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Buying Social Media Influencers To Shape China’s Narrative
A China attempt to recruit an Italy-based “military influencer” to peddle falsehoods about Taiwan and undermine its social and military cohesion, has gone viral in Chinese-language online circles.
说的没毛病啊：关恒事件受到如此关注，确实是有中共大外宣推波助燃。
落日海盗兄，去年9月你打电话给我，尝试招募发展我做外宣的事情这么快就忘了？（看看视频节目，勿谓言之不预也）… https://t.co/PPQfrnspdl pic.twitter.com/rNU3Hu23Op
— 说真话的徐某人 (@xumouren_yt) December 18, 2025
The military influencer is “Xu Mou-ren-Who Speaks Truth” and before we go further, let’s explain what a military influencer is. Basically he or she is a serving member of the armed forces of a country or even a veteran, who uses social media to share authentic experiences of life in the military.
Now it’s not clear if Xu Mou-ren ever served in the PLA, but he is based in Italy, which seems to give him a measure of independence on what he posts on social media or on Youtube where he claimed that a Chinese influencer known as “Sunset Pirate”, had approached him on behalf of Chinese military intelligence.
Attempt to Undermine Taiwanese Confidence
Sunset Pirate allegedly offered Xu a monthly payment of about $43,000 for producing content critical of Taiwan’s military capabilities. The stated aim, Xu said, was to weaken confidence within Taiwanese society about its ability to defend itself. The intermediary also suggested that Xu’s content could be rebroadcast by pro-Beijing television channels to amplify its reach.
The dispute between the two reportedly stemmed from differing views over a separate case involving illegal Chinese migration. Following this, Xu chose to make the recruitment attempt public, releasing the audio as evidence.
In the recording, Sunset Pirate claims to have recruited multiple influencers across Japan, Italy and the United States, spanning fields such as music, travel, food and automobiles.
Their main task, he said, was not overt political messaging but the promotion of Chinese culture and narratives in a subtle manner. He described the guiding principle as “moistening things silently” advancing influence gradually without attracting attention.
Boundaries and Censorship
Joining hands with China came with conditions: limited criticism of the Chinese Communist Party was acceptable, but criticism of Xi Jinping was strictly forbidden.
The recording also suggests that Xu was asked to comment on the Russia–Ukraine war to highlight Ukrainian weaknesses and erode Taiwanese confidence in their own military resilience.
Experts Warn of Expanding Covert Influence Campaign
Taiwan-based Japanese journalist Akio Yaita believes there is a systematic campaign driven by Beijing to co-opt overseas and Taiwanese influencers for narrative and information warfare.
In his view, it is very likely that many Taiwanese influencers have already been approached given the shared language. They would likely have been offered tempting sums of money to do Beijing’s bidding.
The key is whether an influencer openly criticises Xi Jinping. Such criticism not only puts the influencer at risk, but even compromises the person “handling” the influencer. So if somebody on social media consistently aligns with China, it should be a warning to those listening in that he or she is playing China’s tune.
This story underscores another point: as social media increasingly shapes public opinion on security and sovereignty, the risk is not loud propaganda but quiet credibility voices that sound reasonable, balanced and even critical, yet never cross certain lines. For audiences, the lesson is stark: in an age of information warfare, what is left unsaid can matter more than what is spoken, and neutrality itself may sometimes be the most carefully constructed position of all.
Indonesia, US Agree To Sign Tariff Deal In January
Indonesia and the U.S. have agreed on all substantial issues for a tariff deal, paving the way for the signing of an agreement by presidents Prabowo Subianto and Donald Trump at the end of January, Indonesia’s chief negotiator said.
Senior Economic Minister Airlangga Hartarto, speaking from Washington late on Monday after meeting U.S. Trade Representative Jamieson Greer, said the United States wanted access to Indonesia’s critical minerals and had agreed to give tariff exemptions to its palm oil, tea and coffee.
Market Access
Indonesia is the world’s biggest exporter of palm oil and a major global supplier of robusta coffee beans.
Talks between the two countries had appeared at risk of collapse earlier this month after the United States accused Indonesia of backtracking on prior commitments, although Jakarta said their “dynamics” were normal and it was just a matter of “harmonising the language”.
