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The Rest of the World (Special) Report | The Hedge

The View From Everywhere Else | September 22, 2026

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THE HEDGE

Photo by manas rb on Unsplash

For nine months, the countries that have anchored American power since 1945 have been quietly building an exit door. Not out of the alliance itself. None has left NATO. None has renounced a defense treaty. But out of dependence on it.

Trade deals have been signed around Washington instead of through it. Defense industries have been rebuilt to answer to no one but themselves. A joint communiqué was signed after an American strike on a neighboring capital, while other governments in the same region cheered that strike on. This is not seven unrelated stories. It is one pattern, documented across seven threads, from December 2025 to this week.

THREAD ONE — THE REFUSAL

The sequence played out in a single day, and Washington started it.

On September 16, 2026, European Commission President Ursula von der Leyen told Canadian Prime Minister Mark Carney she wanted to open the door for Canada to become the EU’s first “associate member.” It is a status short of full accession, but deeper than any trade partnership Brussels has extended to a non-European state. She framed it as a response to global instability. Democracies, she told Carney, were facing a fracture in the international rules-based system, and Brussels and Ottawa needed to pull closer together. She was careful about the target, calling the partnership one built for “common strength” rather than against anyone else.

Trump did not read it that way. Before Carney could even deliver his own remarks, Trump suggested the arrangement could be a “hostile act” and threatened heavy tariffs on Europe if he judged the intentions behind it unfriendly.

That threat is what Carney stood up to answer on September 17, in an address to the European Parliament in Strasbourg. He did not frame the EU pitch as a rupture with Washington. He framed it as insurance against one. “We are not fair-weather allies. We do not pursue zero-sum deals,” Carney said. He disclaimed any ambition to build a rival power bloc, telling the chamber he was not proposing a third bloc to compete with Washington on worse terms. He said no outside power would dictate Canada’s culture or choice of partners, an answer to the tariff threat made against him the day before.

Asked how Washington might react to the pitch, Carney said the alliance was a positive step, not a provocation aimed at the American president. He argued the arithmetic cut the other way from how the White House might read it: a stronger, more resilient Canada would make a more effective partner for the United States, not a less loyal one.

Canada is not abandoning its largest trading partner. It is building a second option, in public, days after being told that building it could be treated as hostile. That is the hedge, stripped of subtlety, from the country with the most to lose by making it so.

THREAD TWO — THE STRATEGY THAT STARTED IT

The hedge did not begin with any ally. It began with a document Washington wrote about itself.

The Pentagon’s 2026 National Defense Strategy sets out four priorities, according to an April 2026 briefing from the European Parliamentary Research Service, authored by Sebastian Clapp and Darius Engel: homeland defense and dominance of the Western Hemisphere, deterring China in the Indo-Pacific, greater allied burden-sharing, and rebuilding the American defense industrial base. Russia is framed in the strategy as a “persistent yet manageable threat,” mainly to NATO’s eastern members. China is named the “most consequential long-term strategic challenge.”

The briefing’s read on what that means for Europe is direct. Europe must now assume “primary responsibility for conventional defence,” with American support described as “critical but more limited.” The briefing calls the shift “flexible realism.” In practice, the strategy replaces open-ended reassurance with a transactional model, rewarding allies who meet spending targets with prioritized cooperation while implicitly penalizing the ones who fall short. European experts cited in the briefing describe a “narrowing” American focus that leaves Europe needing its own consolidated defense industrial base and independent operational capability, potentially including an adapted British-French nuclear deterrent. The European Parliament’s own response, per the briefing, was a call for urgent autonomous European security measures without abandoning NATO.

That document supplies the mechanics allies have spent the year responding to. In a February 18, 2026 analysis for the Council on Foreign Relations, James M. Lindsay laid out what allies were already doing about it. Canada and Britain were negotiating trade deals with China. The European Union was striking agreements with Mercosur nations and India. Canada was raising military spending while steering more of it toward domestic arms purchases instead of American ones. Europe was reviving its own defense industrial base and discussing a shared nuclear umbrella among European states. Poland was weighing its own nuclear weapons program. The CPTPP trade bloc was expanding without the United States in it. Lindsay closed on a warning aimed at Washington, not at its allies. A future with fewer, less committed friends, he wrote, would leave the United States with “no one but itself to blame.”

