LOOKAHEAD: As 2025 closes, here is what experts say could shape 2026

TRUMP

The United States will reassert its dominance in the Western Hemisphere, build military strength in the Indo-Pacific, and possibly reassess its relationship with Europe, President Donald Trump said on December 5 in a sweeping strategy document that seeks to reframe the country's role in the world.

The National Security Strategy document described Trump's vision as one of "flexible realism" and argued that the U.S. should revive the 19th century Monroe Doctrine, which declared the Western Hemisphere to be Washington's zone of influence. It also warned that Europe faces "civilizational erasure" and must change course.

The document is the latest - and clearest - expression of Trump's desire to shake up the post-World War Two order led by the United States and built on a network of alliances and multilateral groups, and redefine it through his "America First" lens.

Since taking office in January, critics have said Trump's rhetoric evokes modern-day imperialism in the Western Hemisphere. He spoke early on, in vague terms, of retaking the Panama Canal and annexing Greenland and Canada.

More recently, the growing U.S. military presence in the Caribbean and threats of land strikes in Venezuela and in other countries where drug cartels operate have added to concerns in a region where Washington has a troubled history of military interventions.

The United States has sent more than 10,000 troops to the Caribbean, along with an aircraft carrier, warships and fighter jets.

"Looking ahead to 2026, here are my top three things to watch. Number one. What happens to all the U.S. forces that are amassed in the Caribbean? Do they ultimately undertake some military action in Venezuela? Does it work? What is the future of the Maduro regime there and how does President Trump take forward this policy? Because he has raised the stakes quite significantly and yet President Maduro has not left,” Rebecca Lissner, Senior Fellow for U.S. Foreign Policy Relations at the Council of Foreign Relations in Washington said.

The document also alludes to China’s growing economic influence in Latin America, which has been a concern to successive U.S. administrations, and the goal of countering it.

In Asia, the document said, Trump aims to deter conflict with China over Taiwan and the South China Sea by building up U.S. and allies' military power.

“I am particularly concerned about what President Trump might give up in other strategic areas having to do with AI, having to do with Taiwan and having to do with U.S. allies in the Indo-Pacific in exchange for a trade deal with President Xi that seems favourable,” added Lissner as she looks ahead into 2026.

The issue has been an irritant in U.S.-China relations for years.

But Trump has a history of unconventional foreign policy moves, making it hard to predict how this formalisation of national security themes could translate into concrete actions.

That approach has yielded some successes, most notably a ceasefire in Gaza that eluded Trump's predecessor Joe Biden. But so far, the unexpected plan to end the war in Ukraine - and revelations that Russian officials had a hand in its creation - has stirred harsh criticism from Republican lawmakers, exasperation from European allies and confusion inside the administration.

“What we see in the Trump administration is a lot of focus on the shiny deal-making, the signing ceremonies, the conclusions of these flashy diplomatic deals. And those can be consequential. But what we don't see is the follow-through. What we don't see is the focus on execution and implementation and the granular details that really make the difference between a stable peace and a very unshaky truce or even a return to war," said Lissner.

A meeting in Moscow involving Russian President Vladimir Putin, U.S. envoy Steve Witkoff and Trump's son-in-law Jared Kushner produced no breakthroughs.

UKRAINE

The confusion still swirling in Washington over President Donald Trump's latest peace plan for Ukraine has made at least one thing clear: the U.S. president's unconventional, all-in approach to diplomacy carries big risks - both domestic and geopolitical - as well as potential rewards.

President Volodymyr Zelenskiy offered to drop Ukraine's aspirations to join the NATO military alliance as he held five hours of talks with U.S. envoys in Berlin on December 14 to end the war with Russia, with negotiations set to continue.

Trump's envoy Steve Witkoff said "a lot of progress was made" as he and Trump's son-in-law Jared Kushner met Zelenskiy in the latest push to end Europe's bloodiest conflict since World War Two, though full details were not divulged.

Russian President Vladimir Putin has repeatedly demanded that Ukraine officially renounce its NATO ambitions and withdraw troops from about 10% of Donbas which Kyiv still controls. Moscow has also said Ukraine must be a neutral country, and no NATO troops can be stationed in Ukraine.

Under pressure from Trump to sign a peace deal that initially backed Moscow's demands, Zelenskiy accused Russia of dragging out the war through deadly bombings of cities and Ukraine's power and water supplies.