Airlangga repeated there were “dynamics” during the talks, but said all substantial issues had been resolved and that the latest round of talks went well.
“The main thing, of course, is providing balanced market access for American products, and at the same time, market access for Indonesia to the U.S.,” Airlangga said in a video briefing with Indonesian media.
Officials from both countries are now seeking to set up a meeting between Prabowo and Trump by the end of January, where a trade agreement could be signed.
Airlangga said there was no provision in the agreement that would limit Indonesia from making trade deals with other countries.
“No Indonesian policies are restricted by this agreement. This agreement is commercial and strategic in nature, and benefits the economic interests of both countries in a balanced manner,” Airlangga said.
A provision in a U.S.-Malaysia tariff deal allows the United States to end the pact and restore the tariff Trump announced in April, if new deals endanger key U.S. interests and talks fail to resolve its concerns.
US-Indonesia Trade Gap
Cambodia also has a similar clause in its U.S. deal, agreed in October, with some differences in the wording.
The deal would also cover cooperation in digital trade, technology and national security matters, according to a statement later released by Airlangga’s office, which provided no further details.
Trump imposed a 19% tariff on Indonesia after a preliminary agreement in July, down from the 32% he had threatened in April, in return for Indonesia’s promises to remove tariff and non-tariff barriers facing American exports, as well as to buy more American goods to close the trade gap.
Airlangga said there was no risk of the U.S. raising the tariff back to 32% if the January signing does not materialise because everything within the draft deal had been agreed by both sides.
“There is no factor that can hinder the signing of this ART (Agreement on Reciprocal Trade),” he said.
From January to October, trade between the two countries was worth $36.2 billion, with Indonesia booking a $14.9 billion surplus, Indonesian data showed. The U.S. is Indonesia’s second biggest export market.
(with inputs from Reuters)
North Korea’s Kim Showcases Economic Progress Ahead of Party Congress
North Korean leader Kim Jong Un has inaugurated a series of new luxury hotels in the country’s Samjiyon tourist zone, accompanied by his daughter Ju Ae, as part of a broader effort to showcase economic progress before a key ruling party congress next year.
According to state media outlet KCNA, five hotels officially opened over the weekend in the Samjiyon area, located in North Korea’s far northeast near the border with China. The development marks another stage in Kim’s long-term plan to turn the remote mountain region considered sacred in North Korean ideology as the birthplace of Kim’s father, Kim Jong Il into a major domestic tourism hub.
Kim’s Economic Push and Public Appearances
Photographs released by KCNA on Tuesday showed Kim and his teenage daughter touring the hotel interiors and interacting with officials. The leader hailed the new facilities as “clear proof of the rising status of our people and the development potential of our country.”
In recent weeks, Kim has intensified his schedule of public appearances at economic and industrial sites, attending multiple ribbon-cutting ceremonies including three factory openings just last week. The activity is seen as part of an effort to project an image of stability and growth amid international sanctions and food shortages.
Analysts say the inclusion of Ju Ae in such high-profile state events further fuels speculation that she may be positioned as Kim’s eventual successor. North Korean media have referred to her using increasingly formal language, and she now regularly appears alongside her father at major political and military functions.
Preparations for 2026 Party Congress
North Korea is expected to convene its first Workers’ Party congress in five years in early 2026. The gathering is likely to unveil a new national development plan outlining economic and industrial goals for the next five years.
State-run newspapers such as Rodong Sinmun have recently urged citizens to intensify their efforts to complete key construction and manufacturing projects before the congress. The drive underscores the leadership’s desire to demonstrate tangible achievements amid ongoing international isolation.
Samjiyon, often described by North Korean media as a “model socialist city,” has been central to Kim’s drive to modernise the country’s infrastructure and tourism sector. The latest hotel openings are intended to symbolise progress and national pride as Pyongyang seeks to rally domestic morale ahead of the crucial political meeting.
with inputs from Reuters
U.S.: Economic Growth Likely Remained Strong In Q3
The U.S. economy likely grew at a brisk clip in the third quarter, driven by solid consumer spending and business investment, but momentum appears to have since faded amid the rising cost of living and recent government shutdown.
The Commerce Department’s initial estimate of third-quarter gross domestic product on Tuesday is also expected to show the economy was supported by lower imports, which helped to curb the trade deficit. Much of the anticipated acceleration in consumer spending was the result of a rush to buy electric vehicles before the September 30 expiration of tax credits.
