At first glance, 2025 did not appear to be a year rich in good news: tariffs, wars, trade disputes and the unsettling advance of artificial intelligence dominated headlines. Yet beneath the surface of geopolitical tension and economic anxiety, the past year also revealed an unexpected degree of resilience — in markets, in states, and in societies grappling with rapid change. As the world steps into 2026, leaders face an increasingly complex arena where big power rivalry, fragile ceasefires, and technological disruption will shape global outcomes.
Trade was once again at the centre of global uncertainty. When US President Donald Trump declared April 2 “Liberation Day” and unleashed sweeping tariffs on both allies and rivals, the shockwaves were immediate. Global supply chains were upended, governments scrambled to respond, and fears mounted that the world economy was heading toward a sharp slowdown.
Those fears, however, did not fully materialise — at least not yet. Tariffs did not trigger runaway inflation or an outright recession in 2025, though economists caution that their long-term effects are still unfolding. Instead, the tariffs forced countries into hurried negotiations, reconfigured trade routes, and reinforced the reality that economic security has become inseparable from geopolitics.
Nowhere was this more evident than in US-China relations. Tit-for-tat measures between Washington and Beijing escalated to such an extent that, at their peak, sky-high tariffs amounted to what many observers described as a de facto trade embargo. Over time, both sides stepped back from the brink, settling into a fragile truce that restored limited trade flows without resolving deeper strategic rivalry.
The question of who “won” the standoff remains contested. Analysts note that China did not capitulate to President Trump’s pressure and instead demonstrated where its leverage lies — particularly in its dominance of rare earth exports, which are vital to advanced manufacturing and green technologies. The episode reinforced a broader lesson of 2025: economic coercion cuts both ways.
Southeast Asia felt the sting of US tariffs acutely. Countries such as Vietnam, Thailand, Indonesia and Malaysia were hit with country-specific levies that threatened export-driven growth. In response, these nations moved quickly to strike trade deals or reach partial accommodations with Washington. Their experience underscored the vulnerability of middle powers caught between competing giants.
Singapore, despite having a free trade agreement with the US and running a trade surplus in Washington’s favour, was not spared. A baseline 10 per cent tariff raised eyebrows, as did remarks by US Ambassador to Singapore Dr Anjani Sinha, who suggested that American involvement had helped make Singapore’s “economic miracle” possible. Observers interpreted the comments as reflecting a broader expectation in Washington that partners now “pay back” strategic loyalty — a sentiment likely to complicate diplomacy in 2026.
Although Mr Trump’s tariffs are currently under legal scrutiny in the US, few expect the threat to fade. Sectoral tariffs targeting pharmaceuticals and semiconductors remain firmly on the table, signalling that trade policy will continue to be wielded as a strategic weapon.
Beyond economics, President Trump sought to frame himself as a global peacemaker — an image that also played into trade negotiations. While a comprehensive Ukraine settlement remained elusive, the US brokered a Gaza peace deal in October and claimed credit for ceasefires between India and Pakistan, as well as Thailand and Cambodia. Yet the shaky Thailand-Cambodia ceasefire served as a reminder of the limits of American leverage, particularly in long-running regional disputes.
Notably absent from substantive US-China dialogue was Taiwan, despite its centrality to global security. Tensions spiked when Japanese Prime Minister Sanae Takaichi suggested that Tokyo could intervene militarily if China attacked Taiwan. Beijing’s sharp reaction, coupled with Washington’s calibrated response, illustrated how major powers now set the terms of debate — and how quickly rhetoric can inflame already sensitive fault lines.
China’s own attempts to assert territorial claims did not always go smoothly. In August, two Chinese vessels collided with each other while chasing a Philippine patrol boat in the South China Sea, an incident that exposed tactical and operational weaknesses. With Chinese military drills around Taiwan intensifying in the final days of 2025, and the Philippines assuming the ASEAN chairmanship in 2026, maritime tensions are poised to remain a key flashpoint in Asia.
As the US reassessed its global leadership role, China worked to present itself as a credible alternative. This rivalry played out most dramatically in technology. The debut of the AI chatbot DeepSeek sent ripples through Silicon Valley, elevating a Chinese startup into direct competition with US giants such as OpenAI, Meta and Google.
The development reignited debate over whether US technology controls had backfired. Rather than stifling China’s progress, export restrictions appear to have accelerated Beijing’s push for self-reliance. The Chinese government doubled down on support for domestic champions, backing Huawei and local chipmakers even as access to Nvidia’s most advanced products remained restricted.
Chinese exports, from electric vehicles to viral Labubu plush toys, gained traction globally. Yet at home, consumption remained sluggish. Authorities acknowledged that industrial overcapacity had become a serious issue, but tackling price wars and the phenomenon of “involution” — intense competition with diminishing returns — will be no easy task. As China prepares to launch its next Five-Year Plan in 2026, the challenge will be to stimulate domestic demand while continuing its quest for technological supremacy.
Artificial intelligence emerged as one of the most disruptive forces of 2025, moving decisively from promise to practice. The question of whether AI would replace jobs ceased to be theoretical as companies from Amazon to DBS announced workforce reductions tied to automation and AI adoption.
Despite growing unease, stock markets remained buoyant on AI optimism. Analysts in Singapore cautioned that valuations may be running ahead of fundamentals, warning that a sharp correction would have ripple effects on local markets and even sovereign investment portfolios. The bubble, if it exists, did not burst in 2025 — but its durability will be tested in the year ahead.
Public sentiment toward AI, however, was far from enthusiastic. Merriam-Webster crowned “slop” — a term describing low-quality AI-generated content — as its word of the year, capturing widespread frustration. More troubling was AI’s darker side: its use in misinformation campaigns, online scams and child exploitation. Regulators face a daunting task in 2026 as AI-enabled crime becomes more sophisticated and widespread.
In Singapore, 2025 was marked by introspection as the nation commemorated 60 years of independence. The General Election in May delivered a strong mandate to the People’s Action Party, which secured 65.57 per cent of the popular vote. Observers described the result as notable, given cost-of-living pressures and a global trend in 2024 of voters rejecting incumbents.
Budget 2025, widely viewed as an “election budget”, featured prominently in public discourse. With Budget 2026 scheduled for Feb 12, attention is turning to whether similar support measures will continue. Vouchers — including SG60 and Community Development Council vouchers — were a defining feature of the year. While some criticised their use on non-essential items, analysts argued that vouchers offer targeted relief and support local businesses more effectively than broad cash handouts.
Retail rents also dominated discussion as closures mounted across the sector. From small eateries to major department stores, businesses struggled to cope with rising costs. Dining culture shifted, supper spots dwindled, and hawkers faced mounting pressure to balance affordability with sustainability — prompting concerns about the long-term survival of Singapore’s food heritage.
The year ended on a brighter note in sports. Singapore celebrated standout achievements, from Shanti Pereira’s dominance on the regional sprinting stage to Quah Ting Wen becoming the country’s most decorated SEA Games athlete. In a historic breakthrough, the men’s football team qualified for the Asian Cup on merit for the first time. The appointment of Gavin Lee as national head coach sparked debate, but many see it as a long-term investment in local football.
As 2025 closes, the world stands at a crossroads. Tariffs, conflicts and technological upheaval have tested global stability, yet economies endured, ceasefires emerged, and societies adapted. In 2026, leaders will face even harder choices — navigating power politics, regulating transformative technologies, and sustaining public trust in an era defined by uncertainty. Whether resilience can once again outweigh disruption remains the defining question of the year ahead.
