Dr Bilawal Kamran
The architecture of global trade and geopolitics is undergoing fundamental transformation. Traditional alliances are fraying while former adversaries discover common ground. At the center of this upheaval stands President Donald Trump, who describes himself as a peacemaker and unifier even as his policies systematically destabilize the very partnerships that defined the postwar international order.
During his second term, Trump has positioned himself as mediator in multiple conflicts. He claims credit for de-escalating the Hamas-Israel war that killed over fifty thousand children alongside countless civilian adults. He asserts a role in reducing tensions between Pakistan and India after their direct military confrontation, where Pakistan established air superiority by downing Indian aircraft and damaging air defense systems. His administration has engaged diplomatically in disputes spanning Iran and Israel, Rwanda and the Democratic Republic of Congo, Thailand and Cambodia, Armenia and Azerbaijan, Egypt and Ethiopia, and Serbia and Kosovo.
Yet Trump’s primary instrument of statecraft is not diplomacy but tariffs. He has weaponized trade policy, imposing duties on countries running persistent deficits with the United States. These tariffs function as leverage, forcing allies and adversaries alike to renegotiate economic and political relationships on terms favorable to Washington. The approach has brought numerous states to the negotiating table. It has also compelled America’s closest partners to seek alternative arrangements that reduce their dependence on US markets and security guarantees.
Canada faces relentless American pressure over trade barriers, chronic deficits, high dairy tariffs, insufficient NATO defense spending, and a digital services tax targeting US technology companies. The European Union endures similar treatment. Trump describes EU trade policy as structurally unfair, particularly regarding automobiles and agriculture. He criticizes European states for underfunding NATO, relying excessively on American security protection, pursuing migration policies he opposes, and maintaining multilateral governance frameworks misaligned with US strategic priorities.
India has not escaped this pressure despite American involvement in de-escalating its conflict with Pakistan. Washington condemns India’s continued purchase of Russian oil, its trade barriers against American products, and its broader economic policies. The United States has imposed elevated tariffs on Indian exports and threatened punitive measures reaching one hundred percent should India fail to alter its energy and trade stance.
Beyond tariffs, Trump is constructing parallel diplomatic structures outside traditional multilateral institutions. His announcement of a Board of Peace to manage Gaza reconstruction and oversee Hamas-Israel stability represents an effort to create governance mechanisms under American leadership that bypass the United Nations entirely. Major European countries and India declined participation. Canada received then lost its invitation. Middle Eastern states including Pakistan joined, signaling the emergence of an alternative institutional order operating outside established frameworks.
This restructuring intensifies through Trump’s assertive foreign policy, including public interest in acquiring Greenland, a position widely viewed as destabilizing NATO unity. Additional economic pressure follows through tariff surcharges on European states opposing US positions and threats of massive duties on European exports. The administration frames these confrontational approaches toward longstanding allies as consistent with America First doctrine, even as they draw domestic criticism.
The consequence is strategic realignment. Traditional US partners now actively seek new trade and defense relationships. Canada’s engagement with China, including strategic cooperation agreements and tariff reduction frameworks, reflects this shift despite renewed American threats of one hundred percent tariffs. The European Union recognizes that long-term dependence on US economic and security structures without alignment to American strategic demands has become unsustainable. Europe is therefore rushing toward external trade partnerships.
This adjustment appears most visibly in the EU-India trade agreement. Growing American pressure on India accelerated conclusion of this long-delayed deal. The agreement represents more than diplomatic symbolism. It restructures India’s trade posture through phased tariff reductions across industrial sectors.
European concessions on machinery, chemicals, and electrical equipment signal deliberate opening of protected markets. Automotive provisions prove particularly significant. Projected reductions in tariffs on European vehicles from levels exceeding one hundred ten percent to near ten percent within quota frameworks mark clear departure from established barriers toward managed liberalization.
India’s export gains focus on high-consumption sectors like textiles, jewelry, and marine products, offering access to advanced European consumers. However, benefits remain uneven. European resistance to meaningful agricultural access, particularly for sugar, poultry, dairy, and bovine meat, exposes structural asymmetry. Industrial market opening without reciprocal agricultural access limits India’s capacity to translate tariff reductions into broad-based export growth, highlighting familiar North-South trade patterns.
Implementation challenges extend beyond tariffs. Regulatory frameworks, EU standards enforcement, labor protections, environmental compliance, and technical certification regimes will shape outcomes more decisively than headline tariff cuts. Compliance costs and enforcement asymmetries introduce friction for exporters on both sides. Ratification delays and phased implementation reduce immediate impact. As in many North-South agreements, institutional capacity gaps and execution risks threaten to dilute negotiated gains.
The geopolitical dimension carries equal consequence. Framing this agreement as counterweight to US trade pressure introduces strategic risk into what is formally commercial arrangement. India’s post-Ukraine expansion of Russian oil imports, although economically rational for inflation control, already strained relations with Western partners by indirectly softening sanctions pressure. Deeper trade autonomy now risks highlighting perceptions of strategic departure rather than durable cooperation.
Transition risk intensifies through EU suspension of tariff preferences for most Indian exports under the Generalized Scheme of Preferences from January 2026. This sequencing creates competitiveness gaps, exposing exporters to higher duties and compliance costs before free trade agreement benefits activate. The result is reduced Indian price competitiveness in European markets during interim periods.
The EU-India agreement therefore reflects strategic shift rather than simple trade expansion. Success depends less on tariff schedules and more on regulatory coherence, enforcement capacity, institutional coordination, and geopolitical management.
Meanwhile, prospects for an India-US trade deal remain structurally complex and politically fragile. Negotiations are driven less by mutual liberalization and more by pressure tactics, sectoral carve-outs, and strategic bargaining. American demands on digital trade, agriculture, energy sourcing, and market access confront Indian domestic protection priorities and industrial policy goals.
Even where partial agreements emerge, they will likely be narrow, conditional, and enforcement-heavy rather than transformational. This produces uncertainty for investors and exporters because tariff relief may prove reversible and compliance obligations asymmetrical. Any deal concluded may function more as leverage architecture than stable trade integration.
The broader implication is systemic. Global trade is restructuring around power blocs, regulatory regimes, and strategic alliances. The emerging order will be shaped not by trade agreements alone but by coordinated economic, regulatory, and strategic power of the United States and its allies in defining rules, standards, and institutional architecture of the new global economy. Traditional partnerships are dissolving. New arrangements are forming. The question is whether this disorder will eventually stabilize into a new order or whether it represents the beginning of deeper fragmentation and conflict.