The data was delayed by the 43-day government shutdown and is now outdated. It will likely confirm what economists call a K-shaped economy in which higher-income households are doing well, while middle- and lower-income households are barely staying afloat. Surveys suggest consumer spending, the economy’s engine, is being driven by higher-income households, thanks to a stock market boom that has inflated household wealth.
U.S. GDP Rate
Big businesses have mostly managed to withstand the blow from President Donald Trump’s sweeping tariffs, which have increased costs, and are investing in artificial intelligence, reinforcing the economy’s foundation, economists said. In contrast, smaller businesses have been hit hard, they added.
“It was a good quarter, but that is not going to be sustained in the fourth quarter,” said Brian Bethune, an economics professor at Boston College. “Household budgets are squeezed; the average household is just barely keeping its nose above water in terms of real wage gains.”
GDP likely increased at a 3.3% annualised rate last quarter, a Reuters survey of economists estimated. The economy grew at a 3.8% pace in the second quarter.
The Commerce Department’s Bureau of Economic Analysis will also publish its preliminary estimate of corporate profits for the third quarter, as well as gross domestic product, which measures economic growth from the income side.
The nonpartisan Congressional Budget Office has estimated the recent shutdown could slice between 1.0 percentage points and 2.0 percentage points off GDP in the fourth quarter. The CBO estimated that most of the decline in GDP would eventually be recovered, but projected that between $7 billion and $14 billion would not be.
Growth in consumer spending, which accounts for more than two-thirds of U.S. economic activity, is expected to have accelerated from the second quarter’s 2.5% pace. In addition to households pulling forward EV purchases, spending was likely fueled by services, including air travel and hotel stays.
A Bank of America Institute report showed lower-income households were living paycheck to paycheck and have this year been allocating more of their budgets to groceries rather than eating at restaurants. They have also pulled back spending on clothing as well as airlines and hotels, reflecting their limited ability to substitute purchases amid elevated inflation.
In contrast, higher-income households are spending more at restaurants as well as on travel, entertainment and hotel stays.
Affordability Challenges
Trump’s trade policies have raised the prices of some imported goods, contributing to what economists have termed an affordability crisis that is tanking his approval ratings.
Households are also facing higher utility bills as the rapid growth of AI and cloud computing data centres boosts electricity demand. Some Americans will face skyrocketing health insurance premiums in 2026.
Inflation is expected to have accelerated last quarter, with the Personal Consumption Expenditures Price Index forecast to have increased at a 2.8% rate. The PCE price index rose at a 2.1% rate in the second quarter. It is one of the price measures tracked by the Federal Reserve for its 2% inflation target.
The U.S. central bank this month cut its benchmark overnight interest rate by another 25 basis points to the 3.50%-3.75% range, but signalled borrowing costs were unlikely to fall further in the near term as policymakers await clarity on the direction of the labour market and inflation.
Business investment likely contributed to GDP growth, reflecting ongoing strength in AI-related spending on intellectual property and equipment. Spending on structures like factories probably contracted for the seventh straight quarter.
“Despite the ongoing boom in data centre construction, a decline in drilling rigs amid falling oil prices likely dragged down business structures investment,” said Bernard Yaros, lead U.S. economist at Oxford Economics.
Growth also probably received a lift from a smaller trade deficit. Tariffs have caused wild swings in imports, resulting in the trade deficit subtracting from and adding to GDP by margins not seen since the government started keeping records.
Economists were divided on the impact of inventories and government spending on GDP last quarter. Some expected a small contribution, while others believed restocking was neutral. While some economists anticipated a rebound in government spending after declines for two consecutive quarters because of deep cuts at the federal level, others anticipated another quarter marked by a marginal decrease.
Residential spending, which includes homebuilding and sales, is expected to have contracted for a third straight quarter. The housing market has been slammed by higher mortgage rates, which have weighed on demand, as well as rising construction costs because of duties on imported materials.
“The AI boom is masking the ill effects of the trade war,” said Sal Guatieri, a senior economist at BMO Capital Markets. “Growth will slow further in the fourth quarter due to the government shutdown before rebounding in the new year.”
