Trump’s tariff storm, the “chaos” between the United States, Israel, Iran and the Middle East, the “coaching change” at the Federal Reserve... This article takes stock of the top ten global macro events in 2025

# Bu Shuqing

In 2025, systemic fractures emerged in the global macro order, with volatility becoming the new normal: Trump’s "reciprocal tariffs" dealt a heavy blow to the multilateral trading system; U.S. fiscal policy expanded in an all-round way under the *Big Beautiful Bill*; the federal government shutdown set a new historical record; the Israel-Iran "12-Day War" reshaped the pricing of geopolitical risks; the world’s central banks saw a directional split for the first time ever; and the independence of the Federal Reserve encountered unprecedented challenges. Institutional failures were quickly priced in by the market: gold broke through the $4,500 mark, and the U.S. dollar recorded its worst performance in two decades.

2025 was a year of order collapse, and also the first year of rule reshaping.

In this year, Trump wielded the stick of "reciprocal tariffs" to tear apart the post-war trading system; conflicts in the Middle East escalated abruptly, with the U.S. and Israel directly launching strikes against Iranian nuclear facilities; Russia and Ukraine sat down at the negotiation table, but engaged in repeated tug-of-war over territorial and security boundaries. U.S. fiscal spending expanded comprehensively under the *Big Beautiful Bill*, the federal government shutdown set a new historical record, and state machinery frequently ground to a halt amid partisan strife.

Equally profound changes took place on the monetary front: the Federal Reserve accelerated interest rate cuts under political pressure, while the Bank of Japan bucked the trend and restarted rate hikes, marking the first-ever directional institutional split among the world’s major central banks.

All these fractures were ultimately reflected in the market—gold surged past $4,500, ushering in its most feverish bull market in forty years; the U.S. Dollar Index tumbled toward its worst annual performance in two decades; and risk assets learned one thing: to treat institutional failure itself as priceable background noise.

Every shock once left the global market briefly breathless. But when shocks occur repeatedly, they are no longer accidents, but the new normal. In 2026, the world will continue to grope for new balance and rules in the reality that "chaos has become a certainty". The only certainty is this: volatility itself has become the most stable feature of this era.

## Trump’s Tariff Stick Deals a Heavy Blow to the Global Trade Order

In 2025, the "reciprocal tariff" policy implemented by the Trump administration sent shockwaves through global trade. Tariffs evolved from a temporary trade remedy into a normalized tool of game theory, dealing a profound blow to the post-war multilateral trading system.

According to reports from Xinhua News Agency and CCTV News, at the start of the year, the Trump administration signed the *America First Trade Policy* memorandum, broadening the concept of national security to remove obstacles for the full implementation of "reciprocal tariffs".

On April 2, Trump signed a tariff executive order at the White House, declaring a national emergency in the U.S. He announced the imposition of a 10% "base tariff" on all countries, and the application of differentiated, higher "reciprocal tariffs" on the nations with which the U.S. runs the largest trade deficits.

According to the tariff list released by the White House, the tax rates faced by various countries vary drastically. Countries such as the UK and Australia are subject to the 10% base rate, while Vietnam faces a rate as high as 46%, Cambodia 49%, and Lesotho in South Africa hit with a punitive 50% tariff. The EU is taxed at 20%, Japan 24%, South Korea 25%, and India 26%.

On the night the policy was announced, U.S. stock futures plummeted, with Nasdaq 100 futures dropping over 4% at one point. The euro surged against the U.S. dollar to 1.0920 in intraday trading, Bitcoin climbed to $88,000, and spot gold staged a sharp rebound to break through $3,140 after a "flash crash".

# The Core Controversy of "Reciprocal Tariffs"

The core controversy of "reciprocal tariffs" lies in their misleading calculation logic and unilateral implementation approach. The U.S. derives tariff rates solely based on trade deficits, a simplistic formula that 99% of trade economists question as lacking economic significance, and one that even exaggerates the extent of so-called "unfair trade".

