For the past year, countries worldwide have been in panic as the United States imposed tariffs or threatened trade wars. The uncertainty created by President Donald Trump’s unpredictability has added urgency to a shifting global trading order.
China has taken many of the headlines, but US neighbors and major partners such as Mexico and Canada have also been affected. Across the Atlantic, the European Union has faced its own tariff roller coaster and is rethinking long-standing partnerships. Trump’s dismissive comments toward European governments at the World Economic Forum in Davos provided another wake-up call.
To counterbalance US hostility, the EU has worked to negotiate and finalize deals to demonstrate that the bloc is a reliable trading partner and an alternative to the United States. But trade agreements are complex and slow to complete, even in favorable circumstances.
On January 17, European Commission President Ursula von der Leyen traveled to Asuncion, Paraguay, to sign the EU-Mercosur trade agreement. The pact between the 27-member EU and Argentina, Brazil, Paraguay and Uruguay covers a market of about 700 million people, making it one of the world’s largest free-trade zones. “We are sending a very clear message to the world that Mercosur and European Union countries are for low tariffs, for smooth trade, for creating better quality and better prices for our consumers,” EU Trade Commissioner Maros Sefcovic said after the signing.
Four days later, however, the European Parliament voted to delay the deal by calling for a lengthy review by the European Court of Justice. Even if parts of the agreement are provisionally enacted, that hesitation damages the EU’s credibility and could prompt South American partners to pull back. Farmers across Europe strongly opposed the deal, fearing loss of market share, and political opposition demonstrates how a minority can slow or block progress.
Von der Leyen will be hoping for more success at the EU-India summit in New Delhi, hosted by Indian Prime Minister Narendra Modi. The EU is eager to finalize a free trade agreement with India, the world’s largest democracy and the fifth-largest economy. Negotiations on an EU-India Free Trade Agreement began in 2007, were paused in 2013 and restarted in 2022. A breakthrough would be significant, potentially covering a market of two billion people and roughly a quarter of global GDP.
The EU is the world’s second-largest import market, and many countries now view it as steadier and more reliable than the United States. Peter Chase, a visiting senior fellow at the German Marshall Fund’s Brussels office, said the EU is “serious about the commitments it undertakes in its trade agreements” and is keen to build new trading relations. Still, long timelines, complex ratification rules and domestic political interests can impede deals.
The EU already has preferential trade agreements with 76 countries and has shown renewed interest in joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) — a 12-nation Asia-Pacific free trade bloc that so far includes only the UK from Europe. In 2025 the EU negotiated an update to its trade agreement with Mexico and finalized a trade and investment agreement with Indonesia. Talks are ongoing with Malaysia, the Philippines and the United Arab Emirates.
The EU-UK Trade and Cooperation Agreement is scheduled for its first full review since coming into force in 2021. While the audit is intended to assess implementation, some hope it can help repair strained relations and lead to closer cooperation.
Beyond bilateral deals, experts say restoring the global rule of law in trade is urgent. Chase argued that the WTO needs reinforcement: the world requires a restored rules-based system, and only the EU can help build the coalition necessary to counter both “America’s breaking of its commitments and China’s long-standing refusal to keep the promises it made when it joined.”
Edited by: Uwe Hessler