Reference News, January 5 report. According to Reuters on December 29, 2025, this was the most chaotic year in the financial markets that people could remember, as US President Donald Trump tore up the economic script that had shaped a multilateral, globalized world for decades.

Trump's strategy may have clearly conveyed the message, but its impact on the market, economic growth, and policy-making was vastly different from what most Wall Street analysts had expected.

The global trade war of 2025 should not have come as a surprise. Trump's campaign slogan was to "make American manufacturing great again." In 2024, at a rally in Las Vegas two weeks before the presidential election, he said, "I like tariffs. I can get anyone to do anything by using tariffs."

1. Tariffs

Trump stated that he would force countries to pay a price for using "unfair" trade practices that "exploit" the United States. He did so on April 2, 2025, which he called the "Liberation Day."

Despite warnings for months, analysts and investors were caught off guard by the series of sky-high tariffs introduced in the chaos.

Within three days after "Liberation Day," the S&P 500 index fell nearly 15%. The index recovered most of its losses in the following days after Trump delayed implementing some of the more extreme elements of his flagship policies.

However, even after Trump partially backed down, the trade landscape had already changed. By the end of 2024, the actual tariff rate on imported goods in the United States was about 2.5%. According to data from the Yale Budget Lab, this number is now close to 17%, the highest level since 1935.

Perhaps the most surprising thing is that most markets seemed indifferent to it.

2. The Dollar

What was the biggest prediction mistake of 2025? Just look at the dollar. In the first half of 2025, the dollar fell 12% against a basket of major currencies, marking the worst annual start since the mid-20th century when President Richard Nixon let the US abandon the gold standard for the dollar, starting the era of freely floating exchange rates.

This should not have happened. Trump's protectionist tariffs and onshore deals were expected to lead to inflation, thus possibly maintaining a relatively tight monetary policy. This would, in turn, support capital inflows into the US, making the dollar strong, at least that's what was generally believed.

But the rebound never materialized, largely because many global investors were unsettled by Trump's controversial policy agenda, reducing their exposure to the dollar.

Foreign investors still hoped to benefit from the US tech boom and the AI revolution, so they poured into the US stock market, but unlike recently, they hedged their currency risk. Therefore, a rare phenomenon occurred in 2025: Wall Street boomed while the dollar declined.

3. Interest Rates

Finally, but equally important, the Federal Reserve.

A year ago, the futures market expected only a 25-basis-point rate cut in 2025, but the Fed actually cut rates three times, all in the last four months of the year.

Skeptics might attribute this dovish stance to the immense political pressure from the White House overwhelming Federal Reserve Chair Jerome Powell. However, if political intervention was the culprit, the market didn't seem overly concerned.

The independence of the Federal Reserve is considered the cornerstone of the US financial system, but Trump's actions barely drew the attention of investors, except for some turbulence when Trump hinted in May that he might fire Powell.

In fact, the US stock market, the dollar, and the 10-year US Treasury bond all rose in the second half of 2025, despite the extended shadow of Trump over the Fed.

Currently, investors seem to have become accustomed to Trump's new economic script. Will this change in 2026? Many of the issues that dominated 2025, including concerns about trade, the AI bubble, rising public debt, and central bank independence, remain crucial in the chaos of 2026. It might be another turbulent year. (Translated by Wang Qun)

Original: toutiao.com/article/7591841077489910298/

Statement: This article represents the views of the author himself.