After making symbolic tough statements, Europe, Japan and South Korea quickly shifted to negotiations, hoping to secure exemptions through industrial concessions, market access and political coordination. Take Japan as an example: in early September, Trump signed a U.S.-Japan trade executive order, under which the U.S. would impose a 15% baseline tariff on almost all Japanese products. In return, Japan agreed to establish a $550 billion investment fund, and to purchase U.S.-manufactured commercial aircraft, U.S. defense equipment, as well as U.S. agricultural products including corn, among other items.

Following several rounds of intense negotiations, China and the U.S. returned to the negotiating table, ultimately reaching a framework agreement to reconcile and shake hands.

In essence, the Trump administration’s "reciprocal tariff" policy is an attempt to reshape trade rules through unilateral hegemony. As tariffs become a normalized tool, the path to free trade has shifted from global multilateralism to a dual track of regional coordination and bilateral cooperation. The global trade landscape is undergoing profound adjustments unseen in a century.

# The Twelve-Day War: U.S.-Israel Jointly Strike Iranian Nuclear Facilities

The conflict between Israel and Iran emerged as a major variable in the global financial markets in 2025.

The trigger for the conflict was the collapse of the U.S.-Iran nuclear negotiations. Since April, five rounds of indirect U.S.-Iran negotiations have been deadlocked due to the U.S.’s harsh demands such as "zero enriched uranium". Meanwhile, a May report by the International Atomic Energy Agency (IAEA) indicated that Iran’s enriched uranium stockpile was approaching weapons-grade levels, completely cementing Israel’s resolve to take military action.

According to CCTV News, in the early hours of June 13, the Israeli Air Force launched a surprise operation codenamed **"Lion’s Might"**, deploying 200 fighter jets carrying 330 pieces of ordnance to precisely strike over 100 key targets across Iran, marking the start of the "Twelve-Day War". On the evening of June 13, Iran launched the **"True Promise-3"** military operation against Israel. Shortly thereafter, Iran announced the cancellation of the sixth round of indirect U.S.-Iran negotiations scheduled to be held in Oman on June 15.

The market reaction was extremely drastic. The Dow Jones Industrial Average plummeted more than 700 points on the day, the S&P 500 Index fell below the 6,000-point mark, and the VIX Volatility Index surged above 20. WTI crude oil skyrocketed over 13% at one point, posting its largest single-day gain since March 2022. Spot gold rose over 1.4% to break through the $3,400 mark, as risk-averse sentiment swept across the globe.

# Operation Midnight Hammer and the One Big Beautiful Bill: Global Shocks and Monetary Policy Shifts in 2025

As the Israel-Iran conflict raged on, U.S. military forces suddenly launched the **Operation Midnight Hammer** military strike against Iran.

According to *PLA Daily*, in June, the U.S. military deployed 7 B-2 bombers, dropping a total of 14 bunker-buster bombs on the Fordow and Natanz nuclear facilities; it also launched Tomahawk missiles at the Isfahan nuclear facility. In response, Iran launched missile strikes on U.S. military bases.

Under international pressure and the depletion of both sides, a ceasefire took effect on June 25, with both countries declaring "victory".

Risk - off sentiment quickly faded, oil prices fell back to pre - conflict levels, and gold once dropped below $3,300, but then rose again after Jerome Powell signaled interest rate cuts, indicating that the market focus had shifted from geopolitics to monetary policy.

## The One Big Beautiful Bill Takes Effect: A Potential $3.4 Trillion Debt Increase Over the Next Decade

On July 4, U.S. Independence Day, President Donald Trump signed his landmark legislation, the **One Big Beautiful Bill Act** (OBBBA), which officially took effect as a bill covering over $1 trillion in spending and tax cuts.

After days of intense voting, the bill was finally passed.