(with inputs from Reuters)
Trump Launches ‘Trump-Class’ Battleships That Is “100 Times More Powerful”
U.S. President Trump on Monday announced plans for a new “Trump class” of battleships, marking the start of an expanded naval buildup and signalling increased scrutiny of defence contractors over production delays and cost overruns.
Trump said the new battleships would be larger, faster and “100 times more powerful” than any previously built, forming the centrepiece of what he called an expanded “Golden Fleet” aimed at cementing U.S. naval dominance.
The program will begin with two vessels and is expected to grow to between 20 and 25 ships, Trump said. The first of the class will be christened the USS Defiant.
‘Lethal Surface Warfare Ships’
The announcement represents the latest example of the president rebranding an aspect of the federal government in his image. Trump, who has previously criticised the appearance of U.S. warships, said he will be personally involved in the designs.
He said the ships will weigh more than 30,000 tons, larger than current destroyers, and be equipped with the latest technology, including artificial intelligence and directed energy lasers.
“We haven’t built a battleship since 1994. These cutting-edge vessels will be some of the most lethal surface warfare ships … other than our submarines,” Trump said.
In addition to carrying conventional naval guns, the new battleships will be equipped with nuclear-armed, sea-launched cruise missiles, U.S. Navy Secretary John Phelan said, appearing with Trump in Florida for the announcement.
Some U.S. officials have warned that a failure to build new battleships in recent years has handed an advantage to economic and military rival China. Trump downplayed China’s influence on the decision, saying the expansion was “a counter to everybody.”
Delays And Overruns
He said the naval expansion would be paired with renewed pressure on defence contractors to speed up production and rein in costs. He said he will meet with major defence firms next week to address delays and overruns, and to examine whether executive compensation, stock buybacks and dividends are contributing to missed production targets.
“We don’t want to have executives making $50 million a year, issuing big dividends to everybody, and also doing buybacks”, while production of F-35s and other jets languishes, Trump said.
Reuters reported last week that the administration was planning an executive order to limit dividends, buybacks and executive pay for defence contractors whose projects are over-budget and delayed.
Trump and the Pentagon have been complaining about the expensive, slow-moving and entrenched nature of the defence industry, promising dramatic changes that would make the production of war equipment more nimble.
Besides the new battleship class, the expanded fleet envisions increasing numbers of other war vessels, including the introduction of a new, smaller class of frigates previously announced by the Navy, Trump said.
(with inputs from Reuters)
U.S. Warns China Loading 100 Nuclear Missiles Amid Taiwan Tensions
China has likely deployed more than 100 intercontinental ballistic missiles (ICBMs) across three new silo fields and shows no interest in joining nuclear arms control talks, according to a draft Pentagon report seen by Reuters. The assessment highlights Beijing’s rapid nuclear modernisation and growing military assertiveness amid escalating global security tensions.
The report said China’s weapons expansion is advancing faster than that of any other nuclear-armed nation, citing findings by the Bulletin of the Atomic Scientists. Beijing, however, dismissed such reports as attempts to “smear and defame” its image internationally.
Last month, U.S. President Donald Trump suggested he was developing a potential trilateral denuclearisation plan involving China and Russia. Yet, the Pentagon’s analysis suggests that Beijing remains unwilling to engage. “We continue to see no appetite from Beijing for pursuing such measures or more comprehensive arms control discussions,” the draft stated.
Expanding Arsenal and Strategic Reach
According to the report, China has likely placed more than 100 solid-fuelled DF-31 ICBMs in silo fields near the Mongolian border. While the Pentagon had previously acknowledged the existence of these facilities, this is the first time a report has suggested the scale of deployment.
China’s nuclear warhead stockpile stood at just over 600 in 2024 — a slower rate of growth compared to earlier years but the Pentagon predicts that Beijing will possess more than 1,000 warheads by 2030.
The report did not specify any intended targets for the newly deployed missiles. Chinese officials reiterated that the country maintains a “defensive nuclear strategy” and adheres to a “no-first-use” policy. China’s embassy in Washington said its nuclear posture remains limited to the “minimum level required for national security.”
Tensions Over Taiwan and Military Modernisation
The Pentagon report also warns that China expects to be capable of “fighting and winning a war on Taiwan by the end of 2027.” It describes Beijing’s military planning as focused on taking the island “by brute force,” including long-range strike options extending up to 2,000 nautical miles.
