Summary

The American government went into shut down following the inability of Congress to pass a budget, crippling the federal operations and sending hundreds of thousands into unemployment. Trump took his economic nationalism notch higher when he declared a 100% duty on foreign-produced movies, making cultural protectionism into economic warfare. At the same time, Taiwan was forced to divert half its microchip production to the United States, jeopardising the autonomy of the island.

Qatar's economic power and Trump's unexpected Gaza peace plan brought fleeting quiet. Hamas agreed to a US-mediated truce, but Netanyahu went on public record backtracking. At the same time, Gen Z-led uprisings burst forth on several continents. From Peru and Morocco, Indonesia, as one, unified by outrage over inequality, corruption, and misguided government spending.

India and China agreed on resuming direct flights, marking a tentative easing in their tense interaction. Macron's government in Europe fell, and political instability increased. Japan saw history in the making: Sanae Takaichi will be its first female leader, as she takes over from the economy that lags with flat wages and demographic pressure. Last, the American dollar dropped 10% YTD, highlighting fading worldwide faith in the stability of Washington.

Analysis

Japan

Japan's time of glory, Sanae Takaichi as the country's first female PM, is arriving under maximum tension. The globe around Tokyo is on fire: the United States is unsteady, China and India are tentatively repairing relations, and North Korea is displaying its new destroyers.

Takaichi inherits a stagnant economy and a tenuous security situation. She will probably redouble defence spending, economic reflation, and wage increases, her hard part is external. Keeping Japan's worldwide leverage when its key ally is in turmoil. Trump's unpredictability deflates the FOIP (Free and Open Indo-Pacific) story, and the Gaza cease-fire melodrama serves as a reminder that conflict mediation leadership by the United States is no longer institutional, but rather spontaneous.

If Takaichi is wise, she will turn Japan into a regional stabiliser. Growing trilateral partnerships with India and Australia, making investments in tech self-reliance, and becoming the grown-up in the room as the West goes up in flames.

Australia

Australia is watching its anchor, the United States, crumble in real time. The U.S. shutdown, dollar devaluation, and isolationist tariffs all scream one thing: America’s domestic rot is spilling into its global reliability. For Canberra, that’s a nightmare.

Trump's coercion on Taiwan and the economic nationalism focus of the United States highlight fissures in the Indo-Pacific alliance framework on which AUKUS is reliant. A distracted and bankrupt Washington is unable to maintain Pacific deterrence if its own Congress cannot pay for itself. An Australian economy that is export-based (movies, minerals, education) will lose out on American protectionism, and the cultural tariff action is the subtle indication that Trumpism 2.0 is not about open trade.

Look for Australia to hedge more solidifying relationships with Japan, India, and ASEAN. All the while appearing to maintain faith in the United States. Security is still anchored in Washington, but economically, Canberra will be tempted toward regional diversification not to go down with the sinking ship.

International

The real story this week isn’t just Washington’s paralysis. It’s the grassroots chaos erupting worldwide. Morocco’s Gen Z Discord-fuelled protests are a signal: the post-pandemic generation is done waiting for reforms. Their movements digitally organised, globally inspired are spreading like wildfire. We’re seeing a cross-continental youth awakening from North Africa to Southeast Asia.

Economically, Trump's tariffs and the depreciation of the dollar are eroding worldwide faith in American leadership, driving the states into multipolar economic groupings. China–India flight resumption is symbolic. Beijing and New Delhi are testing practical coexistence as the United States self-destroys. Instability in Europe (collapse of the French government, growing populism) just fills the worldwide power vacuum further.

Meanwhile, the Gaza cease-fire isn't peace. Just a tenuous PR gimmick. Israel's internal opposition, Qatar's economic leverage, and Trump's vanity-based diplomacy mean that one will not endure. The Middle East, like the rest of the globe, is learning to live in a non-U.S.-dominated world.