LONDON — Britain’s man in Geneva is quietly trying to fix the global trading system — without angering President Donald Trump. As World Trade Organization (WTO) members stumble toward a long-anticipated reform effort, U.K. Ambassador Kumar Iyer is working to modernize the organization’s rulebook. Iyer’s vision for WTO reform ahead of its big biennial conference in March centers on shaking up the way the 30-year-old U.N. body enforces the rules of global trade. Speaking to POLITICO earlier this month, Iyer said he wants to have a system “where not everything is always held back by consensus and not everything requires everyone to agree […] and it’s not negatively impacting a range of countries.” Brussels has flirted with building an alternative “rules-based” trade order that would bring together the EU and the Indo-Pacific trade bloc that the U.K. joined last year — an alliance that sidelines Washington, long accused of paralyzing the WTO’s dispute system. Ministers representing the two trade blocs are meeting in Melbourne, Australia, this week for their first official joint dialogue. Kumar Iyer’s vision for WTO reform ahead of its big biennial conference in March centers on shaking up the way the 30-year-old U.N. body enforces the rules of global trade. | Martial Trezzini/EPA But Iyer is keen to downplay talk of an anti-Trump alliance. “We’re really comfortable with other countries having those [agreements],” he said. “But they’re not an alternative to the multilateral system.” ‘BUSINESSES’ FOCUS IS NOW ELSEWHERE’ Iyer’s frustration over attitudes towards the WTO is clear — especially with what he sees as corporate indifference toward the organization, leading to its deprioritization in global politics. “CEOs and corporate leaders have stopped looking towards the WTO as being on the forefront of global trade policy,” he said. “They’ll look at CPTPP […] — that’s where the board-level focus has gone, and that’s very understandable.” EU Commission President Ursula von der Leyen first floated the idea of a wider alliance with CPTPP members in June during EU trade talks with the U.S. She argued that the bloc could “show to the world that free trade with a large number of countries is possible on a rules-based foundation.”  Still, Iyer insists that no new alliances can replace the WTO — or its role as the foundation of the global trade system.  “No FTA is even possible without the WTO,” he said. “The WTO is the operating system, and FTAs are essentially the applications that sit on it. Saying you only need CPTPP is like saying I’ve got Microsoft Word and Excel, so I don’t need Windows.” With the WTO’s next ministerial conference fast approaching, officials are steeling themselves for bruising negotiations on several issues, ranging from e-commerce to agriculture and fisheries.  Washington, however, remains the main obstacle. The U.S. has for years blocked the appointment of new judges to the WTO’s top appeals court, effectively paralyzing one of its core functions in trade dispute settlement.  “This isn’t about coming out with a big bang change immediately,” Iyer said of the coming reform talks. “It’s about getting that political engagement around it and showing a real, genuine willingness.”

COPENHAGEN — The G7 is seeking to move from “incremental” to “decisive” actions to end Russia’s invasion of Ukraine, Canadian Finance Minister François-Philippe Champagne said. In an interview with POLITICO, Champagne said the G7 is “no longer in the incremental approach, but … decisive in order to put an end to the war.” The group of industrialized countries is “aligned on ambition and aligned on urgency,” he added. Champagne is chairing G7 talks between finance ministers, including on controversial plans to use Russian central bank assets frozen abroad to help fund Ukraine’s war effort. The G7 is under pressure from U.S. President Donald Trump to take greater action on Moscow to force Russian President Vladimir Putin into Ukraine peace talks. The U.S. sent a paper to other G7 countries earlier this month calling for 100 percent tariffs on China and India, stricter sanctions on Russian oil and gas, and new moves to use the Russian frozen assets to fund Ukraine. The EU and the U.K. have since put forward proposals to use Russian cash frozen in their territories to fund loans to Ukraine. And Brussels has come forward with a new sanctions package. The loans plan is controversial, raising questions over whether it is compatible with international law. Champagne would not give details of the G7 discussions, but he said the group is trying to be “coordinated” in its actions. “There are different initiatives, but … there is a desire to coordinate amongst ourselves and adopt a similar set of policies in action,” he said. Asked whether Canada could propose its own reparations loan plan, Champagne said “we’re very aligned.” NOT JOINING THE EU Champagne was in Copenhagen for talks with EU finance ministers, including sideline conversations around joint defense procurement and the frozen assets plan. He was keen to play up ties between the territories. “We’re very close,” he said, adding that Canada is “probably the country outside of Europe which has the closest link with the European Union,” and that Europe “has a desire to do more with Canada.” But Champagne ruled out the prospect of Canada joining the EU, saying: “We’re not there.”       Champagne had even warmer words for the U.K., describing the two countries as “kind of best friends,” and U.K. finance chief Rachel Reeves as a “good friend.” “We share a lot, we talk a lot, we text a lot because we’re very close,” he said. DEFENSE LINKS Canada received the green light from Brussels this week to start negotiations on accessing the EU’s €150 billion loans-for-arms program, known as SAFE. The U.K. is also starting negotiations on joining the program. Asked whether Canada would want to be included in the first joint procurement round, which would set a tight deadline for agreeing on rules around its participation with the EU, Champagne said: “I would think so … I think we want to be in the first wave, there’s no doubt.” “The defense procurement imperative is front and center,” he said, highlighting Canada’s critical minerals and icebreakers as products it could contribute to the procurement scheme. TRADE TIES Asked whether Canada is disappointed in the U.K. and the EU for capitulating to the U.S. by signing suboptimal trade deals to avoid punishing tariffs, Champagne said “everyone has to look at their own strategic interest.” “When I look at other countries, each of us started from a different base,” he said. “When you look at the different deals that have been struck … I think each of us found a way forward to restore a bit of certainty.” Although there “will still be volatility and uncertainty,” global trade is in “a more stable place now,” Champagne said. The EU is pushing for closer ties to the Pacific-centric trade group the CPTPP, which includes like-minded countries such as Canada, Japan, Australia and Mexico and is emerging as an alternative for rules-based trade away from the paralyzed World Trade Organization.   Champagne said he wants to “strengthen and expand” the CPTPP trading bloc, which he described as “a nice alternative” and “foundational for having a rule-based trading system in that part of the world.” “I see a lot of benefit, particularly as it seems more likely than ever that there won’t be many more … multilateral trading agreements of the same scope and scale,” Champagne said.  

