Irked by President Donald Trump’s constant tariff threats over the past year, several U.S. allies are moving to secure major trade agreements with the world’s next-best economies.
Leading the charge on this front, the European Union struck a new free trade deal with India on Tuesday that makes the 27-nation bloc less reliant on the United States.
The agreement essentially reduces tariffs on both sides in a number of sectors. India, which boasts the world’s fourth-largest economy, agreed to reduce or eliminate tariffs for almost 97% of EU exports, and the EU likewise agreed to reduce its tariffs in phases that will eventually cover nearly 99% of Indian exports. The deal between two of the largest global economies was two decades in the making.
European Commission President Ursula von der Leyen called the agreement the “mother of all deals,” later saying it sends “a strong message that cooperation is the best answer to global challenges.”
Her remark about global challenges is likely directed at Trump, who has threatened punitive tariffs to strong-arm the EU into relenting to his agenda.
The president recently threatened to implement a 10% tariff on the EU after it opposed his desire to take over Greenland, but later said he would hold off on the move for now. In its place, a future agreement involving the Danish territory is in the works after Trump spoke with NATO Secretary-General Mark Rutte.
Following his departure from the Davos summit late last week, Trump teased the agreement details would be revealed in two weeks’ time.
The EU-India free trade deal is expected to be signed later this year and possibly go into effect early next year after the EU Parliament ratifies it, according to the Associated Press.
Indian Prime Minister Narendra Modi said the deal “represents 25% of the global GDP and one-third of global trade.” India is one of the world’s emerging economies, alongside China and Brazil.
The EU has secured similar trade deals with Japan, Indonesia, Mexico, and South America as part of its goal to rely less and less on the U.S. Other U.S. allies appear to be doing the same.
During the Davos summit, French President Emmanuel Macron directly addressed the major trade imbalance that has been plaguing the EU, saying an “objective” of his is “to build bridges and more cooperation with the emerging countries, the BRICs and the G20, because the fragmentation of this world will not make sense.”
The United Kingdom, which is not a part of the 27-nation bloc in mainland Europe, is currently participating in trade talks with China. British Prime Minister Keir Starmer is visiting Beijing on Tuesday to seek new trade and investment opportunities with the second-largest economy behind the U.S.
Starmer’s visit, marking the first made by a British prime minister since 2018, is meant to repair ties between the two nations. At this time, the U.K. is not seeking a full bilateral free trade agreement.
Canada has also been engaging in trade talks with China, which has upset Trump in recent days.
The back-and-forth bickering between Trump and Canadian Prime Minister Mark Carney stems from Canada’s agreement with China to lower tariffs on Chinese-made electric vehicles from 100% to 6.1% in exchange for reduced tariffs on Canadian agricultural products. While he initially supported the agreement, Trump later threatened a 100% tariff on Canada if it agreed to a broader free trade deal with China. Carney denied that was Canada’s intent, although a Canadian official said the nation is negotiating a “narrow trade agreement” that doesn’t violate the U.S.-Mexico-Canada Agreement.
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Both Trump and Carney escalated their rhetoric against the other during last week’s World Economic Forum summit in Davos, Switzerland.
Trump said Canada depends on the U.S., while Carney claimed his country can survive on its own. Canada is but one example of a major U.S. ally expressing that sentiment.