Philip Gordon and Mara Karlin made a related case in “The Allies After America: In Search of Plan B,” published in the January/February 2026 issue of Foreign Affairs. Their argument was less about allies already hedging than about allies who have not yet built a real alternative and are running out of time to. For now, they wrote, most are “playing for time,” relying on flattery and one-sided trade concessions to keep Washington engaged rather than building independence. Trust in the United States, they wrote, “has collapsed”: a Pew Research Center survey of 24 countries found large majorities reporting no confidence in Trump on world affairs. If the retreat continues, Gordon and Karlin argued, allies will have little choice but to accelerate the defense buildups, nuclear debates, and trade realignments already underway without Washington.

The European Parliament’s own research service reached the same place from the inside, in an earlier, narrower assessment than the April strategy briefing above. A February 13, 2026 study found Washington increasingly prioritizing Asia and pressing Europe to assume greater responsibility for its own defense. Europe, the study found, was actively debating how to respond to diminished American security guarantees. Its own language captured the stakes without softening them: the alliance could be “weakened, or irreparably changed.”

Not every read of the moment is alarmed. In a later Council on Foreign Relations piece, “The New Transatlantic Bargain,” senior fellow Matthias Matthijs argued the old model, American security in exchange for European loyalty, was never sustainable. Trump’s return, Matthijs wrote, convinced European leaders “the United States, though still indispensable, is no longer reliable.” He framed that shift as good news for Washington, not bad: a more autonomous Europe, in his reading, makes the alliance more durable rather than diminishing American control over it. Matthijs also points to the asset Washington still holds that neither Beijing nor Moscow can match: more than fifty treaty allies, against China’s limited partnerships and Russia’s dependent client states.

The Pentagon’s own strategy document, a research service inside the European Parliament, and two separate foreign-policy analyses all describe the same restructuring already under way. Only Matthijs frames it as something other than a risk: a fix, if Washington handles it well.

THREAD THREE — THE SURVEY

Diplomatic set pieces like Strasbourg get the headlines. A global survey published by the Stimson Center on May 2, 2026 shows the same instinct running quietly through governments that never made a speech about it.

The report, “Fit for Purpose? Assessing American Alliances,” by researchers including Emma Ashford, Christopher Preble, and Ansgar Baums, surveyed officials and experts across regions and found the hedge is not confined to Washington’s formal treaty allies. Nearly two-thirds of respondents said their country’s alliance with the United States makes it harder to engage economically with China — a constraint felt unevenly. A Thai respondent warned of a “U.S. policy of forcing us to choose between U.S. or China during peacetime.” Philippine elites felt the pull the other way: despite Manila’s own tensions with Beijing over the South China Sea, they were reported to view Chinese government infrastructure projects as economically attractive on their own terms.

The pattern holds outside Asia. A Colombian respondent described the balance as keeping an “essential security alliance with the United States” while “carefully engaging China where it serves economic development.” Brazilian experts rejected being “forced to choose between the United States and China” in similar terms. Turkish experts pointed to their own country’s participation in Chinese-led infrastructure projects as a way of preserving room to maneuver alongside its NATO commitments. Emirati officials described leaning on Chinese economic ties while still relying on the United States for deterrence. Latin American respondents went further than hedging: they rated American reassurance measures as actively decreasing their own security, a judgment the survey’s authors tied to a longer regional memory of US intervention.

None of these governments has renounced its relationship with Washington. What the survey documents is a habit of mind, not a rupture: keep the American security guarantee, and quietly build every economic option that guarantee does not require.

THREAD FOUR — THE MONEY

The clearest evidence of hedging is not a speech. It is a signature, with tariff schedules attached.

On January 27, 2026, India and the European Union finalized a trade agreement between two economies already deeply linked. Goods trade between them had totaled $136.5 billion in India’s most recently completed fiscal year, 2024-25, according to India’s government; adding services puts the full bilateral relationship closer to $200 billion a year. Together the two sides represent 25 percent of global GDP and a third of global trade, Modi said. European Commission President Ursula von der Leyen called it “the mother of all deals.” Modi struck a quieter tone, framing the deal as a stabilizing force for the international system at a moment of global turmoil.

The mechanics of the deal are where the scale becomes concrete. Import duties on European automobiles into India will fall from 110 percent to as low as 10 percent, with a 250,000-vehicle annual quota, and tariffs on European auto parts phased out over five to ten years. Textiles, leather, footwear, and garments get immediate duty elimination on the European side. Industrial chemicals moving from the EU into India face no tariffs at all, while Indian chemical exports gain reductions of up to 12.8 percent. Wine and spirits get phased-in cuts. Beef, chicken meat, rice, and sugar stay excluded on the European side, protecting European farmers from Indian competition. India will eliminate or reduce duties covering 96.6 percent of EU export value, while the EU liberalizes 99.5 percent of its tariff lines on Indian goods. Once ratified, reductions phase in gradually over as long as ten years, depending on the product category.