BRUSSELS — After its defeat by the British in the First Opium War, the Qing dynasty signed a treaty in 1842 that condemned China to more than a hundred years of foreign oppression and colonial control of trade policy.   It was the first of what came to be known as “unequal treaties,” where the bullying military and technological heavyweight of the day imposed one-sided terms to try to slash back its massive trade deficit. Sound familiar? Fast-forward nearly two centuries, and the EU is starting to understand exactly how that feels. European Commission President Ursula von der Leyen’s dash to Donald Trump’s Turnberry golf resort in Scotland last month to seal a highly unbalanced trade deal has raised fears among politicians and analysts that Europe has lost the leverage that it once thought it had as a leading global trade power.  Von der Leyen’s critics were quick to assert that accepting Trump’s 15 percent tariff on most European goods amounted to an act of “submission,” a “clear-cut political defeat for the EU,” and an “ideological and moral capitulation.” If she had hoped that would keep Trump at bay, a rude awakening was in store. With the ink barely dry on the trade deal, Trump doubled down on Monday by threatening to impose new tariffs on the EU over its digital regulations that would hit America’s tech giants. If the EU didn’t fall into line, the U.S. would stop exporting vital microchip technologies, he warned. His diatribe came less than a week after Brussels believed it had won a written guarantee from Washington that its digital rulebook — and sovereignty — were safe.  Trump can wield this coercive advantage because — just like the 19th century British imperialists — he holds the military and technological cards, and is well aware his counterpart lags miles behind in both sectors. He knows Europe doesn’t want to face Russian President Vladimir Putin without U.S. military back-up and cannot cope without American chip technology, so he feels he can dictate the trade agenda. EU Trade Commissioner Maroš Šefčovič strongly implied last month that the deal with the U.S. was a reflection of Europe’s strategic weakness, and its need for U.S. support. “It’s not only about … trade: It’s about security, it is about Ukraine, it is about current geopolitical volatility,” he explained. The trade deal is a “direct function of Europe’s weakness on the security front, that it cannot provide for its own military security and that it failed to invest, for 20 years, in its own security,” said Thorsten Benner, director at the Global Public Policy Institute in Berlin, who also pointed to failures to invest in “technological strength” and to deepen the single market.  Just like the Qing leadership, Europe also scorned the warning signs over many years. “We are paying the price for the fact we ignored the wake-up call we got during the first Trump administration — and we went back to sleep. And I hope that this is not what we are doing now,” Sabine Weyand, director-general for trade at the European Commission, told a panel at the European Forum Alpbach on Monday. She was speaking before Trump’s latest broadside on tech rules.   After its defeat by the British in the First Opium War, the Qing dynasty signed a treaty in 1842 that condemned China to more than a hundred years of foreign oppression and colonial control of trade policy. | History/Universal Images Group via Getty Images It is clear that Trump’s volatile tariff game is far from over, and the 27-nation bloc is bound to face further political affronts and unequal negotiating outcomes this fall. To prevent the humiliation from becoming entrenched, the EU faces a huge task to reduce its dependence on the U.S. — in defense, technology and finance. STORMY WATERS  The Treaty of Nanking, signed under duress aboard the HMS Cornwallis, a British warship anchored in the Yangtze River, obliged the Chinese to cede the territory of Hong Kong to British colonizers, pay them an indemnity, and agree to a “fair and reasonable” tariff. British merchants were authorized to trade at five “treaty ports” — with whomever they wanted.  The Opium War began what China came to lament as its “century of humiliation.” The British forced the Chinese to open up to the devastating opium trade to help London claw back the yawning silver deficit with China. It’s an era that still haunts the country and drives its strategic policymaking both at home and internationally. A key factor forcing the Qing dynasty to submit was its failure to invest in military and technological progress. Famously, China’s Qianlong Emperor told the British in 1793 China did not require the “barbarian manufactures” of other nations. While gunpowder and firearms were Chinese inventions, a lack of experimentation and innovation slowed their development — meaning Qing weapons were about 200 years behind British arms in design, manufacture and technology.   Similarly, the EU is now being punished for falling decades behind the U.S. Slashing defense spending after the Cold War kept European countries dependent on the U.S. military for security; complacency about technological developments means the EU now is behind its global rivals in almost all critical technologies. U.S. Trade Representative Jamieson Greer has, for his part, declared the beginning of a new world order — which he dubbed the “Turnberry system” — comparing the U.S.