For the past year, countries around the world have been in panic mode as the United States added tariffs or threatened trade wars. The sheer uncertainty of President Donald Trump's whims has added a real sense of urgency to the situation.
The old global trading order is gone, and the realignment is pushing countries into each other's arms in new constellations.
China has seen much of the tariff headlines, but US neighbors — and biggest trading partners — Mexico and Canada have not been spared.
Across the Atlantic, the European Union has been on the tariff rollercoaster, too, and is questioning long-standing partnerships. The contempt that Trump threw at Europe at the World Economic Forum in Davos was yet another loud wake-up call.
A reliable trading partner in tough times?
TL;DR: To counterbalance US hostility, the EU has been trying to scrape together deals, and finalize others long in the making, to show that the bloc is a reliable trading partner and an alternative to the US.
To counterbalance US hostility, the EU has been trying to scrape together deals, and finalize others long in the making, to show that the bloc is a reliable trading partner and an alternative to the US. But trade deals are notoriously complex and take time to put together even in the best circumstances.
On January 17, European Commission President Ursula von der Leyen, went to Asuncion, Paraguay, to sign the EU-Mercosur trade agreement.
The deal between the 27-member EU and Argentina, Brazil, Paraguay and Uruguay, covers a market of 700 million people, making it one of the largest free trade zones in the world.
"We are sending a very clear message to the world that Mercosur and European Union countries are for low tariffs, for smooth trade, for creating better quality and better prices for our consumers," EU Trade Commissioner Maros Sefcovic told DW after the signing.
But four days later, the European Parliament halted the deal in its tracks by voting for a lengthy review process by the European Court of Justice.
Even if parts of the deal are provisionally enacted, such hesitation is a major blow to the EU's standing, and the South American partners may just withdraw from the deal in protest.
Trying to do it better in India
TL;DR: Ursula von der Leyen will be hoping for better luck at the EU-India summit on January 27 in New Delhi.
Ursula von der Leyen will be hoping for better luck at the EU-India summit on January 27 in New Delhi.
At the meeting, which will be hosted by Indian Prime Minister Narendra Modi, it is expected that bilateral ties will be intensified.
The EU is especially keen to finalize a free trade deal with the world's largest democracy and the fifth-largest economy, after the US, China, Germany and Japan.
Negotiations on the EU–India Free Trade Agreement first started in 2007, were paused in 2013 and then restarted in 2022.
A breakthrough in talks would be hugely consequential for both sides and cover a market of 2 billion people who are responsible for a quarter of global GDP.
The EU is serious about its commitments
TL;DR: The EU is a good negotiating partner, in that it's serious about the commitments it undertakes in its trade agreements," Chase told DW.
Shouldn't everyone be knocking on Europe's door?
The EU is the world's second-largest import market, and Peter Chase, a senior fellow at the Brussels, Belgium-based German Marshall Fund of the United States, says currently many countries see the bloc as "much more steady and reliable" than the United States.
"The EU is a good negotiating partner, in that it's serious about the commitments it undertakes in its trade agreements," Chase told DW. "And it definitely wants to build new trading relations with many countries."
Still, long timelines and complicated ratification regulations can get in the way.
Other times, small political interests can put up roadblocks, says Chase, who specializes in the EU's economic relations with third countries. The EU-Mercosur deal is an example of a small minority slowing progress.
EU trade agreements are piling up
TL;DR: Last year, the EU was able to negotiate an update to its trade agreement with Mexicoand finalized negotiations for a trade and investment agreement with Indonesia.
The EU already has preferential trade agreements with 76 countries, and has shown renewed interest in joining the so-called Comprehensive and Progressive Agreement for Trans-Pacific Partnership — a free trade bloc of 12 Asia-Pacific nations, including only the UK from Europe so far.
Last year, the EU was able to negotiate an update to its trade agreement with Mexicoand finalized negotiations for a trade and investment agreement with Indonesia.
Indonesia and EU finally seal landmark trade deal
TL;DR: To view this video please enable JavaScript, and consider upgrading to a web browser that supports HTML5 video Other agreements with Malaysia, the Philippines and the United Arab Emirates (UAE) are being negotiated.
To view this video please enable JavaScript, and consider upgrading to a web browser that supports HTML5 video
Other agreements with Malaysia, the Philippines and the United Arab Emirates (UAE) are being negotiated.
Furthermore, the EU-UK Trade and Cooperation Agreement is up for review this year, the first full review of the agreement since it went into force in 2021. Though the audit is merely meant to look at implementation, some are hopeful it can help repair a strained relationship and serve as a springboard for closer cooperation.
But for Peter Chase, there is something more pressing than another EU trade agreement: the World Trade Organization.
While trade liberalization was good, he said, what the world needed right now was for the overall rule of law to be reestablished.
"Only the EU can help build the coalition of countries that will be needed to do this," he stressed, in order to push back against both "America's breaking of its commitments and China's long-standing refusal to keep the promises it made when it joined."
Curated by Sofia Andersson