Britain, France and Germany have been working to refine the U.S. proposals, which in a draft disclosed last month called for Kyiv to cede more territory, abandon its NATO ambitions and accept limits on its armed forces.

The Ukraine peace plan, for its part, met push-back from European leaders, who were alarmed by its initial endorsement of Russian demands that Ukraine give up more territory, curb the size of its army, renounce joining NATO and be barred from hosting Western troops.

Many in Europe see the danger as existential. They fear that ending the war on Moscow's terms and cancelling sanctions will give Moscow billions of dollars to reconstitute its military.

INCREASING SECURITY INSTABILITY

The past year has been defined by increasing security instability and actual conflict, according to the Director of International Security at London's Royal United Services Institute (RUSI), Neil Melvin. A trend that seems to be set to continue throughout 2026.

He said there is growing fragmentation across regions and more regional conflict in the Middle East, Europe, Africa and Asia.

"I think what you can see is the very worrying trend, which is that all of this is starting to bring the major powers into more direct confrontation, more and more talk we hear about the possibility of a European Russia war," Melvin told Reuters.

NATO Chief Mark Rutte on December 11 urged allies to step up defence efforts to prevent a war waged by Russia, that could be "on the scale of war our grandparents and great-grandparents endured".

In a speech in Berlin, Rutte said too many allies of the military alliance did not feel the urgency of Russia's threat in Europe and that they must rapidly increase defence spending and production to prevent a war on the scale of that seen by past generations.

NUCLEAR POWERS

Russia and the U.S. together have more than 10,000 nuclear warheads, or 87% of the global inventory of nuclear weapons. China is the world's third-largest nuclear power with about 600 warheads, according to the Federation of American Scientists.

The arms control treaties between Moscow and Washington were born out of fear of nuclear war after the 1962 Cuban Missile Crisis. Greater transparency about the opponent's arsenal was intended to reduce the scope for misunderstanding and slow the arms race.

Now, with all major nuclear powers seeking to modernise their arsenals, and Russia and the West at strategic loggerheads for over a decade - not least over the enlargement of NATO and Moscow's war in Ukraine - the treaties have almost all crumbled away. Each side blames the other.

In the new U.S. National Security Strategy, the Trump administration says it wants to "reestablish strategic stability with Russia" - shorthand for reopening discussions on strategic nuclear arms control.

CHINA REGIONAL TENSIONS AND NEW FIVE-YEAR PLAN

China announced countermeasures against the former chief of staff of Japan's Self-Defense Forces on December 15 as tensions between the neighbouring countries simmered after remarks about Taiwan by Japan's prime minister angered Beijing.

The countermeasures were imposed on grounds that Shigeru Iwasaki violated the one-China principle and the spirit of political consensus between China and Japan, according to the Chinese foreign ministry, which said Iwasaki "seriously interfered" in China's internal affairs.

Relations have soured in the past month since Japanese Prime Minister Sanae Takaichi warned that Japan could respond to any Chinese military action against Taiwan if it also threatened Japan's security.

China also said its military will step up training and "take forceful measures" to safeguard the country's sovereignty and territorial integrity, the defence ministry said in response to a planned $11.1 billion U.S. arms sales package to Taiwan.

The package, the largest ever by the United States to the island that Beijing views as its own territory, comes as China has been stepping up its military and political pressure on Taiwan.

“The Chinese populations have been brought up with a diet of anti-Japanese sentiments with wartime China, Japan, Japanese atrocities in China, have been constantly replayed on this TV screen, getting people very emotional about Japan. So if the Chinese government does not ease that tension, the relationship is going to get very much more difficult and the economic consequences will be there. And the risk of something happening is much higher," said the Director of the SOAS China Institute, Steve Tsang.

On China’s economy, the elite Central Committee of China's ruling Communist Party held a closed-door meeting in October to discuss, among other things, the country's 15th five-year development plan.

The full five-year plan will only be released at a parliamentary meeting in March 2026, but the post-plenum outline from state news agency Xinhua hinted at policy continuity.

China said in December it plans to expand exports and imports in 2026 as part of efforts to promote "sustainable" trade, a senior economic official said, state broadcaster CCTV reported.