-EU trade accord to the post-war financial system devised at the New England resort of Bretton Woods in 1944.    TURBULENCE AHEAD  With his attack on Monday, Trump demonstrated scant regard for the EU’s desire to bracket out sensitive issues from last week’s non-binding joint statement. The vagueness of the four-page text, meanwhile, leaves room for him to press new demands or threaten retaliation if he deems that the EU is failing to keep its side of the bargain.  More humiliation could follow as the two sides try to work out details — from a tariff quota system on steel and aluminium to exemptions for certain sectors — that still need to be ironed out.   “This deal is so vague that there are so many points where conflicts could easily be escalated to then be used as justification for why other things will not follow through,” said Niclas Poitiers, a research fellow at the Bruegel think tank.    Asked what would happen if the EU were to fail to invest a pledged $600 billion in the U.S., Trump said earlier this month: “Well, then they pay tariffs of 35 percent.”  With his attack on Monday, Trump demonstrated scant regard for the EU’s desire to bracket out sensitive issues from last week’s non-binding joint statement. | Chip Somodevilla/Getty Images It’s a danger the EU is acutely aware of.  The European Commission argues the $600 billion simply reflects broad intentions from the corporate sector that cannot be enforced by bureaucrats in Brussels. But Trump could well use the investment pledge as a trigger point to gun for higher duties.   “We do expect further turbulence,” said a senior EU official, granted anonymity to speak candidly. But “we feel we have a very clear insurance policy,” they added.     What’s more, by accepting the agreement, sold by the EU executive as the “less bad” option following Trump’s tariff threats, Brussels has also shown that blackmail works. Beijing will be watching developments with interest — just as EU-China ties have hit a new low and Beijing’s dominance on the minerals the West needs for its green, digital and defense ambitions hand it immense geopolitical leverage.  ESCAPING IRRELEVANCE But what, if anything, can the bloc do to avoid prolonging its period of geopolitical weakness?  In the lead-up to the deal, von der Leyen repeatedly emphasized that the EU’s strategy in dealing with the U.S. should be built on three elements: readying retaliatory measures; diversifying trade partners; and strengthening the bloc’s single market.     For some, the EU needs to see the deal as a wake-up call to usher in deep change and boost the bloc’s competitiveness through institutional reform, as outlined last year in landmark reports penned by former European Central Bank head Mario Draghi and former Italian Prime Minister Enrico Letta.    In response to the deal, Draghi issued a strongly-worded warning that Trump’s evident ability to force the bloc into doing his bidding is conclusive proof that it faces irrelevance, or worse, if it can’t get its act together. He also played up the failings on security. “Europe is ill-equipped in a world where geo-economics, security, and stability of supply sources, rather than efficiency, inspire international trade relations,” he said.   Eamon Drumm, a research analyst at the German Marshall Fund, also took up that theme. “Europe needs to think of its business environment as a geopolitical asset to be reinforced,” he said.  To do so, investments in European infrastructure, demand and companies are needed, Drumm argued: “This means bringing down energy prices, better putting European savings to use for investment in European companies and completing capital markets integration.”   In comments to POLITICO, French Europe Minister Benjamin Haddad also called for “investing massively in AI, quantum computing and green technologies, and protecting our sovereign industries, as the Americans do not hesitate to do.”   FREE TRADE For others, the answer lies in deepening and diversifying the bloc’s trade ties — Brussels insists the publication of its trade deal with the Mercosur bloc of South American countries is just around the corner, and it is eyeing deals with Indonesia, India and others this year. It has also signaled openness to intensifying trade with the Asia-focused CPTPP bloc, which counts Canada, Japan, Mexico, Australia and others as members.    “In addition to modernizing the [World Trade Organization], the EU must indeed focus on continuing to build its network of trade agreements with reliable partners,” said Bernd Lange, a German Social Democrat who heads the European Parliament’s trade committee.   “To stabilize the rules-based trading system, we should find a common position with democratically constituted countries,” added Lange.   Europe, said Drumm, faces a choice.  “Is it going to reinforce its position as a hub of free trade in a world where globalization is unwinding?” he asked. “Or is it just going to be a battlefield on which increasing competition between China and the United States plays out?” 

