What is the story about?
Any assessment of year-end geopolitical trends must acknowledge that 2025 has been a difficult year for Indian diplomacy. From Bangladesh in its backyard to the United States across the seas, New Delhi has been posed with questions that are challenging with no easy answers. As if the ‘Trump disruption’ wasn’t enough, we have a Bangladesh next door descending into throes of violent Islamism, threatening to destabilize the eastern border.
India’s challenges, however, have not surfaced in isolation. The geopolitical stability that aided China’s rapid rise in the last two decades has been replaced by a new order that is still struggling to emerge. As always happens during these generational shifts, the old order seemingly erodes slowly, before crumbling all at once. The year 2025 could well be that proverbial inflection point.
Shibboleths are breaking down, and volatility is replacing old certainties. Under a revisionist United States, trenchant transactionalism has replaced burden-sharing. The growl of hard power is menacing the transatlantic alliance. Europe has been put on notice. Treaty allies are being evaluated on a strict return-on-investment basis, leaving American partners to reconsider their strategic dependencies.
As China puts to challenge the hegemon and its order to the sternest of tests, the milieu provides the perfect setting for fleet-footed opportunistic players such as Pakistan to grab their chances. For instance, in Donald Trump America has a president -- the most powerful office in the world still -- who has sided with Pakistan for a shady crypto deal, woolly promise of rare earth extraction and base flattery while dismantling decades-old partnership with India.
The episode alone epitomized Trump’s amoral approach, prioritizing personal validation over alliance management. Pakistan's nomination of Trump for the Nobel Peace Prize and public praise fed his ego, while India’s principled refusal to play along triggered punitive responses.
Trump is a symbol. This new, emerging order is structurally Thucydidean, economically protectionist, strategically transactional, and domestically identitarian. These features, as historian Nils Gilman writes in Foreign Policy, are taking shape “on a much more level international playing field than that obtained after the fall of the Berlin Wall, which Charles Krauthammer famously described as a ‘unipolar moment’ in which the United States appeared, in the words of one-time French Foreign Minister Hubert Védrine, as the unique ‘hyperpower’.”
That ‘hyperpower’ moment is long gone. Trump’s attempt to browbeat China into submission through a tariff war has instead exposed American vulnerabilities. As Trump lurched, China used its industrial chokeholds on rare earths and critical minerals and domination of global supply chains to bring him to heel.
As The Economist points out, “In 2025 Xi showed he is willing to use China’s dominance as not just a source of wealth, but of power. His restrictions on rare-earth exports are one example of how China can use other countries’ dependency as a weapon. Findings this month from the Australian Strategic Policy Institute show that China leads in research in 66 of 74 fields, measured by its share of key scientific papers. These include over two dozen areas, such as computer vision and grid integration, where it has a chokehold.”
A chastised Trump has authored a sharp pivot, seeking to develop a great-power compact. A brief meeting on in October on the sidelines of the Asia-Pacific Economic Cooperation forum in Busan notwithstanding, Trump is desperately angling for a leader-to-leader summit with Xi in the New Year, deviating from America’s policy of designating Beijing as the ‘pacing challenge’ towards a more accommodative posture, as Japan found out to its chagrin.
Under Trump in 2025, the power struggle between the US and China has transitioned from a battle over ideological supremacy to a transactional competition for regional spheres of influence. Trump’s National Security Strategy (NSS), released recently, recognizes China not as a revisionist threat to be ‘contained,’ but as an established “Non-Hemispheric competitor” that has earned its own geopolitical weight but cannot be allowed to “make major inroads into our (Western) Hemisphere”.
This has birthed a context where the two superpowers have carved out a calculated management of interests in their respective hemispheres. Naturally, this brutal power game squeezes middle powers such as India that lack the necessary capabilities to be recognized as a new pole of power politics and yet cannot give into the coercive demands of China, that seeks territorial aggrandizement, or Trump, who treats trade flow as a leverage point in a zero-sum game of power projection.
At the root of Trumpian tantrum lies what Chinese researcher Keji Mao calls “decline anxiety”, leading the US to shy away from globalization and use protectionism as a strategic weapon. The more Trump noisily claims to stop multiple wars around the world, the more American irrelevance as the global adjudicator becomes evident. Trump is also presiding over a rapidly dwindling US Dollar. Its status as the global reserve currency is on the wane.
As a report from the Wolf Street observes, quoting new data from IMF’s Currency Composition of Official Foreign Exchange Reserves, “the share of USD-denominated assets held by other central banks dropped to 56.9% of total foreign exchange reserves in Q3, the lowest since 1994, from 57.1% in Q2 and 58.5% in Q1.”
