Executive Summary
The July 2025 was characterized by the serious exacerbation of global trading contradictions, the continuous human tragedy in the Middle East and the restructuring of global partnerships. One of the major characteristics of the month was a fever of activities in the realm of diplomacy in the form of regional and multilateral gatherings. Notable gatherings included the BRICS Finance Ministers’ meeting, the SCO Foreign Ministers’ meeting in China, and a tense EU-China summit. Some essential forums were also held at UN, which includes the High-level Political Forum on Sustainable Development (HLPF), the AI for Good Global Summit, and the conference on the Israeli-Palestinian two-state solution, which the U.S. and Israel boycotted no doubt of.
U.S. President Donald Trump’s “America First” policies dominated the economic landscape, with new tariff threats and deadlines driving intense, last-minute trade negotiations with Europe, Canada, Mexico, Japan, and India. Although it had a huge trade agreement with the European Union and Japan, India was hit with a new 25 percent tariff, indicating the lack of cohesive strategy to trade globally. It is worth noting that Pakistan was charged 19% tariff, which is lower than the tariff on some of the competitors such as Bangladesh and Vietnam, which could create a relatively competitive advantage in the U.S market despite the increment of barriers to trade.
At the same time the Gaza conflict was escalating, where there was a spiral of humanitarian crisis and frequent failures in the ceasefire talks. The conflict’s regional dimensions expanded, with Israeli strikes on Syria and Lebanon drawing international condemnation. In Eastern Europe, Russia continued its war in Ukraine, defying Trump’s diplomatic ultimatums and deepening its military and strategic ties with North Korea.
Internationally, China’s diplomatic and economic influence grew, a trend highlighted by a U.S. report on America’s declining strategic standing. Pakistan also participated proactively in the financial and diplomatic activities toward China and the Central Asian states and simultaneously passed through the greater tensions and load with India. Last, uncharacteristic weather conditions and a land mark ruling of the International Court of Justice highlighted the latent nature of the crisis of global climate.
Global Economic and Trade Dynamics
1.1. US-Led Tariff
Escalation and Trade Negotiations
The month was characterized mainly by President Trump’s aggressive use of tariffs to reshape global trade. The Trump administration imposed and later delayed a series of deadlines most notable being 1 August, in which it would impose new levies.
- EU -Japan Trade Deals: Overwhelming discussions with the European Union and Japan led to the new trade arrangements. The EU agreement with European Commission President Ursula von der Leyen calibrated a minimum of 15 percent tariff on most EU products compared to the 30 percent threatened. A very large EU promise was also given to buy U. S. energy and military goods. A separate “massive” deal with Japan saw a 15% tariff on Japanese exports and a commitment from Japan to invest $550 billion in the U.S.
Tariff on India: President Trump has acted in contrast and has made announcements of India to impose a 25 percent tariff, effective in August. The decision was framed as a penalty for India’s “non-monetary trade barriers” and its continued trade with Russia, particularly in energy and military equipment. This move greatly damaged the U.S.-India relations to the extent where India was compelled to reconsider its course of strategic orientation.
• Conditional Tariffs and New Alliances: The administration also threatened a 10% tariff on BRICS nations if they adopted “anti-American policies.” This step, which was subsequently interpreted to be conditional, brought to the fore the application of the trade policy as a means of geopolitical power. At the same time, China and Pakistan have hinted at urging the formation of new regional blocs that might replace SAARC to achieve higher levels of integration and connectivity in South Asia.
1.2. Energy Markets and Financial Shifts
Global energy markets experienced volatility amidst these geopolitical shifts. The price of oil decreased due to the forecasted combination of the increase in the supply of oil within OPEC and the decrease in the overall demand. Russia’s state-owned Rosatom advanced plans to build nuclear power plants in Kazakhstan, Uzbekistan, and Kyrgyzstan, signaling a major strategic shift in Central Asia’s energy sector to meet surging demand. The month also saw Saudi Arabia’s equity capital market experience robust activity in the first half of 2025, with six IPOs raising a combined $2.8 billion.
