To The Moon

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Two major forces are shaping Washington’s current foreign policy priorities: the escalating U.S. fiscal crisis and the strengthening Russia–China economic partnership. Both factors are converging to push the U.S. toward seeking a resolution in the European theater of war.

From Washington’s perspective, the war in Ukraine has already inflicted enormous costs. It has drained manpower, consumed resources, and destabilized global trade flows. Europe remains determined to resist, but the longer the conflict drags on, the more it undermines U.S. economic resilience and limits Washington’s ability to reindustrialize at a time when the national debt has reached unprecedented levels.

The nightmare scenario for U.S. policymakers is clear: a durable, long-term Russia–China partnership. And this partnership is no longer limited to energy.

Russia’s Commodities and China’s Industrial Advantage

Consider Russian aluminum. Before the war, China imported roughly 10,000 tons from Russia. Today, that figure exceeds 160,000 tons—a sixteen-fold increase. Western sanctions effectively redirected Russian commodities eastward, where Beijing secured supply at a steep discount, likely 10–30%. The result? Chinese industries gained an even greater competitive edge in electric vehicles, machinery, and advanced manufacturing.

This is one of the clearest demonstrations of how Russia’s realignment toward China reshapes global trade flows. While U.S. and European manufacturers struggle with higher input costs, China is building supply chains at scale with cheaper raw materials.

The Shift Away From the Dollar

Equally concerning for Washington is the acceleration of de-dollarization. Russian exporters have rapidly transitioned to conducting trade in Chinese renminbi. In 2024, Russia exported nearly $10 billion worth of goods to China in a single month, but over $13 billion in exports were invoiced in renminbi. In other words, Russia is not just transacting in Chinese currency—it is actively normalizing alternatives to the dollar in its global trade.

This trend poses long-term risks for dollar hegemony. The longer the conflict continues, the more Russia and China cement these alternative systems. That is why Trump’s push for peace carries an economic imperative: the U.S. cannot afford a prolonged war that accelerates the erosion of dollar dominance.

The U.S. Fiscal Bind

Overlaying this geopolitical picture is the U.S. debt crisis. The national debt has surged past $37 trillion—well ahead of projections—and the snowball effect is accelerating. Instead of shrinking deficits, Washington now faces runaway obligations.

Interest expenses alone have surpassed $1 trillion in the first 10 months of the fiscal year and are on track to reach $1.2 trillion by year-end. For perspective, the U.S. now spends more on debt servicing than on healthcare or defense. At prevailing interest rates above 4%, this trajectory is unsustainable.

Foreign investors hold about $8.5 trillion of U.S. Treasuries—less than a quarter of the total—but domestic investors are bearing the bulk of the burden. With the Federal Reserve constrained from expanding its balance sheet without reigniting quantitative easing, private investors will likely demand higher yields. That risks repeating the April scenario, when bond yields rose while the dollar weakened, signaling a loss of investor confidence.

Manufacturing Weakness and Stagflation

Meanwhile, U.S. manufacturing data underscore the severity of the problem. The ISM index shows contraction for four consecutive months, with new orders declining for five straight months. Prices paid have surged to levels not seen since the 2022 inflation spike, while employment in the sector has declined nearly a full year in a row.

In short, the U.S. is experiencing stagflation—rising costs, falling demand, and weakening industrial output. Against this backdrop, tariffs designed to reshore production have become a double-edged sword: they may incentivize domestic investment, but they also lock Washington into perpetual deficit spending and subsidies to sustain uncompetitive industries.

Trump’s Peace Calculus

Trump’s urgency for peace is therefore not simply about ending a war—it is about alleviating economic pressures. Ukraine has sought U.S. security guarantees, even offering $100 billion to secure American weapons and support. Yet Trump appears intent on pushing Kyiv toward concessions, including recognizing Russia’s control over Crimea and potentially other regions such as Luhansk, Donetsk, and Kherson.

If Ukraine refuses, the war continues, draining U.S. and European coffers. If Ukraine concedes, Russia consolidates territorial and resource control, strengthening its geopolitical position. Either outcome places the West in a bind.

The economic stakes are particularly high because Ukraine itself contains significant mineral wealth, much of it in areas under Russian influence. Should Moscow solidify control, it would expand its dominance in global commodities—potentially supplying the U.S. with critical raw materials if sanctions are lifted. This is why Trump’s peace strategy is rooted not just in geopolitics, but in supply chain calculus.

The Russia Factor in U.S. Supply Chains

The U.S. still relies on Russia for nuclear fuels, fertilizers, and select metals. In fact, bilateral trade increased by 20% during Trump’s term, rising to over $6 billion in 2024. Russia was notably absent from Trump’s tariff list, suggesting that economic pragmatism already shaped his policy choices.

The logic is straightforward: Trump cannot replicate China’s global investment in mining projects. Instead, Russia represents a ready-made lifeline for critical resources. Ending the war and normalizing trade with Moscow would provide Washington with immediate access to raw materials essential for its industrial policy.

Risks and Strategic Ambiguities

Still, the strategy carries major risks. Russia is a core member of BRICS, and its strategic alignment with China cannot be ignored. Even if Trump secures short-term agreements, there is no guarantee Russia would trust U.S. commitments, particularly given the political volatility of American administrations.

The $300 billion in frozen Russian reserves, largely trapped in Europe, is another sticking point. Unless those sanctions are lifted, Moscow may see little incentive to deepen ties with the U.S. Any perceived betrayal would likely push Russia even closer to China and its alternative financial systems.

Conclusion: An Uneasy Peace or Prolonged Strain?

Trump’s push for peace with Russia is less about diplomacy than about economics. The U.S. faces a spiraling debt crisis, weakening manufacturing, and the mounting threat of de-dollarization. By normalizing relations with Moscow, Trump hopes to relieve domestic economic pressures and undercut China’s industrial advantage.

Yet this path is fraught with uncertainties. Russia is negotiating from a position of strength, Ukraine is unlikely to concede easily, and long-term trust between Moscow and Washington remains fragile at best.

In the end, the U.S. imperative is clear: without a resolution, the economic strain will deepen, bond markets will remain under pressure, and the dollar’s global dominance will continue to erode. Whether Trump can translate that imperative into a durable peace remains to be seen.