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19 October 2025

Global Trade Tensions Rise As Tariffs And Alliances Shift

India, New Zealand, and Egypt navigate economic and geopolitical upheaval as the US-China trade war intensifies and regional conflicts disrupt commerce.

Trade tensions, climate commitments, and shifting alliances are reshaping the global economic landscape in ways that few could have predicted even a few years ago. As of October 2025, the world’s top economies find themselves at a crossroads, with new tariffs, diplomatic standoffs, and environmental pledges all colliding in a high-stakes game of international relations.

Indian trade negotiators, currently in the United States, are attempting to chart a path toward a "win-win solution" with their American counterparts. Yet, as reported by Indian Express, these talks are informal at best, hampered by the ongoing US government shutdown. The backdrop is anything but simple: India’s continued purchase of discounted Russian oil remains a major sticking point, leading the US to tack on a hefty 25 percent penalty tariff atop existing reciprocal tariffs. Former President Donald Trump, never shy about making headlines, claimed repeatedly this week that Indian Prime Minister Narendra Modi assured him India would stop buying Russian oil. However, the Indian Ministry of External Affairs swiftly countered, stating it was "not aware of any conversation" to that effect. India, for its part, insists its energy import decisions are guided solely by national interest—though officials did hint that oil imports from the US, which have dropped from $25 billion to about $12-13 billion over the last seven or eight years, could be on the rise again.

The numbers tell their own story. Trade data released on October 15 shows imports from the US jumped 11 percent, even as Indian exports to America slipped by 12 percent. The result? A ballooning trade deficit, now at $31.15 billion—the highest in more than a year, according to India’s Commerce and Industry Ministry. Despite this, India’s total exports actually grew by 6.74 percent, buoyed by surging electronic goods (up 58 percent) and a 60 percent increase in iron ore exports to China. Not all sectors are celebrating: labor-intensive industries like textiles, jute, carpets, and handicrafts have suffered export declines of between 5 and 13 percent, a worrying trend for millions of workers.

All eyes are now on a possible meeting between Trump and Modi on the sidelines of the upcoming ASEAN Summit in Malaysia, where trade, tariffs, and geopolitics are sure to dominate the agenda. Trump is also expected to hold talks with Chinese President Xi Jinping at the APEC meeting in South Korea, raising the stakes further as the world’s two largest economies continue to spar.

The US-China trade war, far from cooling, has only escalated in recent weeks. In response to Beijing’s latest move to restrict exports of rare earth elements—a vital resource for everything from smartphones to electric cars—Washington has threatened to slap an additional 100 percent tariff on Chinese imports starting November 1 unless China backs down. According to Xinhua, China has defended its continued purchase of Russian oil as "legitimate," dismissing US actions as "typical unilateral bullying." The rhetoric may be hot, but behind the scenes, there are signs of possible de-escalation: US Treasury Secretary Scott Bessent is scheduled to meet Chinese Vice-Premier He Lifeng next week in Malaysia, an effort to prevent further tariff hikes. As Reuters reported, even Trump has admitted that the current tariff regime is "unsustainable."

Amid these tensions, smaller economies are adapting fast. New Zealand’s Finance Minister Nicola Willis, speaking to Reuters during the annual meetings of the International Monetary Fund and World Bank, emphasized that regional and bilateral trading relationships are holding strong—even as the US and China ramp up their trade war. New Zealand, she noted, is deeply embedded in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a free trade pact among 11 nations including Canada, Japan, and Britain. The European Union is also eyeing a connection with CPTPP, and New Zealand’s separate trade deal with the United Arab Emirates looks promising.

"All of those trade relationships are very strong, and the message that we're having from our partners is that they wish to continue to build on them and expand them, rather than go the other way," Willis told Reuters. She added, "We ... are cautious and nervous about anyone backsliding on agreements, but we're not seeing signs of that happening." According to IMF and global trade officials, only the US, China, and Canada have raised tariff rates in recent months, with a remarkable 72 percent of global trade flows still governed by existing rules.

Climate change, too, remains a central concern for trading nations. Despite the US withdrawal from the Paris climate accord, Willis affirmed that New Zealand is staying the course on emission reduction commitments. "We consider the risk and threat of more extreme climatic events as something that we need to prepare for and adapt to, both for ourselves, but particularly for our Pacific family, small island states who are particularly vulnerable to significant climatic events," Willis said. She noted that global consumers, including those in the US, increasingly care about the emissions profiles of their trading partners, making climate action not just an environmental imperative but a commercial one as well. New Zealand’s trade agreements with the EU and others require ongoing climate commitments, and Willis sees those pledges being honored around the world.

Security concerns are also reshaping alliances. New Zealand remains a member of the Five Eyes intelligence group alongside Britain, Canada, the US, and Australia, and is boosting its defense spending in response to growing geopolitical pressures. As the world’s economic and security architecture shifts, smaller countries like New Zealand are keenly aware of the need to balance trade, defense, and environmental priorities.

Meanwhile, in the Middle East, the "Palestinian question" looms large over regional connectivity projects. Egypt’s Foreign Minister Badr Abdelatty, during a visit to India on October 16-17, underscored that lasting peace and normalization in the region hinge on resolving the Israeli-Palestinian conflict. The war in Gaza, which erupted after the October 7, 2023, Hamas attack on Israel, has taken a devastating toll: over 67,967 people killed and 170,179 wounded in Gaza, while 1,139 Israelis lost their lives and about 200 were taken captive in the initial assault. The conflict has also disrupted major infrastructure projects like the India-Middle East-Europe-Economic Corridor (IMEC), launched in September 2023 at the G-20 summit in New Delhi. Maritime traffic through Egypt’s Suez Canal, a vital artery for global trade, has plummeted by 60 percent, costing Egypt more than $9 billion, according to Abdelatty.

Efforts to broker peace continue, but progress is slow and fraught. A recent ceasefire between Israel and Hamas saw the release of Israeli hostages in exchange for nearly 2,000 Palestinian prisoners, yet violence and restrictions on humanitarian aid persist. Abdelatty called the Gaza peace plan the "only game in town," urging international cooperation to secure a UN Security Council resolution and an international stabilization force for Gaza. India, for its part, reiterated its historic support for a two-state solution and for Palestinian rights.

In this climate of uncertainty, nations large and small are recalibrating their strategies—balancing economic interests, security alliances, and moral imperatives. The coming months will test the resilience of global trade, the durability of diplomatic ties, and the world’s collective resolve to address both conflict and climate change head-on.