As gold and silver scale new and unprecedented highs and central banks around the world, especially in BRICS nations, buy the yellow metal at a furious pace, economists are predicting the “end of US Dollar reign”.
Behind the MAGA economic nationalism, therefore, lies a loss of confidence that also manifests itself as a nativist backlash against legal immigration. It has led the Trump administration to turn access to the American consumer market into a tool of coercive statecraft. Trump’s ‘Liberation Day’ tariffs of April 2025, that imposed universal duties alongside aggressive ‘reciprocal’ rates, were not merely about ‘balancing’ trade deficits. They were designed to extract specific geopolitical concessions.
The imposition of a 50% tariff on Indian goods, for instance, was explicitly linked to New Delhi’s energy ties with Russia, effectively transforming trade policy into a secondary sanction mechanism that forces allies to choose between economic market access and strategic autonomy.
It is entirely another matter that there are several layers to this action by Trump, a vainglorious egotist who felt slighted by India’s determined refusal to validate his repeated lies on authoring the India-Pakistan ceasefire, and possibly incensed at New Delhi’s firm stance on refusing to allow American GM crops, agrobusinesses and conglomerates from accessing India’s dairy and agriculture sectors.
It made for a strange spectacle where Trump openly wishes to renew trade and commerce with Russia, as he mentioned during Sunday’s presser alongside Zelenskyy in the White House, while at the same time ‘punishes’ India for buying seaborne Russian crude.
However, the 50% tariff on India, the highest in the world, is just half the story. Trump courted Pakistan army chief, the man responsible for engineering the Pahalgam terror attack within days of India-Pakistan ceasefire, invited him to the White House several times over the year, gave Pakistan a lenient tariff rate of just 19%, and authored deals to extract Pakistan’s rare earth and mineral reserves.
As Evan Feigenbaum of Carnegie Endowment points out, “the United States and India often differ on Pakistan, but Washington had been sensitive to New Delhi’s equities and tried to shape US policies accordingly. Trump’s fulsome praise for Islamabad and dealmaking with Pakistan’s army and government now raise obvious concerns in New Delhi that this too has gone by the wayside. And these concerns have been amplified exponentially because Trump’s moves came within weeks of the April 22 terrorist attack that killed twenty-six Indian civilians in Pahalgam…”
Alongside, the US president warmed up to Xi, gave China several extensions on preferable tariff rate in contrast with the stepmotherly treatment of India, and he and his minions singled out India for severe tongue-lashing and abuse, calling India a “dead economy”, a “laundromat for Kremlin” and accused New Delhi of “fuelling Putin’s war against Ukraine”. Trump also threatened American tech companies with dire consequences if they continue to invest and build in India.
Trump’s lies, abrasive insults and hard-nosed bullying tactics on trade turned public sentiment in India – that had been welcoming of Trump’s second stint. The souring public mood in India has made signing a trade deal with the US nearly impossible except on fair and mutually beneficial terms.
In response to this ‘economic shock therapy,’ India has aggressively accelerated its pursuit of strategic trade diversification to reduce its export dependency on the American market.
By late 2025, New Delhi fast-tracked several Free Trade Agreements (FTAs) with the UK, Oman, and New Zealand while stepping on the gas for a deal with the European Union. The FTA with New Zealand, signed in late December, will see 95% of New Zealand’s exports to India tariff-free or subject to sharply reduced duties, and limited levy on apples. As Bloomberg points out, this was India’s “first concession on the fruit under any free-trade agreement and comes even as the US has been pressing New Delhi to open its market to American apples”. New Zealand, in exchange, “will eliminate levies on all Indian exports and ease mobility rules for students and workers from the South Asian nation,” says a Bloomberg report.
India also expanded the use of the Indian Rupee (INR) for international settlements to bypass the weaponized US dollar . To combat the pressure on exports due to the stillborn US trade deal, the Narendra Modi government provided over Rs 25,000 crore in export promotion and credit facilities to help MSMEs pivot away from US buyers toward emerging markets in West Asia and Southeast Asia.
The combined effect of Trump’s Pakistan rapprochement and tariff assault drove India towards accelerated engagement with Russia and China. The core of this strategic hedging wasn’t a thorough revamp of India’s foreign policy strategy, or a pivot towards America’s adversaries but a tactical hedging that also doubled as a signalling towards Washington that New Delhi wasn’t bereft of options.