Coverage of the agreement, not the leaders who signed it, described both sides as moving to hedge against unreliable ties with the United States. Neither Modi nor European officials used that framing in public remarks. It is the press characterization of the deal’s strategic logic, not a quoted motive. What is not in dispute is the timing and the scale. It is the EU’s largest new trade partnership in years. It was struck with the country Washington has spent a decade courting as a counterweight to China, and it was finalized without Washington in the room.

THREAD FIVE — THE WEAPONS

Nowhere is the hedge more mechanical, or more involuntary, than in the weapons pipeline. And nowhere does the pattern split more clearly into two different stories wearing the same headline.

The depletion is sharper, and more recent, than an April snapshot alone would suggest. U.S. Patriot missile stockpiles had fallen from roughly 2,330 before the Iran war to 759 to 827 by late July 2026, a decline of about two-thirds, according to Center for Strategic and International Studies estimates. THAAD interceptors, starting from a pre-war baseline of 452, had fallen to roughly 43 to 47 percent of that total by the same July snapshot. A week later, the picture had worsened: CNN reported on August 4 that the U.S. had exhausted nearly 80 percent of its THAAD interceptors, with senior military commanders describing the broader munitions stockpile as “dangerously low.” Rebuilding THAAD to pre-conflict levels could take three years or more, according to analysts cited in that report.

The Precision Strike Missile figure has moved in the same direction. CSIS’s own April assessment of munitions at the Iran war’s ceasefire found an unresolved dispute: one Army official said the Army’s entire inventory of Precision Strike Missiles had been expended, while other officials maintained some remained. By August 26, the Washington Post reported a more specific figure: up to 75 percent of the Army’s 90 Precision Strike Missiles had been used. ATACMS stock, a shorter-range backup weapon Precision Strike Missiles were meant to replace, stood at roughly 800 rounds as of the April assessment.

The effort to replenish U.S. defenses has come at allies’ direct expense. Retired Marine Col. Mark Cancian described the mechanism. Japan bought 400 Tomahawks, he said, and is now “being pushed back in the queue.” The same Washington Post reporting found South Korea and Taiwan absorbing the same squeeze in different forms. The U.S. canceled a joint amphibious landing exercise with South Korea that had been scheduled for September, citing the Iran war’s demands on American forces. Taiwan expects significant delays on Pac-3 Patriot missile deliveries, with the shortfall traced to the Pentagon’s depleted interceptor stockpile. Jennifer Kavanagh of Defense Priorities said the chance Taiwan receives the full 100 Patriots it was promised is “pretty low.” More than 30 ships bound for the Pacific have been diverted to the Middle East over the same period, according to the same reporting.

The stakes behind that diversion are not abstract. Xi Jinping has instructed China’s military to be ready to invade Taiwan by 2027, and China fields more than 3,000 ballistic missiles against a Taiwanese and American interceptor stockpile now measured in the low hundreds. Analysts describe the resulting gap as a “window of vulnerability.”

Ukraine, not a treaty ally but the most exposed customer in the queue, has felt the weapons squeeze more sharply still. In March 2026, President Volodymyr Zelenskyy said more than 800 Patriot interceptors had been fired in the Middle East over a single three-day span, more than Ukraine had received in total since Russia’s 2022 invasion.

Taiwan’s separate arms backlog is a different problem wearing the same symptoms. As of August 2026, the value of Foreign Military Sales cases notified to Congress but not yet delivered to Taiwan stood at $29.72 billion, according to the Taiwan Security Monitor. That backlog predates the Iran war. It traces to manufacturer capacity, not battlefield diversion. Paladin howitzer deliveries are not expected to begin until 2030 because of production delays. A Joint Standoff Weapons sale notified to Congress in June 2017, nearly a decade ago, will not be delivered until 2027 or 2028. Delays in Mk 48 torpedo deliveries have pushed Taiwan’s Ministry of National Defense to consider borrowing active-inventory torpedoes from the U.S. military. Taiwan’s F-16 Block 70 jets are built at Lockheed Martin’s Greenville, South Carolina facility. Production capacity there, not the Iran war, is the documented bottleneck.

