How Trump’s Tariffs Accelerated Global Realignment
Europe absorbed Trump’s tariff shock without retaliation. Canada pivoted to Beijing. China’s trade surplus surged to $1.2 trillion. What appears to be American economic strength masks a deepening strategic failure: the world is no longer organizing itself around U.S. institutions—it’s organizing itself around them.
That’s the central argument from CNN’s Fareed Zakaria, who analyzed global reactions to Trump’s tariff regime this week. His conclusion is stark: American tariffs didn’t wall off rivals. They accelerated their escape.
THE NUMBERS
China’s Trade Surge
Despite sharply reduced exports to the U.S., China’s overall exports rose in 2025, with its trade surplus surging to nearly $1.2 trillion as shipments to Latin America, Africa, Europe, and Asia expanded rapidly.
Europe’s Strategic Pivot
After 25 years of stalled negotiations, EU countries approved a sweeping trade agreement with Brazil, Argentina, Paraguay, and Uruguay—creating one of the world’s largest free-trade zones by population (700+ million people). The timing is deliberate: Europe made this move while absorbing U.S. tariffs without escalating.
Canada’s Historical Reversal
For three decades, Ottawa built its economy around the U.S. More than 75% of Canadian goods exports flowed south in 2024. Trump’s tariff threats and annexation rhetoric shattered that strategy. Canada’s new government is now openly diversifying, with Foreign Minister Anita Anand stating: “It is necessary for us to diversify our trading partners and to grow non-U.S. trade by at least 60% over the next ten years.”
That’s not hedging. It’s strategic reversal.
THE GEOPOLITICAL REALIGNMENT
Europe-China Détente
Brussels and Beijing quietly resolved trade frictions over EV subsidies and market access. Europe remains wary of Chinese industrial policy, but now views China as “a necessary partner”—a 180-degree shift from the strategic decoupling narrative of 2023.
Southeast Asia Emerges
The EU has concluded trade agreements with Singapore and Vietnam, finalized negotiations with Indonesia, and is advancing talks across the region. Southeast Asia is already the EU’s third largest trading partner outside Europe—and growing.
Global Opinion Shift
A European Council on Foreign Relations poll found sharp realignment in just two years. In key emerging powers (India, Brazil, South Africa), respondents preferring an American-led bloc rather than a Chinese one dropped by 15-19 percentage points. Among 10 European countries, only 16% now describe America as an ally.
WHY THIS MATTERS
The U.S. built the post-Cold War global order on a platform: U.S.-designed institutions, security guarantees, predictable trade rules. For decades, the world organized around that platform.
That’s no longer happening.
China’s Ecosystem Play
While the U.S. relies on tariffs (which coincided with declining manufacturing employment in 2025), China is “methodically building one of the most resilient economic ecosystems in modern history”—dominating critical minerals, scaling batteries and EVs, and diversifying export markets to withstand sanctions.
The Platform Problem
“The global order was built on an American platform,” Zakaria notes. “The platform still exists. But the world is no longer building on it. It is building around it.”
This matters for three constituencies:
For Executives: Trade patterns are shifting. Supply chains are diversifying away from both U.S. and China dependence. Emerging markets (Latin America, Africa, Southeast Asia) are becoming strategic alternatives.
For Investors: Capital flows are following political realignment. Countries treating China as a necessary partner opens deals and opportunities others miss.
For Policy Leaders: U.S. geopolitical power is eroding through economic policy choices. Tariffs, immigration rhetoric, and threats against allies are accelerating decoupling that cost decades of Cold War to prevent.
THE AMERICAN RESPONSE?
Zakaria argues the U.S. cannot tariff its way out of this. Instead, it needs ecosystem-building: leveraging its “extraordinary advantage” (advanced technology networks, capital, skilled labor, allied consumer demand) to anchor predictable, open markets.
But that requires treating allies as partners, not “transactional customers.”
Instead, “Washington has encouraged others to hedge” by “treating allies as transactional customers, weaponizing tariffs against them, and turning longstanding commitments into shakedowns.”
WHAT’S NEXT
Supreme Court Tariff Ruling (January-February): The Court will decide whether Trump’s tariffs violate the International Emergency Economic Powers Act. If struck down, $200+ billion in refunds could reshape U.S. budget constraints and policy credibility.
Europe’s Countermeasures: Will the EU impose its threatened 25% retaliatory tariffs on American tech and goods, accelerating further decoupling?
Canada’s Trade Deals: Which specific non-U.S. agreements is Ottawa pursuing—Southeast Asia? EU partnerships?
The geopolitical consequence will take years to fully materialize. But the realignment is accelerating now.
Sources: Fareed Zakaria, CNN, January 18, 2026: “Fareed’s Take: World Countering Trump With Shrewd Moves”
