US allies want to redraw trade map, sans US
Trade chaos is forcing America's allies closer together, and further from the US. And as that happens, the European Union is trying to position itself at the centre of a new global trade map.
The bloc learned this weekend that Washington would subject it to 30% tariffs starting Aug 1. Ursula von der Leyen, the president of the EU executive branch, responded with a pledge to keep negotiating. She also made it clear that, while the EU would delay any retaliation until early Aug, it would continue to draw up plans to hit back with force.
But that was not the entire strategy. Europe, like many of the US' trading partners, is also looking for more reliable friends.
"We're living in turbulent times, and when economic uncertainty meets geopolitical volatility, partners like us must come closer together," von der Leyen said on Sunday in Brussels at a news conference alongside the Indonesian president, Prabowo Subianto.
Just as President Trump threatens to put hefty tariffs on many countries, including Indonesia, the EU is working to relax trade barriers and deepen economic relations.
"In hard times, some turn inward, toward isolation and fragmentation," von der Leyen said. Then, in a message implicitly extended to world leaders who have been jolted by Trump's tariffs, she added, "You are always welcome here, and you can count on Europe."
It is a split screen that is becoming typical. On one side, the US sows uncertainty as it blows up weeks of painstaking negotiations and escalates tariff threats.
On the other, the 27-nation EU and other American trading partners are forging closer ties, laying the groundwork for a global trading system that revolves less and less around an increasingly fickle US.
It will be hard to move away from the US, and Prabowo predicted that America would always be a world leader. But many American trading partners now feel that they are left with little choice but to diversify.
Trump has announced 30% tariffs on EU and Mexico.
Canada's rate is 35%. The likes of Thailand (35%), Bangladesh (35%) and Brazil (50%), along with dozens of other US trading partners, appear to be headed for a similar fate. Trump has backed down from threatened tariffs before, and he has indicated a willingness to negotiate these tariffs down before their Aug 1 effective date - and the EU and other economies are poised to continue with negotiations.
But the atmosphere is increasingly hostile.
Hitting back would be just a first step; drawing closer to outside allies may prove even more meaningful in the long run.
Since Trump's push to reorder the trading system kicked off in Feb, the EU has been hustling to strike new trade agreements and deepen existing ones. Canada and the EU have pulled together. Britain and the EU have had a rapprochement, five years after Britain officially exited the union. The bloc is working toward closer trading relationships with India and South Africa, and with countries across South America and Asia.
Nor is the EU the only global power adopting such a strategy. Canada is also drawing closer to Southeast Asia, while Brazil and Mexico are working to deepen their ties.
Officials have even floated the idea of building trading structures that exclude the US and China, which is widely blamed for supporting its factories to the point that they overproduce and flood global markets with cheap goods. Von der Leyen recently suggested that Europe could pursue a new collaboration between the bloc and a trading group of 11 countries that includes Japan, Vietnam and Australia, but that notably did not include the US or China.
One key question, analysts said, is whether America's allies will go a step further. Instead of simply collaborating more with one another and leaving the US out, could they actually gang up to counter the US?
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