I think that The Plaza Accord (1985) ended up crippling Japan economically. The Plaza Accord is an excellent example of my country benefiting from military and economic power - unfortunately, the days of us getting away with this kind of behavior are probably over.
That said, we will probably get away with bullying Europe for a while longer. Canada seems to be standing up to USA pressure fairly well. Europe needs to do the same, and they will probably eventually get there.
Short answers: dollar dominance and market access leverage.
The argument for benefits of US economic power are clear. Less clear is military power:
The Plaza Accord was framed as cooperation among G5 allies. But in practice U.S. security guarantees gave it disproportionate influence. Japan, for example, had little independent military capability, so its security reliance on the U.S. translated into willingness to accept U.S. economic pressure.
> The Plaza Accord was framed as cooperation among G5 allies. But in practice U.S. security guarantees gave it disproportionate influence. Japan, for example, had little independent military capability, so its security reliance on the U.S. translated into willingness to accept U.S. economic pressure.
Really hit the nail on the head here.
If we extrapolate this way of thinking to Europe, the US keeps pushing Europe to fund more of its own defense. If Europe does so, the US will probably find that a more independent Europe may be less likely to agree with the US on other global issues since Europe will need the US less in Europe.
That said, we will probably get away with bullying Europe for a while longer. Canada seems to be standing up to USA pressure fairly well. Europe needs to do the same, and they will probably eventually get there.