New trade map takes shape in Davos as world adjusts to Trump tariffs
Business among plurilateralists and China’s commerce with allies in the Global South are the key drivers of global dealings: BCG
[DAVOS, Switzerland] US President Donald Trump’s use of tariffs as a foreign policy tool added fresh impetus in Davos this week to efforts to boost global trade beyond the US, with frustration palpable among many of Washington’s top trading partners.
The tariffs roared back into focus when Trump last Saturday (Jan 17) threatened new tariffs on European allies opposing his designs on Greenland, before stepping back from them on Wednesday, after announcing a deal framework with North Atlantic Treaty Organization over the Arctic island.
“It’s the speed, scale and scope of change that is really rattling the world,” Canadian Finance Minister Francois-Philippe Champagne said during a panel discussion on the tariffs at the World Economic Forum’s (WEF) annual meeting in the Swiss mountain resort.
The WEF is meeting in Davos for the first time since Trump hiked the US tariffs to their highest level in nearly a century last year, sending countries scrambling to pick up the slack by trading more with each other.
Trump is ever present in the WEF debates over how to temper exposure to the US. Studies forecast the country will play a lesser role in overall global trade than it did in the past.
He says that his policies are bringing back jobs to the US, spurring trillions of dollars in investment and firing up growth.
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Canada’s Champagne said that countries were diversifying their commercial relations, and doing more at a regional level to make their economies more resilient to trade policy shocks.
“When you talk to chief executive officers today, what do they want? Stability, predictability and the rule of law. I would say it’s in short supply,” he said, days after Canada and China struck a deal to slash tariffs on electric vehicles and canola.
Hot on its heels came the signing of a free trade agreement in January between the European Union and South American bloc Mercosur after 25 years of negotiations – the EU’s largest trade pact, if it overcomes remaining legal obstacles.
The diversification of supply chains and reducing of over-dependence are backed by the World Trade Organization, whose director-general Ngozi Okonjo-Iweala said that such moves helped to spread job creation and growth to other countries.
“This helps build global resilience and we are very supportive of it,” she added.
‘The world has become more expensive’
Boston Consulting Group (BCG) forecasts that the US share of global goods trade could decline from 12 to 9 per cent in the decade till 2034, giving way to more domestic US economic activity.
“Trump is sawing on the branch he’s sitting on,” Dirk Jandura, head of Germany’s Federation of German Wholesale, Foreign Trade and Services, said after data showed German exports to the US falling by 9 per cent during the first 11 months of 2025.
Volker Treier, foreign trade chief of the German Chambers of Industry and Commerce, said that surveys showed that the tariffs on raw materials such as steel and aluminium were making it dearer for companies to build up US industrial capacity.
US manufacturing activity contracted for a tenth month running in December, based on a closely watched survey.
“The world has become more expensive, and structurally it will get even more expensive,” Treier said.
‘We have to reconfigure ourselves very fast’
BCG posits a patchwork of four main nodes dominating world trade –the US, China, Brics+ minus China, and so-called plurilateralists comprising most of Europe, Canada, Mexico, Japan, Australia and several Asia-Pacific economies.
In the BCG study, trade among plurilateralists and China’s commerce with allies in the Global South would be the key drivers of global trade, with US trade advancing more slowly.
Noel Hacegaba, CEO of the Port of Long Beach, said that trade flows have been evolving significantly since Trump’s first term.
In 2019, 70 per cent of the port’s cargo was trade with China. By 2025, that figure had fallen to 60 per cent, with more coming instead from farther afield in South-east Asia, including Vietnam, Thailand and Malaysia, Hacegaba added.
Boudewijn Siemons, CEO of the Port of Rotterdam, Europe’s biggest seaport, said that trade flows were adjusting rapidly to the new reality, and that the continent needed to be nimble.
“We’ve been relying on cheap production in China, cheap energy from Russia and cheap defence from the United States,” he said. “And all three of these securities are falling away, so we have to reconfigure ourselves very fast.” REUTERS
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