BRUSSELS — Most thumbs were up. Some smiles were uneasy. And, in the middle of it all, the EU’s top trade official, Sabine Weyand, wore the kind of look that told the whole story: The bloc had gotten itself into a tricky spot. The photo, taken as the European Union and the United States sealed a fragile tariff truce at President Donald Trump’s Scottish golf resort on July 27, captured the discomfort on the European side over an agreement that was merely “the best it could get.” > President Trump's historic deal with the European Union reinforces our > strategic partnership with a key while expanding unprecedented market access > for American exporters. > > This colossal deal secures $750 billion in energy purchases and $600 billion > in investments, bolstering… pic.twitter.com/fcF2jdMP1f > > — United States Trade Representative (@USTradeRep) July 28, 2025 The two sides have finally firmed up Trump’s handshake deal with European Commission President Ursula von der Leyen into a joint statement that sets a 15 percent baseline U.S. tariff; promises a reduction in tariffs on European cars; caps levies on pharmaceuticals and semiconductors; and fully exempts EU exports of aircraft. Throughout, Europe has been engaged in a delicate dance with Trump — seeking to hold him to his trade promises while its leaders lobby him to commit to security guarantees for Ukraine against Russian aggression. “We’re still hostage to American military and strategic protection with a horribly neuralgic point, which is Ukraine,” said Pascal Lamy, a former EU trade commissioner. “And if we laid into Trump, which we have the economic capacity to do, he would have been able to say: ‘Well, if Europeans are enemies, now I don’t see why I should continue to help Ukraine.’ Nobody wants to take responsibility for that.” A less pressing, yet more awkward, task will be for Brussels to show the world it didn’t break the very rules of international trade that it helped to craft. After all, it has lectured Beijing, Washington and New Delhi for years on the importance of the World Trade Organization as an umpire of rules-based commerce. “We have completely sat on the rules that we helped to create, together with the Americans, and we will be accused of continuing to undermine them in the future if things continue as they are,” said Lamy, who after his stint in Brussels went on to helm the Geneva-based WTO between 2005 and 2013.  Von der Leyen’s admission at Trump’s Turnberry golf club that the EU had a “surplus” with the United States that the deal would help “rebalance” was the last nudge the Trump administration needed to declare victory and bury a system it had long seen as obsolete.  “By using a mix of tariffs and deals for foreign market access and investment, the United States has laid the foundation for a new global trading order,” Trump’s top trade negotiator Jamieson Greer wrote in a newspaper op-ed days after the agreement.  “[T]he Turnberry system is by no means complete, but its construction is well underway,” he added. CREDIBILITY CRUNCH The transatlantic trade accord, say leading trade authorities, risks undermining the very principles that Brussels has long championed at the WTO in a world increasingly shaped by no-holds-barred geopolitical confrontation. “It is going to be very difficult for the EU to say, ‘We are defending the multilateral trading system,’ because they are one of many members that decided to negotiate a bilateral deal with the United States,” said Marco Molina, a trade lawyer and a former senior diplomat who led talks on reforming the WTO’s dispute settlement body until 2024. The core problem of the deal is that it goes against the basic principles of the multilateral trading system: reciprocity and nondiscrimination.  Europe has been engaged in a delicate dance with Donald Trump — seeking to hold him to his trade promises while its leaders lobby him to commit to security guarantees for Ukraine against Russian aggression. | Pool Photo Annabelle Gordon via EPA For one, the two partners need to give each other roughly equivalent concessions — which the framework agreement currently hardly does. Nondiscrimination, set in the WTO’s most-favored nation rule, requires that any benefit granted to one trading partner needs to be immediately extended to all members — unless their agreement covers “substantially all trade.”  So while the EU has agreed to eliminate all tariffs on U.S. industrial goods and on cars, it has to do it under a full-blown trade accord. The Commission insists the agreement will eventually meet that bar.  Because most tariffs are set to be phased out over time, Brussels argues, the deal will ultimately respect the established rules of global trade. A senior Commission official told reporters on Thursday that the opening passage of the joint statement spelled out a “commitment for both sides to make an effort of progressive liberalization.”  They stressed it was “ongoing work that will also help us to meet the standards of the World Trade Organization rules around these issues.” On the record, the Commission’s commitment is unequivocal. “The European Union is and will remain a champion and supporter of WTO and rules-based trade — this will not change,” said Olof Gill, the Commission’s spokesperson for trade.  Yet even former Commission officials aren’t buying it. “The EU’s credibility as a linchpin of the WTO rules-based system would be seriously compromised if it decides to implement tariff reductions on a preferential basis,” said Ignacio García Bercero, who was the Commission’s point person for the transatlantic relationship and was responsible for its WTO policy until 2024.  