The prospect of Donald Trump returning to the White House has prompted a surge in trade deal activity worldwide, as countries move to diversify their trade relationships and mitigate the impact of potential US protectionist policies.
During his first term, Trump’s imposition of tariffs and threats of trade wars spurred nations to secure bilateral agreements to sustain trade volumes. Experts suggest a similar trend is now emerging as the world anticipates his potential return, marked by concerns over renewed tariffs on key trading partners like China, Canada, and Mexico.
Since Trump’s election in November, the European Union has accelerated its trade agenda, finalizing a long-awaited agreement with the Mercosur bloc of South American nations, updating a free trade deal with Mexico, and restarting negotiations with Malaysia after more than a decade of dormancy. The EU’s proactive approach reflects its strategy of reducing reliance on US markets while deepening ties elsewhere.
In his first term, Trump imposed tariffs of up to 100% on Chinese goods, 25% on imports from Canada and Mexico, and hinted at blanket levies on all US imports. These moves sparked global retaliation and trade diversifications. For instance, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) moved forward with 11 member nations after Trump pulled the US out of negotiations. Malaysia’s Trade Minister Tengku Zafrul Aziz noted that this demonstrated the resilience of countries willing to collaborate despite US withdrawal.
China has also been active in expanding its trade reach, recently signing agreements with Serbia, Cambodia, Nicaragua, and Ecuador. With China accounting for 30% of global manufacturing, its growing influence underscores the shifting trade dynamics as other nations adjust to rising US protectionism.
The EU, meanwhile, has solidified partnerships with countries like Japan, Vietnam, and Singapore and has ongoing negotiations with Australia, Indonesia, and the Philippines. Former EU Trade Commissioner Cecilia Malmström, who played a key role in these efforts, reflected that Trump’s unpredictable trade policies in his first term drove countries to conclude deals to protect their economies.
Other regions are also adjusting. The Regional Comprehensive Economic Partnership (RCEP), launched in 2020, brought together ASEAN nations with China, Japan, South Korea, Australia, and New Zealand, covering 2.3 billion people and 30% of global GDP. Africa’s Continental Free Trade Area, which began in 2021, is set to eliminate 90% of tariffs over time, further diversifying global trade flows.
Despite the challenges posed by rising protectionism and the COVID-19 pandemic, global trade has continued to grow. According to Scott Lincicome of the Cato Institute, “Regardless of what Donald Trump does over the next few years, everyone else appears unwilling to embrace costly economic isolationism and will instead just move on without us.”
Looking ahead, analysts predict that if Trump were to return, the focus of new trade agreements might shift toward Africa, while much of Asia remains consolidated under existing agreements. European leaders, including EU Trade Commissioner Maroš Šefčovič, have expressed a commitment to forging deeper trade ties with regions like the Gulf, India, and Latin America.