On July 3, the House of Representatives passed the bill by a narrow margin of 218 to 214, with two Republican lawmakers defecting to vote against it. Earlier, Vice President Vance cast the tie - breaking vote in the Senate, where the vote was 51 to 50. Before the House vote, Democratic leader Hakeem Jeffries delivered a nearly 9 - hour speech to protest the bill, setting a record for the longest speech in modern House history.

The bill permanently extends the tax cuts introduced by Trump in 2017, raises the debt ceiling by $5 trillion, and drastically cuts social security programs such as Medicaid. According to the U.S. Congressional Budget Office, the bill will increase the government budget deficit by $3.4 trillion over the next decade. Republicans claim that they will cut taxes by $4 trillion and reduce spending by at least $1.5 trillion within the next ten years.

The bill exempts tips and overtime pay from taxes until 2028, raises the cap on state and local tax deductions from $10,000 to $40,000, and imposes an 8% net investment income tax on private universities with large endowments, such as Harvard University. It also eliminates tax credits for electric vehicle and climate programs established by the Biden administration, allocates nearly $47 billion for the construction of the U.S. - Mexico border wall, and $45 billion for detention centers. Regarding Medicaid, nearly $1 trillion in cuts will be made over the next ten years, and the Congressional Budget Office estimates that 11.8 million Americans will lose health insurance by 2034.

U.S. Treasury Secretary Bezos stated that the market implies that the bill is fiscally prudent and beneficial to economic growth, and it will bring certainty and stability to the economy.

However, economists predict that the revenue generated by Trump's tariffs will be far lower than the revenue losses caused by the bill. An analysis by the Yale Budget Lab shows that over the next decade, the annual after - tax income of the lowest 20% of earners in the U.S. will decrease by an average of 2.3%, while that of the highest 20% will increase by approximately 2.3%. If the current trajectory continues, the U.S. debt burden will exceed 118% of the economic scale by 2035.

Elon Musk has repeatedly criticized the bill, arguing that it will destroy millions of American jobs and severely damage future industries such as new energy. The bill repeals key rules for carbon emission credit trading, sets the fine for corporate average fuel economy standards to zero, and eliminates the incentive for traditional automakers to purchase Tesla's carbon emission credits. Last year, Tesla's carbon credit revenue reached $2.8 billion, accounting for 39% of its net profit. Without the $409 million in carbon credit revenue in the first quarter of this year, Tesla would have fallen into a loss.

## U.S. Government Shutdown Crisis: A Political Game in the Longest Shutdown in History

The longest - ever 43 - day shutdown of the U.S. federal government officially ended on November 12. President Trump signed a temporary appropriations bill passed by both houses of Congress, which funds the government until January 30 next year and provides back pay to federal employees affected by the shutdown. The shutdown, which began on October 1, forced approximately 750,000 federal employees to take furloughs, suspended the release of key economic data, and exacerbated airport delays.

The House of Representatives completed the final vote at around 7 p.m. Eastern Time on the 12th, and the Senate had approved the bill on Monday. House Republican leader Steve Scalise stated that although Republicans held a slim majority in the House, they secured sufficient support from Democratic lawmakers to pass the bill. Trump had previously stated that he would sign the bill.

The White House Office of Management and Budget issued a statement saying that the bill "finally ended the longest government shutdown in history imposed on the American people by congressional Democrats". White House Press Secretary Karoline Leavitt, citing estimates from the Congressional Budget Office, said the government shutdown may have reduced economic growth by two percentage points in the fourth quarter and could have resulted in the October Consumer Price Index and employment report "possibly never being released".

The shutdown began at 00:00 on October 1, triggered by fundamental differences between the two parties over the content of the temporary appropriations bill. The Republican proposal extended funding until November 21, while the Democratic counter - proposal extended it until October 31 and included a provision allowing the purchase of claims to potential future tariff refunds from importers at a price of 0 to 40 cents as part of the expansion of medical insurance coverage.