This was met with enthusiasm from the leader of the bloc’s biggest economy, German Chancellor Friedrich Merz. | Filip Singer/EPA “There is zero credibility behind the argument that the EU-U.S. ‘deal’ is a step toward a WTO compatible [free-trade agreement],” added García Bercero, who is now a nonresident fellow at Brussels think tank Bruegel.  OUTBULLYING THE BULLY So what do you do when the biggest kid on the playground stops playing by the rules? For the EU, the response is increasingly: You don’t stand alone — you build a gang.   At first, Brussels resisted the idea of coordinating with other countries hit by Trump’s tariffs, such as Canada or Mexico. But it eventually changed course. “The main criticism that can be made against the Commission is that it did not seriously try to build an international anti-Trump coalition,” former WTO chief Lamy said.  That’s something that Brussels tried to fix in late June, when at a leaders’ summit, von der Leyen floated the idea of a new club in which the EU’s 27 countries would join forces with the members of the Pacific-focused Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or CPTPP, bloc, which counts the U.K., Canada, Japan, Mexico and Australia among its members. This was met with enthusiasm from the leader of the bloc’s biggest economy, German Chancellor Friedrich Merz. “If the WTO is as dysfunctional as it has been for years and apparently remains so, then we, who continue to consider free trade important, must come up with something else,” he told reporters.  Talks between EU and CPTPP negotiators are now expected later this year, with the goal of coordinating efforts to defend rules-based trade in the face of Trump’s tariff offensive, a top New Zealand finance official told POLITICO.  “The only way the EU can rebuild trust in the system is by coordinating with other members, beyond the U.S., to ensure WTO rules are respected,” said Molina, who now heads up his own law firm, Molina & Associates. “That will require leadership and teamwork — and the hope that Washington eventually realizes this trade war hurts American interests and consumers.”

Ivo Daalder, former U.S. ambassador to NATO, is a senior fellow at Harvard University’s Belfer Center and host of the weekly podcast “World Review with Ivo Daalder.” He writes POLITICO’s From Across the Pond column. As another tariff deadline fast approached, U.S. President Donald Trump once again decided to extend it — this time to Aug. 1. To many observers, this behavior has become the norm. Indeed, many commentators, analysts and even the markets seem to believe the new August deadline means no more than the ones that came before. “Over the last couple of months, we’ve seen the administration escalate, only to quickly de-escalate, and this could also just be another tactical escalation in some way,” said Wall Street analyst Nadia Lovell. They’ve even coined a name for it: TACO — Trump Always Chickens Out. Trump, meanwhile, aware of his reputation, insists this time is different. “TARIFFS WILL START BEING PAID ON AUGUST 1, 2025,” he declared. “No extensions will be granted.” So, what will it be? Will the U.S. leader blink again in a few weeks? Or will this time really be different? The difficulty in answering these questions is that there are two Trumps: One is Trump, the Dealmaker — the brash, promise-too-much and deliver-too-little, larger-than-life persona behind “The Art of the Deal.” It is the side of him that so effectively monetized his brand in “The Apprentice” and franchised his name to hotels, golf courses, steaks, wine — even meme coins and mobile phones. The other is Trump, the Tariff Man — railing against free trade for decades and believing other countries are “ripping off” of the U.S. “Countries like Japan, China, and others are laughing at us,” he told CNN’s Larry King in 1999. “They have huge surpluses, and we have huge deficits. I’d put a tax on their goods to level the playing field.” It is the side of him that 25 years later, proclaimed tariffs to be “the most beautiful word in the dictionary.” Yet, both in the run-up to the election and since taking office, many assumed the U.S. leader’s tariff threats simply reflected his penchant for dealmaking. Indeed, when Trump first extended his “liberation day” tariff deadline to July 9, his chief trade adviser Peter Navarro promised Trump would negotiate “90 deals in 90 days.” But those 90 days have come and gone. And in that time, Trump has finalized just two interim deals, one with Vietnam and one with the U.K., and most of their details are yet to be finalized let alone negotiated. (A third “deal” with China was really only a ceasefire in the escalating war of tariffs, export controls and sanctions, effectively returning the situation to where it was in early April). All the while, many countries are still scrambling to get a deal before the end of July, including the EU, Canada, Japan, Mexico, and all the other countries that have received a presidential letter indicating what their tariff levels will be as of the August deadline. But even if some deals are struck by then, they will likely be few in number and alarmingly short on details. The truth is, despite his reputation as a dealmaker, Trump is, above all, a tariff man. Even with the postponement of prior deadlines, he has effectively raised tariffs on imports into the U.S. to levels unseen in nearly a century. Trump views tariffs in three ways: He believes they are an efficient and cheap way to raise revenue, which is why his 10 percent “reciprocal tariff” minimum on all trading partners is likely to stay. Donald Trump believes he can win the tariff game, and that U.S. economic might means others will have to do his bidding. | David Ramos/Getty Images He also believes other countries have been stealing U.S. jobs and manufacturing capabilities, and he wants them back. His