Middle East Conflicts and Humanitarian Crises
2.1. Gaza Conflict and Ceasefire Stalemate
The humanitarian situation in Gaza deteriorated to a catastrophic level, with the death toll exceeding 60,000 , and 147 hunger-related deaths reported by month’s end. Reports of children dying from malnutrition and the “obliteration” of the healthcare system underscored a deepening crisis.
Failed Diplomacy: there were repeated stalls in the Doha ceasefire talks which included mostly whether Israel would withdraw all of its troops or would leave 40 percent of the territory. In spite of humanitarian ceasefire proclaimed by Israel, the number of victims was increasing. The UN and international aid agencies condemned the situation, with a UN Special Rapporteur accusing the EU of “consciously supporting” Israel’s actions through its inaction.
• International Pressure: Australia’s Foreign Minister condemned Israel’s blockade as a breach of international law, and a coalition of over 20 countries, including U.S. allies like France and Japan, issued a joint statement criticizing Israel’s “drip feeding of aid” and “inhumane killing of civilians.” U.S. President Trump also expressed rare public divergence from Netanyahu, calling for an end to the “carnage” and advocating for a ceasefire and hostage release.
2.2. Expanding Regional Conflicts
The conflict’s scope widened beyond Gaza, with Israel launching air strikes on multiple fronts.
• Syria and Lebanon: Israeli strikes targeted Lebanon’s Bekaa Valley and Syria’s Suwayda and Damascus, reportedly killing civilians and military personnel. The attack of Syria was said to be in defense of the Druze minority that are fighting the government army. Such moves were however perceived by most people as destabilizing and a U.S brokered ceasefire was necessary in order to prevent further escalation in Syria. Turkey’s Foreign Minister Fidan vowed direct intervention against any attempts to divide Syria.
• Iran’s Stance: Iran’s parliament ruled out resuming nuclear talks with the U.S. until undisclosed “preconditions” are met, a hardened stance following recent U.S.-Israeli strikes on its nuclear facilities. U.S. President Trump defended these strikes, warning of further action if necessary, while Israeli Chief of Staff Eyal Zamir declared that the “campaign against Iran is not over.” This has propagated intense instability in the region and raised the chances of a broader war.
Geopolitical Alliances and Security Developments
3.1. Russia-Ukraine War and Shifting Alliances
The war in Ukraine continued unabated, with Russia defying President Trump’s ultimatums.
• Russia’s Defiance: Russian President Vladimir Putin stated his intention to continue fighting until the West accepts his peace terms, remaining unconcerned by Trump’s threats of tougher sanctions. Russian forces continued large-scale attacks, including a record drone assault on Ukraine, despite Trump’s deadlines. This highlighted the limitations of the U.S. in unilaterally dictating the conflict’s end.
• NATO and U.S. Support: President Trump’s promise to send “very sophisticated” military equipment, including Patriot missile systems, to Ukraine was conditional upon European allies donating their existing systems in exchange for American replacements. NATO Secretary-General Mark Rutte cautioned major economies like Brazil, China, and India of “harsh secondary sanctions” if they continued significant trade with Russia. Meanwhile, Russia deepened its “invincible fighting brotherhood” with North Korea, with a mutual defense pact under discussion.
3.2. China’s Global Influence and Diplomatic Push
China did not hide the fact that it globalized its diplomatic and economic powers and took advantage of the seeming U.S. foreign policy withdrawal.
• Growing Influence: A U.S. Democrat-authored report warned that President Trump’s “America First” foreign policy was causing the U.S. to lose strategic ground to China. A Pew Research survey indicated that more people now view China as the world’s “top economy.”
• Diplomatic Engagements: China hosted a high-level summit with EU leaders, which, despite a tense and shortened outcome due to disagreements on trade and the Ukraine war, underscored China’s push for diplomatic engagement. China also was hoping to enhance cooperation with the U.S. since the U.S treasury secretary, Scott Bessent was to meet with Chinese officials in Stockholm in order to discuss the trade negotiations.
