As Donald Trump continues to wreak havoc on allies and trading partners, countries are scrambling to forge new alliances and repair broken ones to protect themselves from the mercurial American president.
The past few months have seen a flurry of diplomatic moves by governments, including those with longstanding mutual resentment, to reduce their dependence on the United States.
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“Countries are looking to diversify their economic and security partnerships,” Bina Najibullah, deputy director of the Canada Asia-Pacific Foundation, told Al Jazeera.
“Many of America’s allies, especially in the Indo-Pacific region, do not want to dissociate from the United States because the United States is too important, especially in terms of security. But they are all looking for a US-plus strategy to minimize risks,” Najibulla said.
European Commission President Ursula von der Leyen is scheduled to visit Australia after this weekend’s Munich Security Conference to finalize a trade and security agreement that she has been working on since 2018.
The visit follows security and trade deals the European Union has struck with the UK, Canada and most recently India, and comes weeks after the EU signed trade deals with Argentina, Brazil, Paraguay and Uruguay.
“It’s hard to overstate the disruption Donald Trump has caused to the global trading system,” Robert Rogowski, an adjunct professor of trade and economic diplomacy at Georgetown University, told Al Jazeera.
But Rogowski said Trump also underestimated the world’s middle powers, citing Canadian Prime Minister Mark Carney’s call at the World Economic Forum in Davos, Switzerland, for small and medium-sized countries to come together and show “true cooperation” as major powers turn inward.
“That resolve is rooted in a simple reality: For many countries, economic stability is an existential issue. We cannot continue to rely on increasingly volatile trading partners in the face of repeated shocks from Washington,” Rogowski said.
Carney last month became the first Canadian leader to visit China in nearly a decade, seeking to mend relations that had been frozen since Canadian authorities arrested an executive from Chinese telecommunications giant Huawei in December 2018.
Secretary Carney met with Chinese President Xi Jinping in Beijing and agreed to reduce tariffs on certain products and allow up to 49,000 Chinese-made electric vehicles to be imported into Canada with minimal tariffs.
Last week, Canada’s Industry Minister Mélanie Joly said the Canadian government is working with China to set up a joint EV assembly facility in Canada to export globally.
The move is a sharp departure from previous efforts by Canada to restrict China’s EV industry, including 100% tariffs on imports introduced in the wake of a similar move by the United States.
Canada is also seeking to rebuild relations with India, another major trading partner, after years of tension over the killing of a Sikh activist in Canada, and Carney is expected to visit New Delhi in the coming months.
“Restructuring of trade”
“The reconfiguration of global trade is underway,” Rogowski said.
Rebuilding the supply chains and trade relationships that developed after World War II will not be quick or easy, especially when the world’s largest economies are involved, but “the pace of change is accelerating,” he added.
Two-way trade between the United States and its 19 trading partners increased slightly last year, but total global trade grew much faster, said Gary Hufbauer, nonresident senior fellow at the Peterson Institute for International Economics.
In dollar terms, U.S. trade with other countries increased by 3.6%, while global trade increased by 6.3%, he said.
One reason U.S. trade has changed slightly despite President Trump’s tariffs and threats is that many countries have increased exports in anticipation of the new taxes. Deeply embedded supply chains also take time to change.
Hufbauer told Al Jazeera: “There is no doubt that President Trump has shaken up the global trade order. The most important thing is that the trade rules previously agreed to in the WTO and FTAs are no longer binding on the United States.”
“From a diplomatic perspective, confidence in the United States has fallen to its lowest level since World War II. Mr. Carney is right to describe the current geopolitical situation as a ‘discontinuity’ over the past 80 years.”
Hufbauer said he expects trade to diverge further from U.S. trade this year.
“There is a lot of geopolitical uncertainty and countries are actively hedging their risks,” Farwa Amer, director of the South Asia Initiative at the Asia Society Policy Institute, told Al Jazeera.
“Today’s trade deals and partnerships seem to be strategic signals that we have friends and partners beyond Washington. But there are also parallel efforts to keep our relationship with Washington as stable as possible. Washington is a big market and has a lot of global weight. A stable relationship with the United States is realistic.”