Putin visited India in December 2025 for the 23rd Annual Summit, offering uninterrupted fuel supplies and expanded defence cooperation. The two nations agreed on an economic cooperation roadmap through 2030 and redefined their relationship to emphasize joint research, co-development, and co-production of advanced systems rather than simple buyer-seller transactions. Russia remains India’s largest arms supplier, providing critical systems including S-400 air defence batteries, BrahMos cruise missiles, and nuclear submarine technology.
Putin’s Delhi visit coincided with the release of Trump’s NSS, creating a visual counterpoint to American messaging.
India’s most prominent response to American pressure tactics was Modi’s visit to China in August for the SCO Summit. It followed the border disengagement breakthrough in October 2024. Even though the visit was planned months in advance and preceded Trumpian disruption in India-US ties, the visual effect of Modi and Xi’s formal bilateral meeting – Modi’s first visit to China in seven years – and framing of India and China as “development partners, not rivals” alarmed Trump enough to post on social media that “we have lost India to deepest, darkest China.”
The structural limitations of India’s ties with both China and Russia, however, are clear. India’s multialignment strategy will intensify and a hedging towards Europe is already evident but none of these relationships may match the gamut, breadth and depth of India’s relationship with the US.
As James Crabtree and Rudra Chaudhuri write in Foreign Affairs, “the question of how to manage Washington is more complicated. The United States will under most likely scenarios remain India’s most important partner for technology and investment, no matter the current disruption in relations.”
On the other hand, the relationship is now subject to the push and pull of domestic politics, not in small measure due to the extraordinary and vicious racist pushback against India and Indian-Americans from a section of Trump’s MAGA base. It has put to test one of the key pillars of bilateral ties -- people-to-people relations. Nativist backlash against Indian immigrants and their families is also influencing policymaking with the Trump administration. Sweeping changes are being effected in H-1B visa programme that disproportionately affects Indian visa holders.
On the trade front, a transactional deadlock is in effect, and New Delhi has started showing signs of impatience. A deal is purportedly done at the official level, but Trump is bent on playing hardball. The 2026 outlook, therefore, appears bleak for bilateral ties. It may see a further deterioration in sentiment from both sides fuelled by an intense anti-immigration posturing in America and consequently feral response in India.
For policymakers in both sides who understand and appreciate the true value of this partnership, the level of difficulty is poised to increase manifold.
(The views expressed in the above piece are personal and solely those of the author. They do not necessarily reflect Firstpost’s views.)
India’s challenges, however, have not surfaced in isolation. The geopolitical stability that aided China’s rapid rise in the last two decades has been replaced by a new order that is still struggling to emerge. As always happens during these generational shifts, the old order seemingly erodes slowly, before crumbling all at once. The year 2025 could well be that proverbial inflection point.
Shibboleths are breaking down, and volatility is replacing old certainties. Under a revisionist United States, trenchant transactionalism has replaced burden-sharing. The growl of hard power is menacing the transatlantic alliance. Europe has been put on notice. Treaty allies are being evaluated on a strict return-on-investment basis, leaving American partners to reconsider their strategic dependencies.
As China puts to challenge the hegemon and its order to the sternest of tests, the milieu provides the perfect setting for fleet-footed opportunistic players such as Pakistan to grab their chances. For instance, in Donald Trump America has a president -- the most powerful office in the world still -- who has sided with Pakistan for a shady crypto deal, woolly promise of rare earth extraction and base flattery while dismantling decades-old partnership with India.
The episode alone epitomized Trump’s amoral approach, prioritizing personal validation over alliance management. Pakistan's nomination of Trump for the Nobel Peace Prize and public praise fed his ego, while India’s principled refusal to play along triggered punitive responses.
Trump is a symbol. This new, emerging order is structurally Thucydidean, economically protectionist, strategically transactional, and domestically identitarian. These features, as historian Nils Gilman writes in Foreign Policy, are taking shape “on a much more level international playing field than that obtained after the fall of the Berlin Wall, which Charles Krauthammer famously described as a ‘unipolar moment’ in which the United States appeared, in the words of one-time French Foreign Minister Hubert Védrine, as the unique ‘hyperpower’.”
That ‘hyperpower’ moment is long gone. Trump’s attempt to browbeat China into submission through a tariff war has instead exposed American vulnerabilities. As Trump lurched, China used its industrial chokeholds on rare earths and critical minerals and domination of global supply chains to bring him to heel.
