How to keep your country safe from Trump’s whims
The post-2018 agreements are often broader in scope than earlier deals, focusing on inclusivity, digital connectivity and supply chain security
ONE of the silver linings of the global trade war is that the world is de-risking its trade away from the US. Between 2018 – when the trade war started, triggered by the Trump administration’s embrace of protectionism – and November 2025 (by which time Trump had taken his tariff tantrums to a new level), approximately 90 new regional trade agreements (RTAs) were signed or negotiated globally, a sharp acceleration compared with roughly 60 new deals in the 2011 to 2018 period.
The post-2018 agreements, covering Asia, Africa, Europe and Latin America, are often broader in scope than earlier deals, focusing on inclusivity, digital connectivity and supply chain security. The signature achievement of this era has been the rise of mega-regional agreements. These include the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), signed in 2018, which unites 11 Pacific Rim economies plus the UK and sets high-standard disciplines for trade in goods, services, investment and digital flows; the Regional Comprehensive Economic Partnership (RCEP), signed in 2020 and effective since 2022, which is the world’s largest free trade agreement, comprising 15 Asia-Pacific nations; and the African Continental Free Trade Area (AfCFTA), launched in 2019, which aims to create a single market for goods and services covering 54 African countries.
There have been more narrowly focused trade deals as well, in which Singapore has been particularly active of late, such as its digital trade agreements with the European Union as well as the European Free Trade Association; the Future of Trade and Investment Partnership that includes Singapore and 13 small and medium-sized countries; a Comprehensive Strategic Partnership with New Zealand; and a green trade pact with New Zealand and Chile.
US is protectionist and arbitrary
There are compelling reasons for countries to de-risk their trade with the US, not only because of its protectionist policies but also how they are being executed. If they were predictable, data-driven and even-handedly negotiated, involving give and take – as happens with normal trade agreements – they would be tolerable. But they have none of these qualities.
The tariffs, which the Trump administration has invoked emergency powers to justify, are arbitrary, violate the rules of the World Trade Organisation (WTO), and are imposed on nearly all imports, even on goods that the US does not produce, on countries with which the US has a trade surplus and indeed even on its supposed allies.
Some are imposed for reasons that are only tangentially related to economic issues, such as India’s purchases of Russian oil, or even unrelated to such issues, such as Brazil’s prosecution of its former president Jair Bolsonaro, a Trump ally, or the running of a video in Canada of former US president Ronald Reagan expressing his opposition to tariffs.
Lacking the formal backing of the US Congress where trade policy authority usually rests, the tariffs can be rolled back or hiked on the whims of Trump – as indeed some have, without warning. As such, they are capricious and unpredictable, making it impossible for countries or businesses to plan forward with any confidence. Moreover, many of the “deals” that have been made lack jointly written texts, which makes them open to varying interpretations.
Shaped on the basis of a take-it-or-leave-it model, some deals are blatantly one-sided, in favour of the US, even as they involve some lowering of US tariffs. For example, the deal with Malaysia includes a binding commitment to purchase US$150 billion of US goods, such as Boeing aircraft and billions worth of liquefied natural gas annually. Malaysia is required to consult with the US before signing new trade agreements in case they threaten US interests, with the US reserving the right to terminate the deal and reimpose tariffs unilaterally. Malaysia must also align with US trade sanctions or restrictions imposed on other countries.
Japan has been pressured to agree to a US$550 billion investment fund in the US, with the Trump administration effectively deciding the allocation of these funds and the US reserving the right to hike tariffs if Japan fails to comply. South Korea is required to invest US$350 billion in the US, including US$200 billion in cash, which the US will decide how to deploy, and US$150 billion in American shipbuilding.
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Not surprisingly, these and other one-sided deals are facing pushback from local lawmakers, who have argued that they compromise their countries’ economic sovereignty.
No coordination among countries
One of the reasons why the US has been able to get away with deals that are heavily weighted in its favour is that countries have not coordinated their responses. For example, Asean has not dealt with the US as a group even though Asean has an internal trade agreement, nor have African countries which also have their own internal pact, nor even – most surprisingly – Canada and Mexico, which share a trade agreement with the US. This lack of coordination has enabled the US to divide and rule, and deal with countries bilaterally, which gives it more leverage.
But there are now some early signs of coordinated responses. One idea that is gaining traction is for cooperation on trade between the EU and the CPTPP, which is supported by Canadian Prime Minister Mark Carney, European Commission President Ursula von der Leyen, Singapore Prime Minister Lawrence Wong, former EU trade representative Cecilia Malmstrom, former chief economist of the World Bank Anne Krueger and senior Japanese trade officials.
While standards and regulations between the 27-nation EU and the 12 members of the CPTPP vary, cooperation could take the form of affirming a commitment to WTO rules (which even China would support), harmonising regulations in key areas such as digital trade and sustainability, and agreeing to cumulation of rules of origin which could enable goods to qualify for preferential trade treatment even if their parts come from multiple countries in either the EU or the CPTPP, which would in turn enable closer integration of supply chains. If the 39 countries of both groupings were to join forces, they would account for more than 30 per cent of world trade and, if they act collectively, be a formidable counterweight to the US, which accounts for about 10 per cent of world trade.
A WTO clone minus the US?
Krueger goes even further to propose that WTO members create a new trade watchdog called the Global Trade Organisation (GTO) that excludes the US, but leaves the door open for it to join if it wishes. She suggests that the GTO could adopt the WTO’s Articles of Agreement and incorporate its dispute settlement mechanism, with enough judges to make it functional – unlike at the WTO, where the US has vetoed judicial appointments. Membership of the GTO would be open to any country willing to follow its rules.
“If EU and CPTPP countries signed on, others – including South Korea – would likely follow,” Krueger points out, adding that “if the GTO represented even 60 per cent of international trade, its collective bargaining power would far exceed that of the US, rendering Trump’s divide-and-rule tactics ineffective. More importantly, such unity might eventually persuade American policymakers to return to rules-based cooperation”.
There will be obstacles to both EU-CPTPP cooperation and the creation of a GTO. Wider trade liberalisation might be resisted by EU farmers and manufacturers, who could fear a flood of imports from CPTPP countries. Product standards between the groupings and climate-related regulations are far apart. And some members of both groups may be reluctant to participate in possible confrontation with the US on trade. But these may not be insurmountable problems, given the alternative of a world trade order based not on rules but on the aggressive pursuit of economic nationalism and the principle of might is right, which is what we have now.
Vikram Khanna is a former associate editor of The Straits Times who writes on economic affairs.
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