podcast, I argued that 2025 will be remembered as the year the “Long 20th Century” finally ended. For 50 years, the Anglo-American world has been in a slow, managed decline. Decisions made in the late 1970s—the embrace of neoliberalismSupply Side Economics Full Description:Supply-Side Economics posits that production (supply) is the key to economic prosperity. Proponents argue that by reducing the “burden” of taxes on the wealthy and removing regulatory barriers for corporations, investment will increase, creating jobs and expanding the economy. Key Policies: Tax Cuts: Specifically for high-income earners and corporations, under the premise that this releases capital for investment. Deregulation: Removing environmental, labor, and safety protections to lower the cost of doing business. Critical Perspective:Historical analysis suggests that supply-side policies rarely lead to the promised broad-based prosperity. Instead, they often result in massive budget deficits (starving the state of revenue) and a dramatic concentration of wealth at the top. Critics argue the “trickle-down” effect is a myth used to justify the upward redistribution of wealth., financialization, and deindustrialization—have finally reached their apogee. The result is a West that is economically fragile, politically polarized, and strategically adrift.

The Return of History

The most significant shift of 2025 is the visible reset of global power back to Asia. For half a millennium, the West wielded undisputed hard and soft power. That era is over. The ability of the US and Europe to dictate terms to the rest of the world has evaporated, replaced by a multipolar reality where BRICS nations assert their sovereignty and China offers an alternative economic model.

The Tariff Trap

Domestically, the US has spent 2025 grappling with the consequences of Donald Trump’s protectionism. The “Independence Day” tariffs, launched with fanfare at the start of the year, were intended to arrest America’s relative decline. Instead, they have accelerated inflation.

Trump’s worldview—that importers pay tariffs—is economically illiterate. The costs have been passed on to American consumers, just as funding for social programs runs dry. The economic pain is real, and it is likely to bite hard in the 2026 midterms.

The Existential Threat: De-Dollarization

However, the greater threat to American hegemony isn’t tariffs; it is the slow erosion of the dollar. Since 1945, the dollar’s status as the world’s reserve currency has given the US an “exorbitant privilege”—an endless overdraft that funds its military and its debt.

This privilege is under siege. Ironically, the catalyst wasn’t Trump, but Joe Biden. The freezing of Russia’s central bank assets in 2022 sent a chilling message to the Global SouthGlobal South Full Description:The Global South is a term that has largely replaced “Third World” to describe the nations of Africa, Latin America, and developing Asia. It is less a geographical designator (as it includes countries in the northern hemisphere) and more a political grouping of nations that share a history of colonialism, economic marginalization, and a peripheral position in the world financial system. Bandung is often cited as the birth of the Global South as a self-aware political consciousness. Critical Perspective:While the term implies solidarity, critics argue it acts as a “flattening” concept. It lumps together economic superpowers like China and India with some of the world’s poorest nations, obscuring the vast power imbalances and divergent interests within this bloc. It risks creating a binary worldview that ignores the internal class exploitations within developing nations by focusing solely on their external exploitation by the North.
Read more: your money is safe only as long as you obey Washington. This weaponization of finance has accelerated the drive for alternative payment systems. If demand for the dollar collapses, the US ability to fund its global military footprint vanishes.

Britain: The 51st State?

Meanwhile, the UK finds itself in a pitiable position. The Labour government, devoid of any genuine economic vision, has doubled down on the strategy of selling off the state. Meetings with BlackRock and US private equity firms have replaced industrial strategy.

Brexit, far from restoring sovereignty, has turned Britain into a vassal of American capital. Our utilities, our care homes, and our companies are increasingly owned by Wall Street. The British political class, desperate to flatter Trump with gold carriages and royal visits, fails to understand a basic truth: the US has no allies, only interests.

The AI Mirage

Finally, we must consider the precariousness of an economy dependent on the AI bubble. American GDP growth is increasingly tied to the construction of data centers and the promise of artificial intelligence. But AI destroys value as much as it creates it. It threatens to increase unemployment and concentrate wealth in even fewer hands. If this bubble bursts—and China’s open-source AI models suggest it might—the economic fallout could rival 2008.