The trillion-dollar trade surplus posted by the world's second-largest economy is stirring tensions with Beijing's trade partners and drawing criticism from the International Monetary Fund and other observers who say its production-focused economic growth model is unsustainable.

“The outline essentially is one of China doubling down in the approaches that it has already taken,” said Tsang, adding, “a lot of the basic problems that the Chinese government faces like local-level government debt, like the collapse of the property market, like the enormous scale of youth unemployment, like the productivity gap, like the risk of being caught in a middle income trap. Now those problems at the moment do not appear to have been tackled with what we know of the skeleton structure of the next five year plan, and China really needs to address those things, rather than simply focusing on the things they have done well."

Economists warn that the entrenched imbalance between production and consumption in the Chinese economy threatens its long-term growth for the sake of maintaining a high short-term pace.

Chinese leaders promised on December 11 to keep a "proactive" fiscal policy next year to spur both consumption and investment, with analysts expecting Beijing to target growth of around 5%.

CLIMATE

Global temperatures are not just climbing, they are now climbing faster than before, with new records logged for 2023 and 2024, and at points in 2025. That finding was part of a key study in June that updated baseline data used in the science reports done every few years by the Intergovernmental Panel on Climate Change.

Extreme weather continued to hit regions around the globe this year. Typhoon Kalmaegi killed more than 200 people in the Philippines in November. Spain suffered its worst wildfires for three decades because of weather conditions that scientists confirmed were made more likely by climate change.

"2025 was quite devastating. The year started with the really large L.A. fires and across the year, the devastating heat for heatwaves in Europe, where a lot of elderly people died and most recently Hurricane Melissa that hit Jamaica and eastern Cuba, a really large Category five hurricane, that created a lot of negative impacts on small islands, made landfall. So it's a bit as we were expecting to see with increasing climate change, we're seeing more intense and more frequent extreme weather events that negatively affect our societies," said Research Associate in Climate Damage Attribution at the Grantham Institute, Dr. Emily Theokritoff.

The new research shows the average global temperature rising at a rate of 0.27 degrees Celsius each decade – or almost 50% faster than in the 1990s and 2000s when the warming rate was around 0.2 C per decade.

Sea levels are rising faster now too – at about 4.5 millimetres per year over the last decade, compared with 1.85 mm per year measured across the decades since 1900.

The world is now on track to cross the 1.5 C warming threshold around 2030, after which scientists warn we will likely trigger catastrophic, irreversible impacts. Already, the world has warmed by 1.3-1.4 C since the pre-industrial era, according to the World Meteorological Organization.

ARTIFICIAL INTELLIGENCE

Since ChatGPT exploded three years ago, companies big and small have leapt at the chance to adopt generative artificial intelligence and stuff it into as many products as possible. But so far, the vast majority of businesses are struggling to realise a meaningful return on their AI investments, according to company executives, advisors and the results of seven recent executive and worker surveys.

Executives say they still believe generative AI will eventually transform their businesses, but they are reconsidering how quickly that will happen within their organisations. Forrester predicts that in 2026, companies will delay about 25% of their planned AI spending by a year.

“Investors are now beginning to ask questions about the returns, about how these extraordinary amounts of capital flowing to AI will generate a return. Especially because business use of AI according to different service has actually been falling since the summer. So you have record levels of investment going in, you have fewer users coming out,” said Carl-Benedikt Frey, Dieter Schwarz Associate Professor of AI and Work at the Oxford Internet Institute.

He added, “We are now seeing very vigorous competition, especially from open-source models developed in China which are likely to push down returns. And so the question is, will 2026 be the year of the AI bust in financial terms and what then happens to the technology if the bubble bursts.”

AI companies including OpenAI, Anthropic and Google are all doubling down on courting business customers in the next year. During a recent lunch with media editors in New York, OpenAI CEO Sam Altman said developing AI systems for companies could be a $100 billion market.

All this is happening against the backdrop of unprecedented tech investment in everything from chips to data centres to energy sources.

Whether these investments can be justified will be determined by companies’ ability to figure out how to use AI to boost revenue, fatten margins or speed innovation. Failing that, the infrastructure build-out could trigger the kind of crash reminiscent of the dot-com bust in the early 2000s, some experts say.

Production: Millie McCaughan, Zainab Elhaj, Vanessa Romeo/Reuters