Two formal treaty allies, Japan and South Korea, pushed back in the queue by battlefield triage. A wartime partner with no treaty at all watching its patron ration the same weapons it needs. A separate case in Taiwan, where the delay predates the war and traces to factory capacity, not diversion. Different causes, same result for anyone in Seoul, Tokyo, or Taipei watching the queue: American weapons are not guaranteed to arrive on schedule.

THREAD SIX — THE EXCEPTION

Five threads document allies making quiet, hedged, forward-looking decisions. The sixth region did not have the luxury of quiet, and it did not respond as a bloc.

On January 3, 2026, the United States struck targets in Venezuela in an operation reported to have resulted in the capture of Nicolás Maduro. The hemisphere split immediately, and openly.

One camp celebrated. Argentina’s Javier Milei posted his own campaign slogan in response, writing that “liberty advances, long live liberty, damn it.” El Salvador’s Nayib Bukele posted an image of the captured Maduro without further comment. Ecuador’s Daniel Noboa warned Venezuela’s remaining allies. “To all the narco Chavista criminals, your time is coming,” he said. Paraguay’s Santiago Peña said simply that Maduro’s downfall “can only be good news.” Guyana deployed troops to its own Venezuela border in support. Venezuelan opposition leader María Corina Machado said days later, on January 6, that Venezuelans were “very grateful” to Trump.

The other camp condemned it outright. Colombian President Gustavo Petro went furthest. “The US is the first country in the world to bomb a South American capital,” he said. Chile’s Gabriel Boric warned of the precedent. “Today it is Venezuela; tomorrow it could be anyone else,” he said. Cuba’s Miguel Díaz-Canel called the operation “an act of state terrorism,” and Havana reported 32 of its own military personnel killed in it. Honduras’s Xiomara Castro said her government condemned “this barbarity.” Brazil’s Lula da Silva warned the bombing crossed “an unacceptable line” and risked wider violence and instability. Mexico’s Claudia Sheinbaum said flatly that intervention “has never brought democracy.”

Trump’s own language matched the escalation his critics were describing. Asked about Petro on January 5, Trump said Petro was “not going to be doing it very long.” Asked separately whether military action against Colombia was on the table, he said it sounded good to him. The same day, he said Cuba looked ready to fall. He also turned to Mexico, warning that drugs pouring across the border meant Washington would “have to do something.”

The condemnation crystallized into paper. On January 4 and 5, 2026, six governments, Spain, Brazil, Chile, Colombia, Mexico, and Uruguay, issued a joint statement rejecting the operation outright. “These actions constitute a dangerous precedent for peace,” the statement read, and called for the crisis to be resolved through dialogue rather than force. At an emergency UN Security Council session, Venezuela’s ambassador called it an “illegitimate armed attack,” while the U.S. representative, Mike Waltz, described it as a “surgical law enforcement operation.” UN Secretary-General António Guterres said the operation set “a dangerous precedent.” On January 5, Switzerland’s Federal Council froze all assets in the country linked to Maduro and his associates. Twenty-six EU member states issued a joint call for respect of international law in the operation’s aftermath.

Latin America is the one region where the hedge did not stay hedged, and did not stay unified. Direct military action against a neighboring capital collapsed the distance between quiet contingency planning and open confrontation in under twenty-four hours, and split the hemisphere into camps that neither Washington nor its critics fully controlled.

THREAD SEVEN — THE BENEFICIARY

Every one of the first six threads describes a gap opening between Washington and its allies. China has spent the same nine months positioning itself in that gap, uninvited and without closing it.

In the South China Sea, the pattern has been steady pressure rather than a single incident. On January 12, 2026, the Philippines and China traded accusations over rising tensions, with Manila condemning what it called Beijing’s aggressive maritime activity. Three days later, Japan moved to shore up Manila. On January 15, Tokyo and the Philippines signed a defense pact allowing their militaries to exchange fuel and ammunition during joint exercises. Tokyo backed it with a $6 million package to build naval facilities for Philippine patrol boats. China called it a pretext for Japanese “remilitarization.” A joint U.S.-Philippine exercise followed at the disputed Scarborough Shoal on January 26, involving a frigate, a coast guard vessel, a helicopter, and two aircraft. China answered with its own air and naval patrols around the shoal, publicized by its Southern Theater Command. Satellite imagery has since shown China preparing to claim land on Antelope Reef in the Paracel Islands, with infrastructure consistent with a future military installation.

