Representational (AI generated).
In 2025, the global political landscape was reshaped by a potent mix of resurgent populist nationalism, widening economic fragmentation, and escalating regional conflicts. The return of Donald Trump to the White House in January, reviving his “America First” agenda for a second term, acted as a catalyst for worldwide political turbulence, disrupting long-standing alliances, unsettling trade relationships, and recasting the rules of international diplomacy.
The year saw pivotal developments across the globe, with South Asia’s most serious India–Pakistan crisis in years, to the protracted Israel–Gaza war and diplomatic ceasefire efforts, to a trade standoff between the US and India featuring punitive tariffs. Though India navigated these challenges with robust effort, its relationships with major powers were tested at critical inflection points.
Trump 2.0, tariffs and India
Trump returned as President of America for a second consecutive term on January 20, 2025. He unlocked a wormhole of tariff reforms, broadening tariffs, challenging multilateral trade norms and re-engaging selectively in conflict diplomatic efforts.
Despite Indian Prime Minister Narendra Modi visiting his ‘friend’ Trump at Washington DC in mid-February and discussing defence cooperation, trade, energy imports, and partnerships, structural tensions over trade policy and strategic autonomy originated between the two powers.
Trump’s economic policy, precisely US tariffs, reshaped trade patterns, supply chains, and national strategies. Despite months of negotiations, the Trump administration formally imposed sweeping tariffs on Indian goods early August 2025, starting with a 25% “reciprocal tariff” and quickly followed by an additional 25% penalty tied to India’s continued purchases of Russian oil. The result was an effective 50% tariff on many major Indian exports to the United States. This was one of the highest tariff rates the US imposed on India in decades.
This undermined the US’s deep economic integration and cooperation with India, one of its strategic partners in the past.
The US ‘tariff tsunami’ sent shockwaves through Indian industries, putting pressure on textiles, gems, jewelry, marine exports, and MSMEs. However, the Indian government pushed forward the self-reliance rhetoric and economic reforms, seeking to cushion farmers, micro and small enterprises, and accelerate initiatives like domestic semiconductor manufacturing.
Further, Trump’s economic policies were factors that drove inflation in the year. Tariffs raised import costs, immigration restrictions tightened labour markets, fiscal policy sustained demand, and geopolitical uncertainty kept energy markets unsettled. While inflation did not spiral out of control, it proved stubborn and uneven, highlighting the trade-offs inherent in an economic model that prioritized national leverage over global integration.
Then, the Trump administration rolled out tighter visa rules along with a sharp increase in fees for H-1B visas, measures that disproportionately affected Indian professionals and unsettled expatriate communities in America. These steps, coupled with stepped-up deportations and stricter enforcement, reinforced an uncompromising immigration stance and added to the strain in bilateral relations.
Efforts to forge a comprehensive US–India trade agreement broke down as mutual confidence weakened. Following the imposition of tariffs, New Delhi withdrew from the negotiations, laying bare fundamental disagreements over market access, agricultural trade, and regulatory frameworks.
The Pahalgam
But what particularly rocked the conscience of India was the April 22 Pahalgam terror attack in Jammu & Kashmir. The Indian government formally accused Pakistan of sponsoring and orchestrating the Pahalgam terror attack, which resulted in the deaths of 25 tourists and one local civilian in the Baisaran meadows of the Union territory. India attributed the attack to militants operating from across the Line of Control, prompting expulsions of diplomats, suspension of key bilateral treaties, and heightened alert.
India did not stop short but launched Operation Sindoor, targeting militant positions in Pakistan-controlled territories, causing escalations, including cross-border exchanges. This gave rise to fears of a larger war, but international calls and direct diplomatic contacts led to a full and immediate ceasefire on 10 May 2025, with India and Pakistan agreeing to halt hostilities.
Following this, Donald Trump appeared on the scene and claimed that he solved the conflict between India and Pakistan. Despite India maintaining that the truce between the archrivals was met via bilateral mechanisms, Trump repeated his claims on multiple platforms. Citing this claim along with other claims of his stopping other global conflicts across the globe, including the Israel-Hamas war, he made several public statements asserting that he deserved the Nobel Peace Prize. He claimed that excluding him would be a significant "insult" to the United States.
A relief to Palestinian sufferings
Israel’s genocidal war in Gaza, which started in October 2023, reached a relieving ceasefire following a major diplomatic effort in October 2025. On 13 October, leaders convened at the Gaza Peace Summit in Sharm El-Sheikh, Egypt, co-chaired by President Trump and Egypt’s Abdel Fattah el-Sisi. This churned out a fragile ceasefire agreement intended to end the two years of intense fighting and suffering of Gazans. The summit brought together diplomats from over 30 countries, symbolizing a rare international consensus on ending hostilities.
However, as the year ends, the ceasefire and peaceplan remain fragile as reconstruction of Gaza runs lag, and Israel keeps control over parts of the Gaza Strip.
India reiterated its support for diplomatic initiatives aimed at restoring peace in West Asia, consistent with its long-held position in favour of a negotiated two-state solution. At the same time, New Delhi sought to preserve balanced and pragmatic relationships with both Israel and the Arab world, underscoring the region’s significance for the safety of the Indian diaspora, energy security, and wider economic and strategic connectivity.
2025 for India, the US and the conflict-ridden Middle East
By the close of 2025, the global order looked increasingly fractured, as nationalism and hard-edged bilateralism eclipsed multilateral norms and collaborative institutions. The return of Donald Trump to the White House accelerated significant geopolitical and economic realignments, shaping everything from India’s trade adjustments and renewed security challenges in South Asia to high-stakes diplomatic initiatives in the Middle East.
For India, 2025 became a year defined by careful calibration, easing security tensions, navigating a strained relationship with a key global power, and expanding economic ties beyond traditional partners. In the Middle East, tentative moves toward calm in Gaza unfolded alongside intensifying strategic rivalries, particularly those involving Iran and other regional players. Meanwhile, across the global economy, rising tariffs and protectionist policies put supply chains under strain and challenged the durability of growth.