## Turmoil Over the Federal Reserve Leadership Change: Independence Under Challenge

In 2025, the independence of the Federal Reserve encountered unprecedented challenges. Trump publicly discussed the candidate for the next chairperson, and the Treasury Department was deeply involved in the monetary policy framework.

Trump had previously made it clear that the next Federal Reserve Chairperson must "substantially cut interest rates" and that "anyone who disagrees will never become the Federal Reserve Chairperson". Regarding the timeline, Trump stated that the decision would be made "in the coming weeks".

Trump is more inclined to choose his long - term advisor Hassett as the Federal Reserve Chairperson. Hassett meets two key criteria set by Trump: loyalty and market credibility. Former Federal Reserve Governor Kevin Warsh and current Governor Christopher Waller have also re - entered the race due to their excellent performance in previous interviews.

A more profound challenge lies in the independence of the Federal Reserve. The Trump administration has requested the Supreme Court to authorize the dismissal of officials of independent agencies, attempting to overturn the precedent established by the 1935 *Humphrey's Executor* case. If successful, the president will gain the power to dismiss the Federal Reserve Chairperson, which will fundamentally change the pattern of central bank independence.

There are also undercurrents on Wall Street. Heavyweights such as JPMorgan Chase CEO Jamie Dimon have frequently communicated with the government and expressed their positions, and lobbying and competition among candidate camps have continued to intensify. Critics argue that Hassett's current job responsibilities include defending the president's policies on television and criticizing the Federal Reserve, making him unfit to lead an independent central bank.

## Global Interest Rate Cut Cycle: A New Era of Policy Divergence

Monetary policies of central banks around the world are undergoing a historic divergence. While the Federal Reserve continues to cut interest rates, major central banks such as the European Central Bank (ECB) and the Bank of Japan have turned hawkish. The market even bets that some central banks will start raising interest rates in 2026. This rare reverse policy operation is reshaping global asset pricing.

Since September, the Federal Reserve has cut interest rates by a total of 75 basis points, and the market expects it to cut rates approximately two more times in 2026. In contrast, the ECB decided to keep interest rates unchanged at its December meeting, marking the fourth consecutive meeting with no action. Swap market pricing indicates that the probability of the ECB raising interest rates in 2026 now exceeds that of cutting rates. Australia and Canada are also expected to raise interest rates next year, and the Bank of England is expected to hit the bottom of interest rates in the summer.

Policy divergence is mainly due to regional differences in economic data. Canada's strong employment data has led the market to price in the possibility of an interest rate hike early next year, and Australia's stronger - than - expected household spending has supported expectations of an interest rate hike. Service sector inflation in the euro zone remains high, and the economy exceeded expectations in the third quarter. Germany's fiscal stimulus measures are expected to further support growth, reducing the need for further interest rate cuts to stimulate the economy. The actual impact of Trump's trade war on U.S. trading partners has also been lighter than expected.

The Bank of Japan has continued its interest rate - hiking path. The minutes of the December policy meeting showed that many members believed that Japan's real interest rate was still at an extremely low level, "still a considerable distance away" from the neutral interest rate. In December, the Bank of Japan raised its benchmark interest rate to 0.75%, a 30 - year high. A Bloomberg survey showed that economists expect the Bank of Japan to raise interest rates again in about six months, and most believe that the terminal rate of this interest rate - hiking cycle will be 1.25%.

David Mericle, Chief U.S. Economist at Goldman Sachs, predicted that the Federal Open Market Committee will cut interest rates by two more 25 - basis - point increments as inflation eases, lowering the interest rate to the range of 3% - 3.25%. Pooja Kumra of TD Securities described next year as a potential "turning point" for the central banks of the euro zone, Canada, and Australia, and emphasized that "hawkish voices are becoming louder".

## The Bank of Japan Resumes Interest Rate Hikes: Has the Forgotten Black Swan Reappeared?

On December 19, the Bank of Japan unanimously approved a 25 - basis - point interest rate hike to 0.75% by a 9:0 vote, the highest interest rate level since 1995. This was the first time that Kazuo Ueda had "all members bet on an interest rate hike" during his tenure, fully in line with market expectations.