Pressure on Taiwan followed a similar rhythm. Rockets landed in Taiwanese waters during Chinese exercises in late December 2025. A Chinese surveillance drone crossed into airspace over the Taiwan-controlled island of Pratas on January 17. Taiwan’s defense ministry called the intrusion “provocative and irresponsible.” Taiwan responded on January 29 with drills simulating a repulsion of sea assault. That exercise marked the first deployment of its own domestically built suicide drones.

Even as it pressed Manila and Taipei, Beijing was courting New Delhi. On January 26, the same day as the Scarborough Shoal exercise, Xi Jinping marked India’s Republic Day by calling China and India “good neighbor, friend and partner” and calling for expanded cooperation. India moved in step: officials said the government planned to scrap restrictions, in place since a deadly 2020 border clash, that had barred Chinese firms from bidding on Indian government contracts. Removing that bar opens an estimated $700 to $750 billion in Indian government contracting to Chinese companies, a market access grant to Beijing that arrived the same month India was signing its hedge-against-Washington trade deal with Brussels.

On July 6, 2026, China tested a submarine-launched ballistic missile, reported as a JL-2 or JL-3, nuclear-capable. The dummy warhead traveled roughly 4,500 miles across the Pacific. The US and Japan said Beijing gave only a few hours’ advance notice; Australia received about 23 hours, just under the international standard. The Marshall Islands and Palau signed onto the resulting joint statement and separately lodged their own protests. That statement, from the United States and 40 other countries, said the test broke with standard practices for notifying and deconflicting ICBM, submarine-launched ballistic missile, and space launch vehicle tests, and called for a minimum of 24 hours’ notice from nuclear-weapon states going forward. China’s disarmament ambassador, Li Chijiang, rejected the criticism. Beijing, he said, “has always conducted its ICBM tests safely and responsibly.” He noted China has carried out only three ICBM test launches, against more than 300 by the United States.

Even the summit meant to manage the relationship ran late. A Trump-Xi meeting originally planned for April 2026 was delayed by the Iran war, then confirmed for May 13-15 once the conflict eased. China’s Foreign Ministry announced the state visit in a single sentence, dated to those three days, at Xi’s invitation.

Economically, China’s Belt and Road Initiative recorded its highest first-half engagement since 2013. The total, combining investment and construction contracts, reached $126.4 billion, according to a tracking report from the Green Finance & Development Center. Construction contracts rose year over year. Investment, by contrast, fell over the same period. Cumulative Belt and Road engagement since 2013 now totals $1.539 trillion. Thirty-two individual projects each now exceed $1 billion in value, a marked shift from the smaller-scale projects that defined the initiative’s pandemic-era years. Africa alone absorbed the sharpest swing. Chinese investment there hit $33.5 billion in the first half of 2026, a 254 percent jump over the same period in 2025. Ethiopia took $18.9 billion of it and Egypt $9.7 billion, and the continent accounted for two-thirds of all BRI investment worldwide that half-year.

China is not simply filling the space allied hedging has opened. It is pressing its own claims in the Pacific on its own timeline while opening new doors in New Delhi, and its infrastructure lending is hitting new construction highs even as fresh investment slows. The documented record shows pressure, courtship, and opportunity moving side by side, not one causing the other.

CLOSING STATEMENT

None of these seven threads ends in NATO’s dissolution. Canada is still Washington’s neighbor. Japan still hosts American bases. Colombia still buys American weapons. Türkiye and the UAE still rely on American deterrence even while courting Chinese capital. China still sends its foreign minister to Washington and its president to meet Trump. Nothing here is a divorce.

What the documented record shows is smaller and more durable than a divorce. A US defense strategy document itself told allies to expect less. A trade deal was signed around Washington instead of through it, with a decade-long tariff schedule attached. A defense industrial base was rebuilt to answer to no one else. A missile queue now exists where loyalty does not guarantee a delivery date, stretching from Tokyo to Seoul to Taipei, with a wartime partner watching the same queue from outside the alliance altogether. A global survey found officials across Asia, the Middle East, and Latin America describing the same quiet math: keep the American guarantee, hedge everything else. A hemisphere split in real time over a strike on one of its own capitals, six governments condemning it on paper, five more governments cheering it on, and Venezuela’s own opposition leader thanking Washington for it. A prime minister told the European Parliament, in front of cameras, that his country is not a fair-weather ally, a day after being told in public that saying so could be treated as hostile.

The hedge is not a prediction. It has already been built. What happens to it next depends on decisions that have not yet been made in Washington.

SOURCES

“Whenever the people are well informed, they can be trusted with their own government.” — Thomas Jefferson, 1789