Such capabilities, it noted, could “seriously challenge and disrupt U.S. presence” in the wider Asia-Pacific during a conflict.
China regards democratically governed Taiwan as part of its territory and has not ruled out using force to achieve unification. The United States maintains a policy of strategic ambiguity but continues to supply Taiwan with defensive weaponry.
Arms Race Concerns as Nuclear Treaties Expire
The report’s release comes just weeks before the scheduled expiration of the 2010 New START treaty — the last remaining nuclear arms control accord between the U.S. and Russia, which caps strategic warheads at 1,550 per side. The agreement, extended once in 2021, cannot be formally renewed.
Analysts fear its lapse could ignite a new three-way nuclear arms race among the U.S., Russia and China. “More nuclear weapons and an absence of diplomacy will not make anyone safer,” warned Daryl Kimball, executive director of the Arms Control Association.
Trump has previously said he wants the U.S. to resume nuclear weapons testing, though his administration has yet to outline specific plans.
Corruption Purges and Industrial Impact
Beyond nuclear expansion, the Pentagon report details President Xi Jinping’s sweeping anti-corruption campaign within the People’s Liberation Army (PLA) and China’s defence industry. The crackdown, it said, has disrupted procurement and slowed weapons production but could yield “long-term improvements” in military efficiency.
Revenues at state-owned defence firms fell last year despite three decades of steady budget increases, reflecting the purge’s short-term impact. At least 26 senior executives from major arms manufacturers have been investigated or dismissed in the past 18 months.
The probe, initially centred on rocket and missile procurement, has since widened to include China’s nuclear and shipbuilding industries.
As Beijing continues its drive to expand and modernise its military power, U.S. officials warn that the combination of nuclear growth, regional assertiveness and internal restructuring underscores China’s emergence as a strategic rival unlike any other.
(with inputs from Reuters)
Trump Appoints Special Envoy To Greenland, Stirs Backlash
U.S. President Donald Trump named Louisiana Governor Jeff Landry on Sunday as his special envoy to Greenland, drawing renewed criticism from Denmark and Greenland over Washington’s interest in the mineral-rich Arctic island.
Trump has advocated for Greenland, a self-governing Danish territory, to become part of the United States, citing its strategic importance and mineral resources. Landry, who took office as governor in January 2024, publicly supports the idea.
“You cannot annex another country. Not even with an argument about international security,” Danish Prime Minister Mette Frederiksen and Greenland’s Prime Minister Jens-Frederik Nielsen said in a joint statement. “Greenland belongs to the Greenlanders, and the U.S. shall not take over Greenland.”
In a post on Truth Social, Trump wrote: “Jeff, the special envoy, understands how essential Greenland is to our National Security, and will strongly advance our Country’s Interests for the Safety, Security, and Survival of our Allies, and indeed, the World.”
The White House did not respond immediately to requests for comment.
The envoy, in a post on X, thanked Trump: “It’s an honour to serve in this volunteer position to make Greenland a part of the U.S. This in no way affects my position as Governor of Louisiana!”
The Trump administration put further pressure on Copenhagen on Monday, when it suspended leases for five large offshore wind projects being built off the East Coast of the U.S., including two being developed by Denmark’s state-controlled Orsted.
Greenland’s Strategic Value
Greenland, a former Danish colony with a population of about 57,000, has the right to declare independence under a 2009 agreement but remains heavily reliant on fishing and Danish subsidies.
Its strategic position between Europe and North America makes it a key site for the U.S. ballistic missile defence system, while its mineral wealth has heightened U.S. interest in reducing reliance on Chinese exports.
Greenland’s Nielsen commented on Facebook: “We have woken up again to a new announcement from the U.S. president. This may sound big, but it does not change anything for us. We decide our own future.”
Diplomatic Tensions Escalate
Danish Foreign Minister Lars Lokke Rasmussen said on Monday he would summon U.S. Ambassador Kenneth Howery, who had pledged “mutual respect” during a recent visit to Greenland.
“Out of nowhere, there is now a special U.S. presidential representative, who, according to himself, is tasked with taking over Greenland. This is, of course, completely unacceptable,” Rasmussen told TV2.
