I. Introduction
Professor Charles Kindleberger of the Massachusetts Institute of Technology (MIT), analyzing the interwar period (1919-1939), posited that the global chaos during that time resulted from the absence of hegemonic leadership (Note 1). Building on this theory, Professor Joseph Nye of Harvard University has warned that the world is once again facing a crisis reminiscent of what he terms “the Kindleberger Trap (Note 2).”
In particular, in 2025, the Trump administration has returned to power in the United States, implementing protectionist trade policies and withdrawing from international organizations, effectively reducing the provision of public goods that underpin the international order. On the other hand, China, a rising emerging power, still lacks the strength to fill the vacuum. Thus, the Kindleberger trap is becoming a reality.
This article examines the crises facing the contemporary international order and explores strategies for avoiding them, based on a historical analysis of the interwar period.
II. The Kindleberger Trap and Lessons from the Interwar Period
Professor Kindleberger argues in his book The Great Depression: 1929-1939 that the economic and political turmoil of the interwar period was due to the absence of hegemonic leadership in the international system (Note 3). In other words, the stability of the international order requires a hegemonic power to provide international public goods such as maintaining free trade markets, stabilizing capital flows, acting as a “lender of last resort,” preserving the value of currencies, and coordinating macroeconomic policies; however, these conditions had collapsed at that time.
During the interwar period, the United Kingdom lost its status as the world’s hegemonic power. War fatigue, economic hardships, and the rise of colonial independence movements meant that the country's international influence had waned, leaving it unable to exercise leadership. Meanwhile, the United States, which was emerging as a global economic power, adopted an increasingly isolationist stance immediately after the end of World War I. By refusing to join the League of Nations and adopting disarmament policies, it avoided international responsibilities.
The Great Depression that began in 1929 caused severe economic upheaval in both the United Kingdom and the United States. In 1930, the United States passed the Smoot-Hawley Tariff Act, promoting protectionist policies that imposed high tariffs, which led other countries to introduce retaliatory tariffs. As a result, world trade contracted significantly. Furthermore, as one country after another abandoned the gold standard, the race to devalue currencies intensified. This expansion of protectionism led to a decline in international cooperation and the formation of economic blocs, deepening the fragmentation of the global economy.
Thus, the decline of British leadership, the isolationist stance of the United States, and the expansion of protectionist policies in various countries in the wake of the Great Depression created a leadership vacuum in the international community. This situation intensified conflict between countries and ultimately led to the outbreak of World War II. The experience of the interwar period teaches us an important lesson: the continued provision of international public goods by hegemonic powers is essential to the stability of the international order.
Professor Nye applied this analysis to the modern day, coining the term “Kindleberger Trap” for this concept in 2017 (Note 4). The idea is that the international order becomes unstable when existing hegemonic powers stop providing international public goods and emerging powers are unable to take over that role. Professor Nye warned that the decline of the United States' leadership as a hegemonic power, combined with the insufficient capabilities of China as an emerging power are bringing this dynamic into sharp focus.
III. The modern Kindleberger trap is becoming more and more real
The international community today, like that of the interwar period, is facing a structural crisis due to this leadership vacuum. In particular, a series of policies from the Trump administration, which has returned to power in 2025, are making the Kindleberger trap a reality. The United States' abandonment of its responsibility to provide global public goods threatens to fundamentally destabilize the international order.
First, protectionism is on the rise and trade wars are intensifying. Immediately after taking office, the second Trump administration imposed high tariffs not only on China, but also on allies such as Canada, the EU, and Japan under the banner of reciprocal tariffs. These policies are unilateral responses that ignore World Trade Organization (WTO) rules and are reminiscent of the Smoot-Hawley Tariff Act of the 1930s causing stock prices in major markets to plummet and straining relations between the United States and its allies.
Second, international frameworks for cooperation are collapsing. Immediately after returning to power, President Trump announced his intention to once again withdraw from the World Health Organization (WHO) and to close the United States Agency for International Development (USAID), a federal government agency responsible for overseeing much international cooperation. He also openly distrusts NATO, demanding that European countries increase their defense spending. Coupled with other radical positions such as regaining control of the Panama Canal, annexing Greenland, and integrating Canada into the United States, the trust between the United States and other countries has deteriorated significantly.