• Pakistan-China Ties: The China-Pakistan relationship strengthened across various sectors, including a push for a new regional bloc to replace SAARC, an agreement for cultural and tourism partnerships, and Chinese interest in investing in Pakistan’s ICT and new energy sectors.
3.3. Pakistan’s Domestic and Foreign Policy
Pakistan’s internal security and economic performance were key themes during the month.
• Counter-Terrorism and Regional Ties: The Pakistan and Afghanistan executed a plan to increase cooperation on cross-border infiltration of Tehreek-i-Taliban militants. Pakistan’s COAS Field Marshal Asim Munir also accused India of a “nefarious agenda” of proxy warfare following a “manifest defeat” in a recent military engagement. Pakistan also committed to deepening security collaboration with Bahrain.
• Economic Progress: Pakistan’s IT exports soared to a record $3.8 billion in the fiscal year 2025, marking an 18% increase and putting the country on track to achieve its $15 billion target by 2030. Pakistan’s government also met with Russian officials to discuss the revival of steel mills and sought investments from China’s Guangdong Group.
Other Major Developments and Outlook
4.1. Climate and Environmental Security
The month marked increasing human-related climatic change.
ICJ Ruling: The International Court of Justice (ICJ), in a landmark case, ruled that parties are expected to be bound to the regulations of the Paris Agreement to ensure that the global temperate is not increased beyond 1.5 o C and failure to meet the limitation could result to legal liability to nations that do not meet the limit. This was hailed as a “lifeline of hope” and a significant turning point for climate responsibility.
Extreme weather A heatwave of exceptional severity affected Western Europe causing unprecedented temperatures in Spain, massive wildfires in Turkey, France and Greece and widespread evacuation. In July, Pakistan was hit by deadly floods and landslides especially in GilgitBaltistan (GB) and Khyber Pakhtunkhwa. These events, attributed to climate change impacts, led to the rescue of over 200 stranded tourists and tragically claimed 234 lives nationwide since late June, highlighting the country’s vulnerability to extreme weather phenomena. An 8.8 magnitude earthquake also struck Russia’s far east, triggering tsunami alerts across the Pacific.
4.2. Global Political and Social Issues
• Dalai Lama’s Succession: The Dalai Lama’s 90th birthday became a point of diplomatic tension, as he reaffirmed his institution’s exclusive authority over his reincarnation, directly challenging Beijing’s demand to approve his successor.
• Japan’s Political Turmoil: Japan’s ruling Liberal Democratic Party (LDP) lost its majority in upper house elections, leading to calls for Prime Minister Shigeru Ishiba to resign and triggering a contentious succession battle.
The International Criminal Court (ICC) awarded warrants of arrest to the Taliban leaders on crimes against humanity on charges of persecuting Afghan women and girls. Meanwhile, in an unrelated move, the U.S. put UN Special Rapporteur Francesca Albanese under sanctions on the grounds that she, in her attempts to lead the ICC to investigate U.S. and Israeli officials, engaged in bias and antisemitism.
4.3. Outlook for August 2025
• Trade: The August deadline of new U.S tariffs to the EU and other countries will be crossed and the outcome of the newly done deals and tariffs will be evident. The U.S. and China are likely to request an extension of their tariff truce ahead of the 12 August deadline which would perhaps open the doors to a Trump-Xi meeting.
-Middle East: a new international conference on the Israeli- Palestinian two state solution will take place co- chaired by France and Saudi Arabia although it has been boycotted by the U.S and Israel. In September as well, France and the UK will officially recognize a Palestinian state.
• Geopolitics: The SCO Summit is already scheduled to be hosted in Tianjin, China, on 31 August-1 September where the leaders of more than 20 countries are likely to meet and define cooperation in the region in the future.
• Energy and Environment: The Grand Ethiopian Renaissance Dam (GERD), which is due to have an official inauguration on September, might create tensions between Egypt and Ethiopia. After the devastating floods in July, Pakistan is at risk of its monsoons being still active and the probability of above average rainfall in the month of August, making it even worse on the humanitarian and infrastructure front.
