As
2025 draws to a close, the international order looks markedly different from where it began. The year unfolded as a sequence of overlapping shocks—aggressive trade measures, decisive political transitions, widening conflicts in West Asia, and relentless summit diplomacy—that together redefined how power is exercised and contested. Rather than a single crisis, it was the accumulation of pressure points that made 2025 a turning year in global affairs.
Weaponised trade and the new age of economic coercion
In 2025, the
United States placed tariffs and sanctions at the centre of its foreign policy toolkit, widening economic rifts with both adversaries and partners. Tensions with
China sharpened as Washington imposed fresh tariffs and technology restrictions, casting trade increasingly as a national security concern amid deepening strategic rivalry. Engagement with
India followed a more calibrated path, involving negotiations on tariffs, supply chains, and critical minerals, even as both sides worked to shield their broader strategic partnership from trade-related strain.
Beyond Asia, the US expanded sanctions and trade pressure on countries including Russia, Iran and select emerging economies. Tariffs, export controls, and financial restrictions were no longer peripheral tools but central instruments shaping diplomacy, alliances, and global economic alignment.
US–China tug-of-tariffs
Amid a global market meltdown, US President Donald Trump announced on April 9 a further increase in tariffs on Chinese imports to 125 per cent, while placing a 90-day pause on punitive levies aimed at most other nations.
China responded by raising tariffs on American goods to 125 per cent from its earlier rate of 84 per cent, matching the level announced by the Trump administration on April 9. Beijing also signalled it would “ignore” any future US tariff hikes.
Subsequent high-stakes talks produced a limited breakthrough, with China and the United States agreeing to remove most tariffs imposed since April 2. The deal eased import duties that had reached unprecedented levels but did not resolve underlying tensions.
The two sides later agreed to a temporary, partial truce in their trade war. Despite this pause, their rivalry remained intense.
Meanwhile, the commercial fallout spread across supply chains. US retail giants began pushing Chinese suppliers to absorb between half and 66 per cent of US import duty costs, according to industry sources, intensifying pressure on business margins.
India’s trade diplomacy in a fragmented global economy
As the year ended, India’s foreign policy agenda was shaped less by headline-grabbing summits and more by sustained negotiations over tariffs, carbon measures, and supply chain rules. Across Washington, Brussels, Riyadh, and other capitals, New Delhi focused on securing market access, hedging against “weaponised” trade and positioning itself as a dependable link in reconfigured global supply chains, particularly in the aftermath of Trump’s tariff moves.
A major milestone came on July 24 with the signing of the India-United Kingdom Comprehensive Economic and Trade Agreement (CETA). The pact provides tariff reductions, expanded market access and coverage across goods, investment, procurement, services and mobility.
Under the agreement, 99 per cent of Indian exports to the UK will attract zero duties, including textiles, leather, engineering goods, marine products, gems and jewellery. India agreed to cut tariffs on nearly 90 per cent of UK goods. Duties on British whisky and gin will drop from 150 per cent to 75 per cent immediately and decline to 40 per cent over ten years. Import duties on UK-manufactured cars will fall from over 100 per cent to 10 per cent under a quota system, with specific provisions for electric and hybrid vehicles.
Big leadership changes that reset political equations
Political transitions across key capitals reshaped power equations in 2025, adding to a year already marked by uncertainty and recalibration.
• United States: Donald Trump returned to the White House, completing a dramatic political comeback and ushering in sharp changes in US domestic and foreign policy.
• Japan: Sanae Takaichi sworn in as Japan’s first female Prime Minister following leadership changes within the Liberal Democratic Party, signalling adjustments in Japan’s security and economic strategy.
• Bangladesh: Sheikh Hasina resigned as prime minister and fled the country after weeks of deadly protests that began as student demonstrations against government job quotas and escalated into a wider movement demanding her resignation.
• France: Political instability deepened after Prime Minister François Bayrou lost a confidence vote in the National Assembly. The defeat followed rapid leadership churn, including Sébastien Lecornu’s 14-hour administration, the shortest in modern French history, and stalled efforts to form a new cabinet with the conservative Republicans and centre-right Renaissance parties, triggering broader questions about President Emmanuel Macron’s future.
• Guinea: Junta leader Mamady Doumbouya was elected president, securing 86.72 per cent of the vote in the first round, according to provisional results, in elections held without the participation of major opposition leaders.
• Honduras: Conservative Nasry Asfura was declared the winner of the country’s disputed presidential election, with the result announced by the election commission.
Israel, Iran and the expanding arc of conflict
In 2025, Israel faced escalating, multi-front confrontations that brought the Middle East closer to a broader conflict. Tensions with Iran intensified through direct and indirect strikes, cyber operations, and explicit threats of retaliation. Along the Lebanon border, clashes with Hezbollah grew from sporadic exchanges into sustained military pressure.
The war in Gaza continued to pull in regional actors, disrupting shipping routes and raising insecurity across West Asia. Collectively, these developments marked one of Israel’s most volatile security environments in decades, reshaping regional alliances, diplomatic engagement, and global debates over escalation and restraint.
Gaza Peace plan struggle to keep pace with events
In West Asia, a multilateral ceasefire and broader peace plan between Israel and Hamas came into effect in October 2025 as part of an internationally negotiated framework.
Initiatives backed by the United States, Egypt, and Qatar proposed phased ceasefires, expanded humanitarian access, and a framework for post-war governance in Gaza. Israel, for its part, maintained demands for security guarantees and the dismantling of Hamas. Deep mistrust, disagreements over Gaza’s future administration, and wider regional tensions repeatedly stalled implementation, leaving the peace plan unresolved as diplomacy lagged behind developments on the ground.
Summit diplomacy
Against this backdrop, multilateral forums became arenas for managing — rather than resolving — global fractures. Leaders of the Group of Seven (G7) — Canada, France, Germany, Italy, Japan, the United Kingdom and the US — met in July in Kananaskis, Alberta, for the 51st G7 summit. The gathering traced its roots back to 1975, when the first meeting was held in Rambouillet, France, as the G6, before Canada joined a year later.
Alongside the G7, meetings under the G20 and Asean frameworks reflected a world grappling with overlapping crises, where dialogue remained essential even as consensus proved elusive.
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