sectoral tariffs on automobiles, steel, aluminum, copper and soon likely on pharmaceuticals, semiconductors, lumber and other products are meant to strengthen U.S. capacity at home. Therefore, these, too, are likely to remain. Finally, he believes tariffs can compensate for, or even eliminate, bilateral trade deficits, and the deals he seeks are focused on addressing this long-standing concern. It doesn’t matter that bilateral deficits in goods tell us nothing about economic strength — as any economist will tell you. Trump sees deficits as a loss and surpluses as a gain. And he sees himself as a winner. Then, there’s the fact that Trump believes he can win the tariff game, and that U.S. economic might means others will have to do his bidding. “We are a department store, and we set the price,” he told Time Magazine. “I set a fair price, what I consider to be a fair price, and they can pay it, or they don’t have to pay it. They don’t have to do business with the United States, but I set a tariff on countries.” Of all his views on tariffs and the economy, it is this idea that the U.S. holds all the cards — that he has all the leverage and others will do his bidding — which will likely prove the most misguided. The president often forgets others have choices, including the choice to shop at another department store or not shop at all. And that is exactly what is happening. America’s allies in Asia, Europe and North America are increasingly looking to each other to reaffirm global trade rules and strengthen trading bonds. They are “derisking” their economies from Trump’s America. And the EU is looking to forge an agreement with the 11 Asia-Pacific countries that signed the Comprehensive and Progressive Agreement Trans-Pacific Partnership on new trading rules, which would exclude not only China but also the U.S. Other large economies, notably those in the BRICS grouping, are strengthening economic ties too — and often at the expense of the U.S. At their summit last week, they largely ignored Trump’s threat of additional tariffs and just moved on to discuss new areas of cooperation. Even countries in America’s own hemisphere, like Colombia and Brazil, are turning toward Beijing and away from Washington. And while Canada is still hoping for a deal, it is hedging its bets by strengthening ties with Europe and trying to redirect its economy’s north-south focus toward east-west instead. As more countries come to realize there is no fair deal to be made, they will likely look for economic opportunities elsewhere too, often no matter the short-term cost of transitioning. This is the new world Trump is helping to forge.

BRUSSELS — Europe is getting fed up with Donald Trump’s trade threats — and is exploring a bold move to look east instead of west to find partners who want to play by the rules. Trump’s unilateral and arbitrary tariffs — which could ratchet up to 50 percent from July 9 if EU and U.S. negotiators fail to cut a trade deal — have tested EU chief executive Ursula von der Leyen’s patience and resolve. Her response? To team up with the CPTPP, a Pacific-centric trade group that includes like-minded nations such as Japan, Australia, Canada and Mexico. Between them, the 39 countries of the EU and (deep breath) Comprehensive and Progressive Agreement for Trans-Pacific Partnership account for 30 percent of world trade. Forming a coalition of the willing could, boosters argue, mark a first step toward reconfiguring the international trade order and escaping the institutional paralysis besetting the World Trade Organization. In a pitch to EU leaders, von der Leyen turned previous comments on possible cooperation with the CPTPP into more of a reality. The new grouping would redesign the rules of global trade, she said, reforming or perhaps even replacing the global trade rules body. Such a plan would “show to the world that free trade with a large number of countries is possible on a rules-based foundation,” von der Leyen said after an EU summit on Thursday night. “This is a project where I think we should really engage on, because CPTPP and the European Union is mighty.” MAKING THE PLEDGE But how could forming such a coalition of the willing work? One idea would be to make an up-front pledge to uphold the established rules of multilateral trade, veteran trade negotiators Tim Groser, Steve Verheul and John Clarke said in exclusive commentary shared with POLITICO. Groser, a former New Zealand trade minister; Verheul, previously Canada’s chief trade negotiator; and Clarke, until recently a senior EU trade negotiator, said the 39 EU and CPTPP countries should, in a first step, commit to a “Standstill Agreement” to keep their markets open to each other. “What it would do is send a massive signal to Washington that a very substantial part of the global economy, including nearly all the traditionally closest partners of the United States, remains committed to the rules-based system,” they said.  The U.S. had the chance to join the CPTPP, previously known as the Trans-Pacific Partnership, during the Barack Obama administration. But Trump withdrew in 2017, after taking office for the first time, before the pact could be finalized. When asked on Thursday if the U.S. would join the new initiative between the EU and CPTPP, von der Leyen replied, “As far as I understand, the Americans left at a certain point.” It would be up to the two blocs to decide if they want to let them in, she added.  Europe is getting fed up with Donald Trump’s trade threats — and is exploring a bold move to look east instead of west to find partners who want to play by the rules. | Shawn Thew/EPA Ignacio García Bercero, a former chief EU trade negotiator, believes that the potential partnership shouldn’t close the door to the Americans just yet, nor should it be seen as a move to antagonize Trump.   