[Marked absent—but still consequential: A year in which American leadership receded, without disappearing. (The empty chair tells the story.)]

Editor’s Note:

This essay brings down the curtain on Founding Fuel’s 2025 In Review series—a set of conversations that revisited the forecasts made in The World in 2025 Masterclass in January, and examined how the year actually unfolded. Drawing on discussions with Yao Yang, Sundeep Waslekar, Justin Logan, Philippe Le Corre, and Ambassador Shyam Saran, (#ICYMI, See the Dig Deeper section at the end), Dinesh Narayanan reflects on a year in which global power shifted, alliances frayed, and India found itself navigating a world with fewer certainties.

The most geopolitically significant moment in global history this century perhaps came on September 20, 2001, when US President George W Bush gave an ultimatum to the rest of the world: “Every nation, in every region, now has a decision to make. Either you are with us, or you are with the terrorists.”

The next most disruptive moment came on April 2, 2025, when President Donald Trump declared a global trade war. “For decades, our country has been looted, pillaged, and plundered by nations near and far, both friend and foe alike,” he said.

In a global display of esprit de corps, world leaders—having witnessed the horror of the World Trade Towers crumbling into a heap of dust—stood with Bush as he launched multiple wars chasing Al Qaeda across the globe. Trump’s “Liberation Day” tariffs, by contrast, left America’s friends and foes alike scratching their heads. The reciprocal tariffs—upwards of 40% on the tiny economies of Laos and Myanmar but just 10% on heavyweights such as Brazil (later raised to 50%) and the UK—defied reason, convention, or shared values.

“The tariff policy had a ready-fire-aim quality to it,” says Justin Logan, director of defence and foreign policy studies at the Cato Institute.

What unfolded through much of 2025 was a Trump White House dismantling not only long-established international customs and etiquette, but also treaties once believed to be etched in stone.

“The United States no longer feels that the international system and the international rules of the game that it was mostly responsible for putting in place after World War II work for the United States,” says Shyam Saran, India’s former foreign secretary.

America Steps Back

Trump began his term with threats of annexing Greenland, Mexico and even Canada, but soon moved on to trade, tariffs and ending what he called “forever wars”. While he managed a tenuous pause in the conflict in Gaza, the Russia–Ukraine war crept towards its fourth anniversary.

The White House closed the year with the release of its National Security Strategy (NSS), which surprised many by placing Europe—rather than Russia or China—in its crosshairs. The underlying theme was clear: with US national debt crossing $36 trillion in October, Trump sought to shore up America’s economic and national security by consolidating dominance in the western hemisphere.

“The days of the United States propping up the entire world order like Atlas are over,” the NSS declared.

The G20 summit in South Africa, which the US boycotted, captured the mood of much of the rest of the world. South Africa simply “marked the US absent” and moved on. President Cyril Ramaphosa advised the media to ignore those not present in the room.

Yet absence is easier to declare than to live with.

Even if Washington is absent from many rooms in the future, the rest of the world will still have to work with the institutions and systems the US built—from financial plumbing and banking to jurisprudence and trade rules.

“We are moving towards a much more diffused geopolitical landscape,” says Saran. “Where the chips fall eventually is not very clear.” The West has dominated the globe for the past 500 years, he notes, and while that dominance is coming to an end, “you can’t change these systems overnight”.

The World in Three Slices

If geopolitics was a card game, the major players in the Trump casino divided themselves broadly into three categories—the quick folders, the fast high rollers, and the weak-hand stoics.

Trump’s vice president, JD Vance, set the tone in February at the Munich Security Conference when he argued that Europe’s main threats lay within, not outside, accusing European leaders of suppressing free speech and tolerating illegal migration.

In a public note issued by the European University Institute shortly after Vance’s speech, Trine Flockhart, chair of security studies at the institute, said: “In that one moment, all the pillars of transatlantic relations—shared values, mutual respect—were smashed.”

By the time the European Union sat down to negotiate tariffs mid-year, it had already lost the initiative. This capitulation unfolded against the backdrop of the Ukraine war and a deep fear in European capitals that US security guarantees could weaken or disappear. What initially appeared to be a crack in the Western alliance turned into a consolidation of unequals.

“What we saw was Europe’s total subjugation to the United States,” says Sundeep Waslekar, president, Strategic Foresight Group.

Trump demanded that Europe buy more American weapons and energy and open its markets further to US technology firms. EU leaders, many of whom believe Moscow’s ambitions do not end with Ukraine, pledged to raise defence spending to 5% of GDP and buy natural gas, oil and nuclear fuel worth $250 billion annually from the US. They also diluted parts of the EU’s digital regulations, delayed implementation of sections of the AI Act, and committed to invest $600 billion in the US even as Europe struggled to finance its own industrial revival.

“There is a shift happening in Europe due to the acceleration of history. The relationship with the US will not be the same even after Trump leaves the stage,” says Philippe Le Corre, professor of geopolitics and Asian studies at ESSEC Business School and senior fellow at the Asia Society Policy Institute.

Other US allies such as Japan and South Korea also fell in line, pledging large investments in the US and agreeing to trade terms favourable to Washington.

China Plays Its Hand

Trump’s actions finally brought China to reveal at least one of its high cards. Even though Beijing’s wolf-warrior diplomacy and its five major global initiatives—an attempt to build parallel institutions and norms outside US-led systems—had already hinted at its ambitions, proof came soon after Liberation Day when China curbed exports of rare earths, extremely scarce elements indispensable to modern electronics and defence systems.

