Several characters in The Man in the High Castle read the popular novel The Grasshopper Lies Heavy, by Hawthorne Abendsen, whose title is assumed or supposed to have come from the Bible verse: "The grasshopper shall be a burden" (Ecclesiastes 12:5). Thus, The Grasshopper Lies Heavy constitutes a novel within a novel, wherein Abendsen writes of an alternate universe, where the Axis Powers lost World War II (1939–47). For this reason, the Germans have banned the novel in the occupied U.S.; but it is widely read in the Pacific, and its publication is legal in the neutral countries.
The Grasshopper Lies Heavy postulates that President Roosevelt survives an assassination attempt but forgoes re-election in 1940, honoring George Washington's two-term limit. The next president, Rexford Tugwell, removes the Pacific fleet from Pearl Harbor, Hawaii, saving it from Japanese attack, which ensures that the U.S. enters the conflict a well-equipped naval power. The United Kingdom retains most of its military-industrial strength, contributing more to the Allied war effort, leading to Rommel's defeat in North Africa; the British advance through the Caucasus to fight alongside the Soviets to victory in the Battle of Stalingrad; Italy reneges on its membership in the Axis Powers and betrays them; British tanks and the Red Army jointly conquer Berlin; at the end of the war, the Nazi leaders—including Adolf Hitler—are tried for their war crimes, wherein the Führer's last words are Deutsche, hier steh' ich ("Germans, here I stand"), in imitation of Martin Luther.
After the war, Winston Churchill remains the British Prime Minister, and, because of its military-industrial might, the British Empire does not collapse. The U.S. establishes strong business relations with Chiang Kai-shek's right-wing regime in China after vanquishing the Communist Mao Zedong. The British Empire becomes racist and more expansionist post-war, while the U.S. outlaws Jim Crow laws, resolving its racism by the 1950s. Both changes provoke racial-cultural tensions between the U.S. and the U.K., leading them to a Cold War for global hegemony between their two vaguely liberal, democratic, capitalist societies. Although the end of the novel is never depicted in the text, one character claims the book ends with the British Empire eventually defeating the U.S., becoming the world superpower.