However, “if the U.S. is not ready to join because they don’t believe that the solution to these problems is rules, others are going to have to move ahead without the U.S.” YOU’VE GOT A FRIEND The United Kingdom has also spearheaded efforts as a newer CPTPP member to welcome the EU’s drive to strengthen ties between the two potential partners.  “I’ve been talking to the leaders in Japan, in Singapore, in Australia, New Zealand, Canada, about how we, the U.K., can trade in an easier, better way with them — whether we as a group of countries can trade with other countries in an easier and better way,” Prime Minister Keir Starmer said as he launched the U.K.’s first Trade Strategy since Brexit on Thursday.  Those countries are all members of the Asia-Pacific bloc, which the U.K. joined in December. Starmer’s government has been open to the idea of the bloc and EU teaming up. “I do think that it’s [a] difficult environment, but there are significant opportunities if we’re agile about it, if we understand the world we’re living in, and get ahead of the curve,” the prime minister told businesses during his Trade Strategy launch in Westminster.  If the EU and CPTPP can establish a new community of values and interests, that could serve as the basis to address trade challenges that have accumulated since the WTO was founded 30 years ago — but that it has been unable to resolve because the Geneva-based trade club works by consensus and its largest member, the U.S., won’t play ball. “This must start outside Geneva with a group of countries that can move more decisively,” argued Groser, Verheul and Clarke. “In the medium term, we contend that this grouping could be a focal point for developing new rules and commitments to a trading system that can deliver continued growth and prosperity to their people.” Von der Leyen is already courting the leaders of CPTPP countries, issuing a joint statement with Kiwi Prime Minister Christopher Luxon after their meeting this week in which both supported the launch of a dialogue between the EU and CPTPP “as soon as possible.” That echoed an appeal by CPTPP ministers meeting in Jeju, Korea, in mid-May. A meeting at ministerial level is planned in July, according to an EU official. “To be clear, the EU is not joining [the CPTPP] as such, but we are building bridges between the two blocs,” the official, speaking on condition of anonymity as is customary in Brussels, said before the EU summit.

BRUSSELS — Late at night, after a dinner of dumplings and duck legs, the European Union’s leadership excitedly revealed a new plan to combat the hell-raising American president’s trade war: Take him on at his own wild game. For six months, Donald Trump has upended the global trading order, threatening and announcing tariffs, then easing them to open negotiations, while warning that punitive levies will be reimposed if the terms are not to his liking. With just 13 days until the Trump-imposed deadline to conclude a EU-U.S. deal, European Commission President Ursula von der Leyen decided the time for conventional negotiating tactics was over. She floated the idea that the EU’s 27 countries could join forces with 12 members of the Asian-led Comprehensive and Progressive Agreement for Trans-Pacific Partnership bloc (CPTPP) — which now includes the U.K. — to form a new world trade initiative.  The new grouping would redesign a rules-based global trading order, reforming or perhaps even replacing the now largely defunct World Trade Organization, she said. Crucially, the U.S. would not automatically be invited. Such a plan would “show to the world that free trade with a large number of countries is possible on a rules-based foundation,” von der Leyen said at the end of the EU leaders’ summit in Brussels in the early hours of Friday morning. “This is a project where I think we should really engage on, because CPTPP and the European Union is mighty.” Von der Leyen then explained that it would be up to the EU and the CPTPP to decide whether the U.S. would be allowed to join their project. “As far as I understand, the Americans left at a certain point.”  INNOVATIVE AND UNPREDICTABLE The idea of more formal cooperation with the Indo-Pacific group had already been floated in recent months by the EU executive as a way to counter Trump’s tariffs. But in case there was any doubt that such a gambit was firmly tied to fighting back against Trump’s disruption, another man called Donald dispelled it.  Polish Prime Minister Donald Tusk revealed the bloc had to be “very innovative … sometimes maybe unpredictable — as our friends from the other side of Atlantic.”  Poland currently holds the six-month rotating presidency of the Council of the EU. And Tusk, a former European Council president, is a veteran of Brexit negotiations, having chaired late-night summits in Brussels in an attempt to get a deal with the U.K. on its divorce from the bloc. He couldn’t resist crowing about giving Trump a taste of his own medicine. European Commission President Ursula von der Leyen decided the time for conventional negotiating tactics was over. | Oliver Hoslet/EPA “I think all of us are aware about this new method how to negotiate and how to talk about trade and other communications,” Tusk said, clearly referring to Trump’s disruptive tactics. The U.S. is one of Europe’s closest partners, he noted, “but we need to be similar to our partners in some sense.” Von der Leyen’s idea won public endorsement from Europe’s most powerful leader, German Chancellor Friedrich Merz. “If the WTO is as dysfunctional as it has been for years and apparently remains so, then we, who continue to consider free trade important, must come up with something else,” he said. But the truth is, von der Leyen’s proposal may ultimately prove only a temporary distraction from what threatens to be a major defeat, when an agreement with Trump is finally unveiled.  