Why Global Trade Is Tiptoeing Away from Washington

For years, Europe has been characterised as geopolitically slow-moving: internally divided, procedurally cautious, and strategically reactive. Yet recent events suggest a more deliberate and coherent approach. When Washington once again turned to tariffs as a central policy tool, Europe resisted the impulse to retaliate. Instead, it adjusted.

That restraint proved sensible. A transatlantic trade confrontation would likely have fuelled inflation, disrupted supply chains, and undermined already fragile growth. By absorbing pressure and avoiding escalation, Europe preserved economic stability and created space to pursue longer-term strategic objectives. In an environment marked by volatility, it prioritised predictability.

The most visible expression of this strategy came with the recent European Union approval of a comprehensive trade agreement with Brazil, Argentina, Paraguay and Uruguay, following 25 years of stalled negotiations. If ratified, the agreement will establish one of the world’s largest free-trade zones, encompassing more than 700 million people. Rather than reflecting indecision, the deal underscores a renewed emphasis on market access and diversification.

Europe’s approach extends beyond Latin America. Trade frictions with China over electric vehicles and market access have eased, reflecting a pragmatic recognition of China’s role in the global economy, even amid continued political and industrial policy concerns. At the same time, the EU has accelerated trade engagement across Southeast Asia, a region that has become central to global growth and supply chains. The underlying logic is clear: reducing dependence on any single partner is now a strategic imperative.

This shift has implications well beyond Europe.

Canada offers another example. After decades of deep economic integration with the United States, recent tariffs, trade threats and diplomatic unpredictability have prompted a reassessment. Ottawa’s goal of increasing non-U.S. trade by 60 per cent over the next decade represents a significant strategic reorientation.

Despite widespread discussion of “de-risking” from China, trade flows suggest a different reality. China’s exports continue to expand, particularly to Latin America, Africa, Europe and Asia. Tariffs have not isolated Beijing from global markets; instead, they have encouraged many countries to strengthen alternative trade relationships.

Over the last 12 months we have seen support for alignment with the United State decline noticeably. Even within Europe, perceptions of the United States have shifted from that of a reliable ally to a more transactional partner, while views of China remain cautious but pragmatic.

The United States still has immense strengths—a vast alliance network, unmatched innovation, and deep capital markets. But those advantages only work if allies are treated as partners, not pressure points. Right now, the world isn’t abandoning the American system—it’s building around it.

Europe noticed early. Canada is adjusting fast. Australia, with its trade-heavy economy and Indo-Pacific focus, would be wise to keep learning the same lesson: in a multipolar world, resilience comes from options.