As U.S. Turns Its Back on Free Trade, Other Countries Double Down
Faced with U.S. barriers, countries like the U.K. and India move to ease trade among themselves
May 6, 2025 The Wall Street Journal
Key Points
Nations seek market resilience beyond the U.S. amid rising tariffs.
The U.S. is backing away from free trade under President Trump, but much of the rest of the world is not.
Since Trump’s election there has been a flurry of activity as countries across the globe attempt to deepen trade ties, hoping to offset some of the pain from U.S. tariffs by trading more with one another.
On Tuesday, the U.K. and India announced the completion of a trade agreement that had been stuck for several years. The EU is negotiating its own deal with India, and recently agreed on one with South America’s Mercosur trading bloc. Canada and Asian countries are also dusting off old trade deals. The Comprehensive and Progressive Agreement for Trans-Pacific Partnership, a trade club consisting of 12 countries, is considering new applicants, including Costa Rica and Indonesia.
The activity has accelerated since Trump was re-elected, and is based on the idea that even if the U.S. accounts for 26% of global economic output, it accounts for 13% of global imports, leaving plenty for the rest of the world to exchange.
“The U.S. is acting as an accelerant to the lowering of tariffs by everyone else,” said Alan Wolff, a senior fellow at the Peterson Institute for International Economics and former deputy director-general of the World Trade Organization. He said the European Union, Canada and others are seeking to boost trade with other partners now that the U.S. has become a less reliable market.
Faced with blanket U.S. tariffs, many countries are now adopting a two-pronged strategy: trying to strike deals with Trump to roll back some of the duties, while also boosting trade cooperation with other partners to help mitigate the pain if they lose meaningful access to the giant U.S. market, says Achyuth Anil, a researcher at the Centre for Inclusive Trade Policy at the University of Sussex.
President Trump’s trade policies are spurring global trade deals among other countries.
The U.K. and India completed a trade agreement; EU is negotiating with India and has agreed on a deal with Mercosur.
“One thing is for sure: Countries are realizing that they really need resilience in terms of markets other than the U.S.,” says Anil.
For now, globalization has taken a hit following the U.S.’s 10% across-the-board tariffs, as well as duties on specific sectors such as automotive imports and steel and aluminum imports.
Global goods trade volumes will fall by 0.2% this year, compared with an increase of 2.9% last year, according to estimates last month by the WTO.
But moves by other countries to ease trade show that other countries aren’t giving up on globalization just yet, says David Henig, a trade expert at the think tank European Centre for International Political Economy. “There is a lot of talk about the reordering of globalization,” he says. But “these sorts of trade deals are nudging in the other direction.”
The India-U.K. trade deal, one of the most high-profile since Britain left the EU in 2021, sees big cuts to Indian tariffs on British whiskey and cars among other sectors, which the British government claimed will boost bilateral trade between the nations by 25.5 billion British pounds (the equivalent of just over U.S. $34 billion) in the coming years. The British government said India had reduced tariffs on 90% of goods, and within a decade most of those would become tariff free. The U.K. in turn has cut taxes on Indian products, including footwear and jewelry, and made it easier for Indian professionals, including chefs and yoga teachers, to enter the country.
Britain has been trying to seal a trade deal with India since 2022. Talks were bogged down, however, over issues including the extent to which Indian students would get preferential visas to the U.K. and how intellectual property rights would be treated in India. In February, as Trump’s tariff plans came into focus, the U.K. and India agreed to restart talks. Last month, U.K. Chancellor of the Exchequer Rachel Reeves said Britain was “accelerating trade deals with the rest of the world,” as U.S. tariffs came into effect.
“Clearly Trump was a catalyst” to the U.K. and India deal, says Sam Lowe, a trade expert at Flint Global, a consulting firm.
Finance ministers from the Asean Plus Three, a group of 10 Asian countries including China, Japan and South Korea put out a statement this week reaffirming that they would try to offset the current global trade shock with “greater inter regional trade.” In Latin America, Brazil is hoping to boost exports to both China and the U.S.
And many countries aren’t giving up trying to deepen ties to the U.S. On Tuesday, new Canadian Prime Minister Mark Carney visited the White House and was expected to discuss trade among other issues with Trump.
British officials still hope to sign a trade deal with the U.S. to lower tariffs and also to secure closer trade relations with the European Union, its largest market, when U.K. and EU officials meet later this month.
A British deal with the Trump administration has been elusive in the past. After quitting the EU, the U.K. government initially hoped to score a free-trade deal with the U.S. However, British officials balked at the prospect of the vast U.S. agricultural and pharmaceutical industries getting preferential access to British markets, and a deal never materialized.
The EU is also moving forward to ease trade with other nations. It struck a preliminary trade deal in December with the four South American countries that founded the Mercosur customs union—Brazil, Argentina, Paraguay and Uruguay—and announced a revamped deal with Mexico in January.
The bloc is also ramping up talks with other countries. European Commission President Ursula von der Leyen traveled to India in February with other top leaders from the bloc’s executive body, where she said the EU intends to complete a free-trade agreement with India by the end of this year.
EU officials launched trade talks with the United Arab Emirates last week, and the bloc’s ongoing negotiations with Indonesia, the Philippines, Thailand and Malaysia are being accelerated, Trade Commissioner Maroš Šefčovič told EU lawmakers on Tuesday. The EU will “continue diversifying our trade and investment ties with partners around the globe,” Šefčovič said.
“To be honest, Trump talks a big game but the actual impact on everyone else’s trade has been pretty limited,” Henig says.
Write to Max Colchester at Max.Colchester@wsj.com and Kim Mackrael at kim.mackrael@wsj.com
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Appeared in the May 7, 2025, print edition as 'Washington’s Trade War Spurs Other Nation’s to Strike Deals'.