03 Feb 2025
“The global economy is increasingly becoming one that is characterized by ever deepening trade relationships excluding the United States. The trend is not necessarily anyone's preference, but the arrangements offer a second best option given America's rejection of a more open economic order. The proliferation of trading blocs, like the one between the European Union and South American nations, also helped countries avoid an overreliance on China.”
As the United States, under President Trump's leadership, moves toward a trade conflict that could escalate into a global trade war, an increasing number of nations, including longstanding allies, are seeking new economic partnerships outside the influence of the U.S. This shift reflects a growing trend where countries are actively pursuing trade arrangements that exclude the United States, prompted by its recent protectionist measures, including tariffs on close allies such as Mexico and Canada.
- European Union and South American Trade Deal: In December 2024, the European Union finalized a trade agreement with four South American countries, creating one of the largest trade zones in the world. This deal connects markets with a combined population of 850 million people, demonstrating the EU's growing influence in global trade outside the U.S. orbit.
- EU and Switzerland: The European Union also reached a trade agreement with Switzerland, further solidifying its economic relationships in Europe. This deal, struck just weeks after the South American pact, reflects the EU’s consistent push to secure new trade deals despite U.S. protectionism.
- EU and Mexico: The EU bolstered its trade arrangements with Mexico, signaling continued economic cooperation between the two regions. This partnership is particularly significant as it forms a counterbalance to the U.S.'s strained relationship with Mexico under President Trump's tariffs.
- Resumption of Malaysia Talks: After a 13-year hiatus, the EU resumed free trade agreement negotiations with Malaysia. This move further emphasizes Europe's strategy of deepening its economic ties across Asia while navigating the uncertainties created by the U.S.'s trade policies.
- BRICS Expansion: The BRICS group, which originally included Brazil, Russia, India, China, and South Africa, has expanded with the addition of Indonesia, bringing the total number of member countries to 10. With half of the world’s population and over 40% of global economic output, BRICS continues to grow as a powerful economic bloc that stands in contrast to U.S. trade dominance.
- Southeast Asia and Middle East Cooperation: The ASEAN (Association of Southeast Asian Nations) group is strengthening ties with the Gulf Cooperation Council (GCC) countries, with Malaysia hosting a summit and inviting China. This meeting highlights the increasing regional cooperation between Southeast Asia, the Middle East, and China, positioning these areas to deepen trade and investment ties.
- China and ASEAN: China is expected to update its free trade agreement with ASEAN countries, which includes major markets like Indonesia, the Philippines, and Vietnam. This expansion reflects China's growing role in regional trade as it strengthens economic partnerships across Asia.
- United Kingdom’s New Trade Partnerships: Following Brexit, the UK officially joined the trans-Pacific trade bloc, which includes countries like Japan, Australia, and Mexico. The UK is also working to repair its economic ties with the European Union, further diversifying its trade relationships post-Brexit.
- Latin American Cooperation (Brazil and Mexico): Brazil and Mexico are in discussions to expand their trade agreements, demonstrating increasing economic collaboration within Latin America. These efforts are part of a broader trend where countries are looking to form new alliances to reduce their reliance on the U.S. and China.