America First, World Disrupted: How Trump’s 2025 Trade Turn Reshaped Global Economics — and Pushed India and China Closer

The year 2025 is likely to be remembered as a structural break in the post-war global order. From the day he returned to the White House, U.S. President “Donald Trump” embarked on a series of decisions that dismantled pillars of multilateral cooperation built over eight decades. By withdrawing the United States from the Paris Climate Agreement and the World Health Organization, Washington effectively undercut prospects for coordinated global responses to climate change and health emergencies. But it was Trump’s third move — the adoption of the America First Trade Policy — that sent shockwaves through global economics and geopolitics, altering alliances and accelerating the fragmentation of the world trading system.

America First Trade Policy: tariffs as strategy, not leverage

Unveiled as a “foundation” to restore American economic and national security dominance, the America First Trade Policy framed trade as an extension of state power. Unlike previous administrations that balanced protection with multilateral engagement, Trump’s approach rested almost entirely on tariffs — famously described by him as “the most beautiful word in the dictionary”.

In April, the U.S. announced steep “reciprocal tariffs” on 57 countries, with implementation deferred by three months. The expectation was clear: targeted countries, heavily dependent on access to the American market, would rush to negotiate concessions. While short-term uncertainty raised the cost of doing business globally, the deeper impact was structural, striking at the heart of global value chains that had underpinned international production and trade for three decades.

From global value chains to inward-looking protectionism

Trump’s trade doctrine marked a decisive shift away from globalised production networks, many of which are centred on China. While his predecessor sought to reconfigure these networks through “friend-shoring” — notably via the Indo-Pacific Economic Framework — Trump’s policy went further. It erected a protectionist wall designed to incentivise reshoring of manufacturing into the U.S., even at the cost of higher global prices and fractured supply chains.

This inward turn bordered on economic isolationism. More consequentially, it concentrated extraordinary trade powers in the executive, sidelining both Congress and international institutions, and dealing a severe blow to the multilateral trading system.

The WTO’s existential crisis

For nearly 80 years, global trade rules were shaped through consensus — first under the General Agreement on Tariffs and Trade (GATT), and later through the “World Trade Organization”. Trump had already weakened the WTO during his first term by paralysing its dispute settlement mechanism. His second-term embrace of overt unilateralism pushed the institution toward an existential crisis.

By bypassing negotiated rules in favour of executive-driven tariffs, the U.S. signalled that power, not consensus, would determine market access — a message that smaller economies could ill afford to ignore.

Why China and India refused to yield

Of the 57 countries targeted by reciprocal tariffs, the U.S. managed to conclude deals with only 17. Notably absent were “China” and “India”. China responded with repeated threats of retaliatory tariffs, while India refused to concede ground despite facing duties as high as 50% on its exports.

Trump’s failure to extract concessions from these two large economies produced an unintended geopolitical outcome: a visible thaw in India–China relations. In August, Prime Minister “Narendra Modi” and President “Xi Jinping” met on the sidelines in Tianjin — a largely symbolic but politically significant encounter that marked the beginning of the end of a five-year standoff.

Trade shocks and diplomatic realignments

By the end of 2025, tangible signs of normalisation followed: direct flights resumed, visa procedures eased, and China committed to importing more from India. The shift was notable given that India’s exports to China had fallen to just over $14 billion in 2024–25 — their lowest level since 2017–18 — after declining by nearly a third during years of strained ties.

The turnaround was swift. Indian exports to China rose by over 90% in November alone, and by more than 33% in the first eight months of the current financial year, year-on-year. While modest in absolute terms, the rebound underscored how trade policy shocks emanating from Washington were reshaping Asian economic diplomacy.

Reducing dependence on the U.S. market

Trump’s tariffs also forced a recalibration of export dependence. China, which had already been reducing its reliance on the U.S. market since Trump’s first term, saw its export share to the U.S. fall from nearly 22% in 2017 to around 10% by November 2025. India followed suit, cutting its export dependence on the U.S. from about 23% in June to 20% in November.

More visibly, India accelerated efforts to diversify export destinations. A flurry of free trade agreements concluded in 2025, along with India’s decision to engage the “Eurasian Economic Union” during President “Vladimir Putin”’s December visit to New Delhi, signalled a strategic attempt to reduce over-reliance on any single large economy.

A turn toward strategic autonomy

What Trump’s America First Trade Policy ultimately revealed was the fragility of an order built on assumptions of U.S. stewardship. As Washington weaponised trade, other major economies responded not by aligning, but by hedging — diversifying partners, reviving dormant relationships, and asserting greater autonomy.

For India, the turbulence reinforced a long-held instinct: strategic autonomy is not just a diplomatic slogan, but an economic necessity. In that sense, 2025 may be remembered not only as the year the global trade order fractured, but also as the moment when emerging powers began actively designing alternatives to it.