China asserted its dominance further in October when it imposed global restrictions on the movement of rare earths originating in its territory. The move stunned the world and brought Trump to the negotiating table at a summit in Seoul.

The president hinted, as usual through social media posts, that this marked the beginning of a Group of Two, or G2, acknowledging China’s rise as a military, economic and technological power comparable to the United States. Beijing did not respond publicly. Reports suggested Chinese leaders were wary of such framing, which carries hegemonic undertones and could provoke regional anxieties.

Many Chinese citizens still view Trump favourably because he is transactional rather than ideological, according to Yao Yang, dean of the Di-shui-hu Advanced Finance Institute at the Shanghai University of Finance and Economics. “If you give him something, he’ll deal,” Yao said.

In a recent speech on Xi Jinping Thought on Diplomacy, Chinese foreign minister Wang Yi described China-US relations as “developing in the direction of mutual respect, peaceful coexistence, and win-win cooperation”. According to Wang, China has “already become a responsible major power with greater international influence, innovative leadership, and moral appeal”.

China, however, faces its own constraints. Domestic demand remains weak, and while headline GDP growth may touch 5%, Yao estimates underlying growth closer to 2.2%. These constraints help explain why Beijing has been selective—assertive abroad where it holds leverage, cautious where it does not.

In December, Washington announced the Pax Silica Summit, a US-led initiative to secure critical semiconductor and AI supply chains. At first glance, this appeared to be an expansion of the Joe Biden administration’s CHIP-4 alliance under the CHIPS Act—a plan Trump had earlier opposed—aimed explicitly at restricting China by corralling key chipmakers in the region.

Crucially, the expanded group does not include Taiwan, which could suggest that the US is now sensitive to China’s concerns or is betting that Taiwanese companies will follow TSMC in moving new investments to the United States. Days before the Pax Silica announcement, Trump had already cleared the export of Nvidia’s H200 processors—the second most powerful chips in the world—to China.

Seen in this light, Pax Silica is not just an industrial policy initiative but a strategic signal. Read together, the NSS and Pax Silica suggest that the United States is, at least for now, prepared to cede much of the eastern hemisphere to China. The signal to Beijing appears to be this: keep your half of the world, and leave the western hemisphere to us. Competition, in this framing, is to be fought in technology, trade and standards—not on the ground. This gives Washington time to regroup the West and conserve resources. It also marks a repurposing of America’s historic grand strategy. Where control of the seas once lay at its core, the decisive domain today is data.

The summit also omits India, the US partner in the Initiative on Critical and Emerging Technology, or iCET, which was upgraded to Transforming the Relationship Utilizing Strategic Technology (TRUST) during Prime Minister Narendra Modi’s state visit to Washington in February 2025. Informed sources say India has since been frozen out of US high-technology initiatives.

India’s Narrowing Room for Manoeuvre

As its relationship with the US cooled, India moved to thaw ties with China. Modi travelled to Tianjin for the Shanghai Cooperation Organisation summit and met Chinese president Xi Jinping and Russian president Vladimir Putin. This was followed by a New Delhi summit between Modi and Putin, where weapons and energy supplies—both red lines for Trump—were discussed.

India has stayed at the table with the hand it was dealt, but it is running low on chips.

On the positive side, Saran says China now sees India as one of only two anchors of stability in a turbulent world, the other being itself. In the past, India-China relations often shifted with the temperature of India’s ties with the US. China now appears to believe it makes sense to work more closely with India. This convergence, however, is tactical rather than structural—driven by shared unease with US unpredictability rather than deep strategic trust.

India’s relationship with the US, by contrast, is in disarray. Helped by President Bush’s “strategic altruism”, India had found itself at the heart of America’s Asia strategy for nearly 25 years. That scaffolding has now unravelled.

India began the year well, with Trump hosting Modi among the first leaders at the White House. Their personal chemistry held, but India could not escape stiff tariffs. Trump later imposed additional levies, including penalties for buying sanctioned Russian oil. The trigger is believed to be India’s refusal to acknowledge Trump’s claimed role in brokering a ceasefire between India and Pakistan after a short armed conflict in May. A trade deal, believed to have been completed at the ministerial level, remains unsigned.

The US withdrawal from the Indo-Pacific has compounded matters. While secretary of state Marco Rubio’s first meeting was with Quad foreign ministers, US priorities shifted by year’s end.

The US will no longer “waste blood and treasure to curtail the influence of all the world’s great and middle powers,” the NSS says. Instead, Washington intends to consolidate power in the western hemisphere.

For Asia, the strategy is different. The NSS says the US must “continue to improve commercial and other relations with India” to encourage New Delhi to contribute to Indo-Pacific security, including through the Quad. In effect, the US expects regional powers to shoulder greater responsibility in managing China, much as Europe is now expected to manage Russia.

That shift is now embedded in US doctrine and is likely to endure beyond Trump. A reset to square one will not be possible.

As Saran puts it, there is no square one left for India to go back to.

Dig Deeper: 2025 In Review Podcast Series

• Episode 1 | China and the Trumpian Reset — Prof Yao Yang
  Play time: 30 mins

• Episode 2 | The Erosion of Global Norms, Accelerating AI — Sundeep Waslekar
  Play time: 35 mins

• Episode 3 | America’s Year of Disruption — Justin Logan
  Play time: 30 mins

• Episode 4 | Europe’s Year of Hard Choices — Philippe Le Corre
  Play time: 34 mins

• Episode 5 | India’s Strategic Tightrope in a Fragmenting World — Amb Shyam Saran
  Play time: 55 mins