Third, the international security framework is weakening, and international conflicts are becoming more frequent. First, the war in Ukraine continues unabated. Under the Trump administration, the United States has adopted a less adversarial stance toward Russia, causing friction with NATO. Additionally, tensions between the United States and China are not limited to the economic sphere; they have the potential to spread to the military sphere, driven by security friction over the Taiwan issue and the South China Sea. In the Middle East, in addition to the Palestinian issue, the issue of Iran's nuclear development is also a source of regional instability.
Fourth, the United States' disregard for the issue of climate change is becoming a serious problem. The Trump administration has announced its second withdrawal from the Paris Agreement and has put forward a policy of promoting fossil fuels such as coal and oil. The withdrawal of the United States from the talks will weaken the international framework for climate change cooperation and risks undermining efforts by other countries.
Fifth, the domestic turmoil in the United States is having a negative impact on the international order. The Trump administration announced pardons and commutations for approximately 1,600 individuals charged or convicted in connection with the attack on the U.S. Capitol on January 6, 2021. He also aims to politically restructure the federal bureaucracy through the reinstatement of the “Schedule F” program (Note 5). These actions could undermine the US's democratic system itself and its credibility as an international model of democratic governance. Finally, the United States' withdrawal from the United Nations Human Rights Council and its imposition of sanctions on the International Criminal Court reflect a negative stance toward the international human rights regime, further undermining its reputation as a global leader (Note 6).
IV. China's Limitations as a Global Leader
In recent years, China has been providing international public goods such as infrastructure development services and funding through the promotion of the Belt and Road Initiative and the establishment of the Asian Infrastructure Investment Bank (AIIB). However, conditions are not yet fully established for China to exercise hegemonic leadership in place of the United States.
First, in economic terms, China's gross domestic product (GDP) in 2024 was 64.2%, and its per capita GDP only 15.5% of that of the United States (Note 7). Furthermore, doubts are being raised about its ability to sustain economic growth due to factors such as the collapse of the housing bubble and population decline.
As an international currency, the Renminbi still lags far behind the U.S. dollar, which maintains its status as the key currency for both international settlements and reserves. Behind this are structural issues like the fact that China's GDP is still smaller than that of the United States, the low level of openness of its capital markets, lack of transparency in the financial system, and excessive government intervention.
Moreover, from a political perspective, China's state-led model is inconsistent with the principles of the existing international order, such as democracy and free market economy. This lack of alignment could hinder the formation of international norms and the building of cooperative structures. Additionally, in terms of security, China is a party to conflicts such as the South China Sea issue and the Taiwan issue, and it will not be easy for it to gain the trust and support of the countries involved.
V. Avoiding the Kindleberger Trap
With neither the United States nor China able to fully uphold the international order, countries need to take action to prevent the Kindleberger Trap and avoid repeating the mistakes of the past.
First, the United States should reaffirm its responsibility to provide global public goods and actively participate in stabilizing the international order. The fact that interwar isolationism exacerbated the Great Depression and ultimately led to a world war demonstrates the true risks of abandoning international cooperation.
Second, not only developed countries, but also emerging countries such as China, should contribute to the stability of the international order. Adherence to international rules and responsible behavior will prevent new tensions and contribute to the formation of a cooperative framework. The intensification of conflict increases the risk of the breakdown of order.
Third, there is a need to rebuild a cooperative system based on multilateralism. Countries are required to work together to address global challenges such as climate change, infectious diseases, and financial instability, utilizing frameworks such as the G7, G20, and the United Nations. Unilateralism cannot effectively resolve complex international issues.
Fourth, there is an urgent need to ease geopolitical tensions. In the face of various conflicts, including the war in Ukraine, peaceful resolution through diplomacy and dialogue is highly desirable. At the same time, it is necessary to curb arms buildups and strengthen confidence-building measures.
Fifth, strengthening economic cooperation contributes to the stabilization of the international order. Considering that protectionism and the formation of economic blocs during the interwar period led to a contraction of the global economy and intensified conflict, today it is essential to maintain a free and fair international trading system and build a cooperative system to respond to global financial crises. Economic interdependence can also be a factor promoting cooperation among countries.
Thus, in order to restore a stable international order, it is necessary for major countries—especially the United States and China—to take the lessons of history seriously, prioritize cooperation over confrontation, and take responsible actions based on a long-term perspective that goes beyond short-term national interests.
First published in Japanese on June 20, 2025. English version updated on July 15, 2025.