Denmark has sought to repair strained ties with Greenland over the past year, while also trying to ease tensions with the Trump administration by investing in Arctic defence to address U.S. criticisms about inadequate security.
“It is a difficult situation that our allies for a lifetime are putting us in,” Prime Minister Frederiksen said in an Instagram post.
Mikkel Vedby Rasmussen, a political science professor at the University of Copenhagen, told Reuters: “This appointment shows that all the money Denmark has invested in Greenland, in the defence of the Arctic, and all the friendly things we have said to the Americans, have had no effect at all.”
(with inputs from Reuters)
Turkish Delegation To Visit Damascus For Talks To Integrate SDF
A high-level Turkish delegation will visit Damascus on Monday to discuss bilateral ties and the implementation of a deal for integrating the Kurdish-led Syrian Democratic Forces (SDF) into Syria’s state apparatus, a Turkish Foreign Ministry source said.
The visit by Turkey’s foreign and defence ministers and its intelligence chief comes amid efforts by Syrian, Kurdish and U.S. officials to show some progress with the deal. But Ankara accuses the SDF of stalling ahead of a year-end deadline.
Turkey views the U.S.-backed SDF, which controls swathes of northeastern Syria, as a terrorist organisation and has warned of military action if the group does not honour the agreement.
Last week, Foreign Minister Hakan Fidan said Ankara hoped to avoid resorting to military action against the SDF but that its patience was running out.
The Foreign Ministry source said Fidan, Defence Minister Yasar Guler and the head of Turkey’s MIT intelligence agency, Ibrahim Kalin, would attend the talks in Damascus, a year after the fall of former President Bashar al-Assad.
‘National Security’ At Stake
The source said the integration deal “closely concerned Turkey’s national security priorities” and the delegation would discuss its implementation. Turkey has said integration must ensure that the SDF’s chain of command is broken.
Sources have previously told Reuters that Damascus sent a proposal to the SDF expressing openness to reorganising the group’s roughly 50,000 fighters into three main divisions and smaller brigades as long as it cedes some chains of command and opens its territory to other Syrian army units.
Turkey sees the SDF as an extension of the outlawed Kurdistan Workers Party (PKK) militant group and says it too must disarm and dissolve itself, in line with a disarmament process now underway between the Turkish state and the PKK.
Ankara has conducted cross-border military operations against the SDF in the past. It accuses the group of wanting to circumvent the integration deal and says this poses a threat to both Turkey and the unity of Syria.
(with inputs from Reuters)
Bangladesh: NCP Leader Shot In Khulna
Days after the killing of Bangladesh’s student activist Sharif Osman Hadi, another NCP student leader has been shot at in Khulna city.
The Dhaka Tribune reports that National Citizen Party (NCP) Khulna division chief and central organiser of Shramik Shakti, Motaleb Sikder, was shot in public in the city’s Sonadanga area around 11:45 am on Monday. He was taken to Khulna Medical College Hospital in critical condition.
Sonadanga Model police station Officer-in-charge Animesh Mandal said Sikder was shot by miscreants and rescued by locals, who rushed him to the hospital, added the report. Police were later deployed to the scene.
Out Of Danger
The New Indian Express reports that his condition was initially described as critical, but medical assessments later indicated that the bullet grazed his skull, and he is now out of danger.
Sikder’s party, the National Citizen Party, was formed earlier this year. It emerged from the Students Against Discrimination movement and the Jatiya Nagorik Committee, becoming Bangladesh’s first major student-led political party.
The police have told Prothom Alo that they are certain that the shooting occurred due to an internal dispute among those who were present at the crime scene.
Saif Newaz, organiser of the NCP Khulna city unit, told Prothom Alo that Sikder was recently involved in preparations for an upcoming divisional labour rally of the party.
Hadi’s Killing
Violent protests have taken place across Bangladesh last week after the death of Sharif Osman Hadi, a radical leader known for his anti-India sentiment. Hadi gained fame for his role during the 2024 student protests and uprising that led to the ouster of the then PM of Bangladesh, Sheikh Hasina.
Hadi was shot on December 12 by masked assailants, and his shooters remain to be found. After being treated in Dhaka, he was airlifted to a hospital in Singapore for treatment, where he succumbed to his injuries on December 18. The protests have also grown more targeted towards India following Hadi’s shooting.