As The Economist points out, “In 2025 Xi showed he is willing to use China’s dominance as not just a source of wealth, but of power. His restrictions on rare-earth exports are one example of how China can use other countries’ dependency as a weapon. Findings this month from the Australian Strategic Policy Institute show that China leads in research in 66 of 74 fields, measured by its share of key scientific papers. These include over two dozen areas, such as computer vision and grid integration, where it has a chokehold.”
A chastised Trump has authored a sharp pivot, seeking to develop a great-power compact. A brief meeting on in October on the sidelines of the Asia-Pacific Economic Cooperation forum in Busan notwithstanding, Trump is desperately angling for a leader-to-leader summit with Xi in the New Year, deviating from America’s policy of designating Beijing as the ‘pacing challenge’ towards a more accommodative posture, as Japan found out to its chagrin.
Under Trump in 2025, the power struggle between the US and China has transitioned from a battle over ideological supremacy to a transactional competition for regional spheres of influence. Trump’s National Security Strategy (NSS), released recently, recognizes China not as a revisionist threat to be ‘contained,’ but as an established “Non-Hemispheric competitor” that has earned its own geopolitical weight but cannot be allowed to “make major inroads into our (Western) Hemisphere”.
This has birthed a context where the two superpowers have carved out a calculated management of interests in their respective hemispheres. Naturally, this brutal power game squeezes middle powers such as India that lack the necessary capabilities to be recognized as a new pole of power politics and yet cannot give into the coercive demands of China, that seeks territorial aggrandizement, or Trump, who treats trade flow as a leverage point in a zero-sum game of power projection.
At the root of Trumpian tantrum lies what Chinese researcher Keji Mao calls “decline anxiety”, leading the US to shy away from globalization and use protectionism as a strategic weapon. The more Trump noisily claims to stop multiple wars around the world, the more American irrelevance as the global adjudicator becomes evident. Trump is also presiding over a rapidly dwindling US Dollar. Its status as the global reserve currency is on the wane.
As a report from the Wolf Street observes, quoting new data from IMF’s Currency Composition of Official Foreign Exchange Reserves, “the share of USD-denominated assets held by other central banks dropped to 56.9% of total foreign exchange reserves in Q3, the lowest since 1994, from 57.1% in Q2 and 58.5% in Q1.”
As gold and silver scale new and unprecedented highs and central banks around the world, especially in BRICS nations, buy the yellow metal at a furious pace, economists are predicting the “end of US Dollar reign”.
Behind the MAGA economic nationalism, therefore, lies a loss of confidence that also manifests itself as a nativist backlash against legal immigration. It has led the Trump administration to turn access to the American consumer market into a tool of coercive statecraft. Trump’s ‘Liberation Day’ tariffs of April 2025, that imposed universal duties alongside aggressive ‘reciprocal’ rates, were not merely about ‘balancing’ trade deficits. They were designed to extract specific geopolitical concessions.
The imposition of a 50% tariff on Indian goods, for instance, was explicitly linked to New Delhi’s energy ties with Russia, effectively transforming trade policy into a secondary sanction mechanism that forces allies to choose between economic market access and strategic autonomy.
It is entirely another matter that there are several layers to this action by Trump, a vainglorious egotist who felt slighted by India’s determined refusal to validate his repeated lies on authoring the India-Pakistan ceasefire, and possibly incensed at New Delhi’s firm stance on refusing to allow American GM crops, agrobusinesses and conglomerates from accessing India’s dairy and agriculture sectors.
It made for a strange spectacle where Trump openly wishes to renew trade and commerce with Russia, as he mentioned during Sunday’s presser alongside Zelenskyy in the White House, while at the same time ‘punishes’ India for buying seaborne Russian crude.
However, the 50% tariff on India, the highest in the world, is just half the story. Trump courted Pakistan army chief, the man responsible for engineering the Pahalgam terror attack within days of India-Pakistan ceasefire, invited him to the White House several times over the year, gave Pakistan a lenient tariff rate of just 19%, and authored deals to extract Pakistan’s rare earth and mineral reserves.
As Evan Feigenbaum of Carnegie Endowment points out, “the United States and India often differ on Pakistan, but Washington had been sensitive to New Delhi’s equities and tried to shape US policies accordingly. Trump’s fulsome praise for Islamabad and dealmaking with Pakistan’s army and government now raise obvious concerns in New Delhi that this too has gone by the wayside. And these concerns have been amplified exponentially because Trump’s moves came within weeks of the April 22 terrorist attack that killed twenty-six Indian civilians in Pahalgam…”
Alongside, the US president warmed up to Xi, gave China several extensions on preferable tariff rate in contrast with the stepmotherly treatment of India, and he and his minions singled out India for severe tongue-lashing and abuse, calling India a “dead economy”, a “laundromat for Kremlin” and accused New Delhi of “fuelling Putin’s war against Ukraine”. Trump also threatened American tech companies with dire consequences if they continue to invest and build in India.