At the summit, European leaders grimly digested the news of a fresh proposal from the U.S. for further negotiations, POLITICO was first to reveal. PUNITIVE TARIFFS As they sat around the dinner table and accepted they won’t get a great agreement from Trump, they asked each other just how bad a deal they would be prepared to take to avoid the worst of his tariffs. Von der Leyen and her team are now expected to negotiate a sketchy outline of a contract in the next few days to meet Trump’s deadline of agreeing terms by July 9. After that date, he has threatened to ramp up punitive tariffs on EU goods to as high as 50 percent.  Only a month ago, EU countries were bullish about pushing Trump to back down in his trade war. They scorned the outline agreement the U.S. president struck with U.K. Prime Minister Keir Starmer, insisting the bloc was a trading superpower and would never accept Trump’s baseline 10 percent tariff.  Now, all that has changed. “It would be best to have the lowest tariff possible, 0 percent is the best,” said French President Emmanuel Macron. “But if it’s 10 percent, it’ll be 10 percent.” Lithuania’s President Gitanas Nausėda told POLITICO the EU can at most “hope to be treated like the United Kingdom” when it comes to a trade agreement with the U.S.  “It would probably be the best scenario,” Nausėda said. “But the United Kingdom, in the eyes of the United States, it’s a little bit different as a partner. And I hope we will be treated like the United Kingdom — but we will see.”  Diplomats said the question facing EU leaders was whether to go for a quick deal in the next two weeks or wait for a better one, even if it means a protracted trade war with the U.S.  “It would be best to have the lowest tariff possible, 0 percent is the best,” said French President Emmanuel Macron. | Oliver Matthys/EPA The risk in that situation would be that Trump then revisits his commitments to European defense, asking why Americans should pay to protect countries that are fighting them on trade, one diplomat said, speaking on condition of anonymity because the matter is sensitive.  Germany’s Merz was the strongest voice in favor of a rapid deal, even if it is only an outline. “We now have less than two weeks until July 9. And you can’t agree a sophisticated trade agreement there,” he said. Industries from chemicals, to steel, to car-making are already suffering, he said, putting companies at risk. “Please let’s find a solution quickly.” Hans von der Burchard, Jacopo Barigazzi, Yurii Stasiuk, Ben Munster, Gregorio Sorgi, Hugo Murphy, Louise Guillot, Nicholas Vinocur, Sarah Wheaton, Max Griera and Alexander Varbanov contributed reporting.

LONDON — In a world blighted by tariffs and increasing protectionism, U.K. Prime Minister Keir Starmer is starting to realize that teamwork really is the only way to make his free trade dream a reality. “I do think that it’s [a] difficult environment, but there are significant opportunities if we’re agile about it, if we understand the world we’re living in, and get ahead of the curve,” Starmer told businesses in Westminster on Thursday as he set out the U.K.’s first Trade Strategy since Brexit. While underscoring the importance of trade deals with the likes of India and the U.S., Starmer hinted at a more multilateral approach to trade policy. “I think we should also talk to like-minded countries, because they recognize that the world is changing,” he said. “I’ve been talking to the leaders in Japan, in Singapore, in Australia, New Zealand, Canada, about how we, the U.K., can trade in an easier and better way with them and whether we as a group of countries can trade with other countries in an easier and better way.” The countries mentioned are all members of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), an Asia-Pacific trading bloc which the U.K. joined in December. ASIA-PACIFIC BLOC ‘MORE IMPORTANT THAN EVER’ Starmer’s words were borne out in the government’s new trade strategy, where the U.K. committed to working alongside partners and allies to negotiate and agree an “ambitious agenda for future plurilateral agreements.” It describes the role of groupings such as CPTPP as “more important than ever in the current global context.” “We will use CPTPP as a platform to support the wider multilateral and plurilateral system, and to encourage deeper trading relationships between countries and groupings committed to liberal rules-based trade,” the strategy said. At a recent meeting in Korea, CPTPP members committed to work with the EU and the Association of Southeast Asian Nations — a regional grouping of 10 states in Southeast Asia — to liberalize global trade in light of “significant challenges” facing the international trading environment.   This could include discussions on areas such as tariffs, digital trade, rules of origin, supply chains, customs administration and innovation, the Trade Strategy said, adding that these dialogues could “create a platform for other trade-focused economies to participate, so broadening our network of collaborative partnerships.” In another sign of the U.K.’s commitment to a multilateral trading system, the U.K. announced it would join the World Trade Organization’s Multi-Party Interim Appeal Arbitration Arrangement (MPIA), an alternative system for resolving WTO disputes. The U.K. had previously dragged its heels on signing up to the mechanism. “Joining MPIA sends a clear signal that the U.K. is committed to the principles of free and fair trade and that we will champion progress wherever and whenever necessary,” the strategy said.