Trump Shakes Up Global Trade In 2025, Uncertainty To Persist
President Donald Trump’s return to the White House in 2025 kicked off a frenetic year for global trade, with waves of tariffs on U.S. trading partners that lifted import taxes to their highest since the Great Depression, roiled financial markets and sparked rounds of negotiations over trade and investment deals.
His trade policies – and the global reaction to them – will remain front and centre in 2026, but face some hefty challenges.
What Happened In 2025
Trump’s moves, aimed broadly at reviving a declining manufacturing base, lifted the average tariff rate to nearly 17% from less than 3% at the end of 2024, according to Yale Budget Lab, and the levies are now generating roughly $30 billion a month of revenue for the U.S. Treasury.
They brought world leaders scrambling to Washington seeking deals for lower rates, often in return for pledges of billions of dollars in U.S. investments. Framework deals were struck with a host of major trading partners, including the European Union, the United Kingdom, Switzerland, Japan, South Korea, Vietnam and others, but notably a final agreement with China remains on the undone list despite multiple rounds of talks and a face-to-face meeting between Trump and Chinese leader Xi Jinping.
The EU was criticised by many for its deal for a 15% tariff on its exports and a vague commitment to big U.S. investments. France’s prime minister at the time, Francois Bayrou, called it an act of submission and a “sombre day” for the bloc. Others shrugged that it was the “least bad” deal on offer.
Since then, European exporters and economies have broadly coped with the new tariff rate, thanks to various exemptions and their ability to find markets elsewhere. French bank Societe Generale estimated the total direct impact of the tariffs was equivalent to just 0.37% of the region’s GDP.
Meanwhile, China’s trade surplus defied Trump’s tariffs to surpass $1 trillion as it succeeded in diversifying away from the U.S., moved its manufacturing sector up the value chain, and used the leverage it has gained in rare earth minerals – crucial inputs into the West’s security scaffolding – to push back against pressure from the U.S. or Europe to curb its surplus.
U.S. Inflation Elevated
What notably did not happen was the economic calamity and high inflation that legions of economists predicted would unfold from Trump’s tariffs.
The U.S. economy suffered a modest contraction in the first quarter amid a scramble to import goods before tariffs took effect, but quickly rebounded and continues to grow at an above-trend pace thanks to a massive artificial intelligence investment boom and resilient consumer spending. The International Monetary Fund, in fact, twice lifted its global growth outlook in the months following Trump’s “Liberation Day” tariffs announcement in April as uncertainty ebbed and deals were struck to reduce the originally announced rates.
And while U.S. inflation remains somewhat elevated in part because of tariffs, economists and policymakers now expect the effects to be milder and short-lived than feared, with cost sharing of the import taxes occurring across the supply chain among producers, importers, retailers and consumers.
What To Look Out For
A big unknown for 2026 is whether many of Trump’s tariffs are allowed to stand. A challenge to the novel legal premise for what he branded as “reciprocal” tariffs on goods from individual countries and for levies imposed on China, Canada and Mexico tied to the flow of fentanyl into the U.S. was argued before the U.S. Supreme Court in late 2025, and a decision is expected in early 2026.
The Trump administration insists it can shift to other, more-established legal authorities to keep tariffs in place should it lose. But those are more cumbersome and often limited in scope, so a loss at the high court for the administration might prompt renegotiations of the deals struck so far or usher in a new era of uncertainty about where the tariffs will end up.
Arguably, just as important for Europe is what is happening with its trading relationship with China, which has been a reliable destination for its exporters. The depreciation of the yuan and the gradual move up the value chain for Chinese companies have helped China’s exporters. Europe’s companies, meanwhile, have struggled to make further inroads into the slowing domestic Chinese market. One of the key questions for 2026 is whether Europe finally uses tariffs or other measures to address what some of its officials are starting to call the “imbalances” in the China-EU trading ties.
Efforts to finally cement a U.S.-China deal loom large as well. A shaky detente reached in this year’s talks will expire in the second half of 2026, and Trump and Xi are tentatively set to meet twice over the course of the year.
And lastly, the free trade deal with the two largest U.S. trading partners – Canada and Mexico – is up for review in 2026 amid uncertainty over whether Trump will let the pact expire or try to retool it more to his liking.
(with inputs from Reuters)