Trump’s lies, abrasive insults and hard-nosed bullying tactics on trade turned public sentiment in India – that had been welcoming of Trump’s second stint. The souring public mood in India has made signing a trade deal with the US nearly impossible except on fair and mutually beneficial terms.
In response to this ‘economic shock therapy,’ India has aggressively accelerated its pursuit of strategic trade diversification to reduce its export dependency on the American market.
By late 2025, New Delhi fast-tracked several Free Trade Agreements (FTAs) with the UK, Oman, and New Zealand while stepping on the gas for a deal with the European Union. The FTA with New Zealand, signed in late December, will see 95% of New Zealand’s exports to India tariff-free or subject to sharply reduced duties, and limited levy on apples. As Bloomberg points out, this was India’s “first concession on the fruit under any free-trade agreement and comes even as the US has been pressing New Delhi to open its market to American apples”. New Zealand, in exchange, “will eliminate levies on all Indian exports and ease mobility rules for students and workers from the South Asian nation,” says a Bloomberg report.
India also expanded the use of the Indian Rupee (INR) for international settlements to bypass the weaponized US dollar . To combat the pressure on exports due to the stillborn US trade deal, the Narendra Modi government provided over Rs 25,000 crore in export promotion and credit facilities to help MSMEs pivot away from US buyers toward emerging markets in West Asia and Southeast Asia.
The combined effect of Trump’s Pakistan rapprochement and tariff assault drove India towards accelerated engagement with Russia and China. The core of this strategic hedging wasn’t a thorough revamp of India’s foreign policy strategy, or a pivot towards America’s adversaries but a tactical hedging that also doubled as a signalling towards Washington that New Delhi wasn’t bereft of options.
Putin visited India in December 2025 for the 23rd Annual Summit, offering uninterrupted fuel supplies and expanded defence cooperation. The two nations agreed on an economic cooperation roadmap through 2030 and redefined their relationship to emphasize joint research, co-development, and co-production of advanced systems rather than simple buyer-seller transactions. Russia remains India’s largest arms supplier, providing critical systems including S-400 air defence batteries, BrahMos cruise missiles, and nuclear submarine technology.
Putin’s Delhi visit coincided with the release of Trump’s NSS, creating a visual counterpoint to American messaging.
India’s most prominent response to American pressure tactics was Modi’s visit to China in August for the SCO Summit. It followed the border disengagement breakthrough in October 2024. Even though the visit was planned months in advance and preceded Trumpian disruption in India-US ties, the visual effect of Modi and Xi’s formal bilateral meeting – Modi’s first visit to China in seven years – and framing of India and China as “development partners, not rivals” alarmed Trump enough to post on social media that “we have lost India to deepest, darkest China.”
The structural limitations of India’s ties with both China and Russia, however, are clear. India’s multialignment strategy will intensify and a hedging towards Europe is already evident but none of these relationships may match the gamut, breadth and depth of India’s relationship with the US.
As James Crabtree and Rudra Chaudhuri write in Foreign Affairs, “the question of how to manage Washington is more complicated. The United States will under most likely scenarios remain India’s most important partner for technology and investment, no matter the current disruption in relations.”
On the other hand, the relationship is now subject to the push and pull of domestic politics, not in small measure due to the extraordinary and vicious racist pushback against India and Indian-Americans from a section of Trump’s MAGA base. It has put to test one of the key pillars of bilateral ties -- people-to-people relations. Nativist backlash against Indian immigrants and their families is also influencing policymaking with the Trump administration. Sweeping changes are being effected in H-1B visa programme that disproportionately affects Indian visa holders.
On the trade front, a transactional deadlock is in effect, and New Delhi has started showing signs of impatience. A deal is purportedly done at the official level, but Trump is bent on playing hardball. The 2026 outlook, therefore, appears bleak for bilateral ties. It may see a further deterioration in sentiment from both sides fuelled by an intense anti-immigration posturing in America and consequently feral response in India.
For policymakers in both sides who understand and appreciate the true value of this partnership, the level of difficulty is poised to increase manifold.
(The views expressed in the above piece are personal and solely those of the author. They do not necessarily reflect Firstpost’s views.)