The interest rate hike was driven by inflation remaining consistently above the 2% target and the unemployment rate staying below 3% for a long time, creating conditions for wage growth. Sanae Takaichi's 21.3 - trillion - yen fiscal policy also intensified inflationary pressures. The weakness of the yen has become a common concern of the government and the central bank, providing political space for the interest rate hike.

This interest rate hike has once again aroused market concerns about liquidity shocks. In July last year, the Bank of Japan's previous interest rate hike, combined with the exit from Yield Curve Control (YCC), triggered a global market earthquake. A large number of "carry - trade" positions were closed in a concentrated manner, which resonated with the U.S. recession trade, resulting in a significant liquidity shock.

According to a strategy report released by Western Securities in mid - December, the Bank of Japan's hawkish move at that time led to the concentrated closing of a large number of arbitrage transactions accumulated during the YCC era, triggering a chain reaction in the global financial market.

However, according to the analysis of the report, the risk of liquidity shock has eased to some extent. Data from the futures market shows that most speculative short positions in the yen were closed in July last year, and the most active carry - trade transactions have ebbed. In addition, the United States has not experienced a recession trade similar to that in July last year, and the Federal Reserve has launched a balance sheet expansion policy to provide a liquidity buffer.

However, the report also warns that global stock markets, represented by U.S. equities, are inherently vulnerable after a six-year bull run. Coupled with concerns over an AI bubble, Japan's interest rate hikes may still act as a **catalyst** triggering global liquidity shocks. The report advises investors to closely monitor whether the U.S. market sees consecutive **"triple meltdown" signals** in stocks, bonds and currencies for two to three times.

# Precious Metals Rally: A Safe-Haven Feast Amid Dollar Collapse

Driven by geopolitical risks, global supply shortages and robust investment demand, the precious metals market has ushered in a historic moment.

On December 24, spot gold broke through the $4,500 mark for the first time, surging approximately 70% year-to-date and on track to post its best annual performance since 1979.

Silver once breached the historic threshold of $80, with a year-to-date gain exceeding 150%, also poised to record its strongest annual performance since 1979.

At the same time, other precious metals such as platinum and palladium have also witnessed historic market movements. Platinum prices soared to a new high above $2,300, rising for 10 consecutive trading days with a year-to-date increase of over 150%.

The drivers behind gold's rally are diversified. Sustained and substantial purchases by central banks around the world provide a solid foundation, with capital continuously flowing into gold ETFs. Trump's aggressive measures to reshape the global trade system and challenges to the Federal Reserve's independence have further fueled the gold price surge. Investors are engaging in **"currency depreciation trades"**, worrying that the expansion of global debt will erode the value of sovereign bonds.

The platinum boom stems from tight supply-demand dynamics and trade risks. Supply disruptions in South Africa have led to shortages for the third consecutive year, and high borrowing costs have prompted industrial users to opt for leasing rather than purchasing. The market is closely watching potential tariffs or trade restrictions that may result from the U.S. Section 232 investigation.

In contrast, the U.S. Dollar Index has fallen nearly 10% year-to-date, approaching its worst performance since 2003. Rising expectations of Fed rate cuts, combined with political uncertainty, have driven a broad rally in non-U.S. currencies. The euro, British pound and Australian dollar have all hit multi-month highs, while the Swedish krona has climbed to its strongest level since early 2022.

This historic shift signals that the U.S. dollar's dominant position is facing unprecedented challenges, and the global financial landscape is undergoing profound restructuring.

## Risk Warning and Disclaimer

The market is risky, and investment requires prudence. This article does not constitute personal investment advice, nor does it take into account the specific investment objectives, financial situations or needs of individual users. Users should consider whether any opinions, views or conclusions in this article are consistent with their specific circumstances. Any investment made based on this article shall be at the user's own risk.