As we look to 2026, the only certainty is uncertainty. The old assumptions are crumbling, and the new world struggling to be born looks volatile, dangerous, and distinctly post-American.

Transcript

Nick: Welcome back to the Explaining History podcast.

It is December 18, 2025. We are coming up to the end of another year, and I like to do a bit of reflective thinking at this time.

I think the place we are at now is the tail end of 50 years of progressive decline in the Anglo-American world. Decisions taken in the late 70s have finally reverberated and reached their apogee. We are also in a moment where all the assumptions of the 20th century are crumbling. This is part and parcel of historical change, but it means a period of almost non-stop crisis for the British and Americans for at least a decade.

2025 was the year the historical reset became visible: the shift of power back to Asia. For most of recorded history, that is where the center of gravity was. The half-millennium of European colonization and Western dominance has run its course.

This sounds apocalyptic, and in a way, it is. Apocalypses are moments when societies see the end of all they knew.

Let’s look at specifics. The Trump tariffs tell us something important. Launched at the start of the year, these tariffs on allies and rivals alike were an attempt to arrest America’s relative economic decline without redistributing wealth. In Trump’s worldview, you tax imports because the American market is so lucrative that importers will pay. Of course, everyone knows the cost is passed on to the consumer.

These price rises hit in January, accompanied by libertarian talk of slashing the state. This will likely bite in 2026 when funding runs out for social programs—buses, old-age care, veterans’ welfare.

But the civilization-ending threat isn’t tariffs; it is de-dollarization.

Since 1945, the dollar has been the world’s reserve currency. Commodities like oil and wheat are traded in dollars. This means America has an almost endless overdraft because demand for the dollar is artificially high. This demand allows America to fund its army, navy, and air force. Without dollar hegemony, American hard power evaporates.

One reason for de-dollarization wasn’t caused by Trump, but by Joe Biden. Freezing Russia’s dollar reserves after the Ukraine invasion sent a message to the world: the bank can swallow your card whenever it feels like it. Countries are now looking to move away from the dollar. If this happens, it presents an existential economic catastrophe for the US.

Another striking trend this year is the failure of the “nuclear option” of tariffs. When Trump pressed the button, it didn’t work as intended. China had been preparing since 2018, and other countries like Brazil realised they could resist without making concessions.

Britain, however, has not been able to do that. The policy of British governments is to flatter Trump, thinking that gold carriages and royal visits will secure preferential treatment. This is delusional. American presidents are interested in outcomes for America, not favors for Britain.

The world of the 19th century lingered into the 20th, and perhaps we are only now emerging from the “Long 20th Century.” We are entering conditions determined by population size and resource control.

One trend to watch is the extent to which American GDP growth is dependent on building AI data centers. If the AI bubble pops—and it must at some point—we could see a crisis like 2008. This might be where American democracy finally crumbles into full-blown repressive oligarchy. We are halfway there.

In Britain, the Labour government came to power with no real economic plan other than “growth.” What they meant was selling off the state to American private equity. Meetings with BlackRock have replaced policy. Brexit has turned Britain into a vassal state of the USA, with our utilities and social care owned by Wall Street.

The threats to attack Venezuela seem alarmingly credible right now. This fits the Trumpian calculation: secure resources before someone else does.

What will occur in 2026? The only thing that might arrest these trends is the growing unpopularity of Trump’s government. Populists have to deliver. Trump has de-brained his administration by firing experts, so I doubt they can address key problems. They are hoping AI will save them, but AI threatens to increase unemployment and concentrate wealth.

China is arguably ahead in the AI race and is offering open-source models, which kills potential export markets for US tech.

So, let’s see what 2026 holds. I’ll be doing more episodes between now and Christmas, looking at China, the Middle East, and the fall of the Ottoman Empire.

Take good care everyone. It’s been a great year, and I’ve loved hearing from you. All the best. Bye-bye.