We couldn't let the first half of the year go by without writing an article on the significant topic that has dominated trade policy this year
The upcoming US trade policy in 2025.
Whereas during the previous months we have seen many articles, opinions and publications on the measures that the US has adopted. From TRADE&TRAIL we have preferred to see this issue with a little calmer and once the first two months of turbulence since the US announcement of the application of tariffs are over; analyze the current situation from the point of view of trade geopolitics.
Because this issue, which some might consider purely economic, has undoubtedly become much more important. Today it is the epicenter of international geopolitics.
Allow me to ask you a question. Have you ever stopped to think how a decision made in Washington, Beijing or Brussels can end up affecting the price of coffee we drink every morning? Or employment in our companies. Or even... the political stability of our countries.
Think about it A tariff here. A trade retaliation there. A treaty suspended or a supply chain cut off. And suddenly, what seemed distant, abstract, technical... becomes urgent, real and immediate.
Imagine for a moment that, in a just few weeks, the trade agreements that have sustained our exports for decades could crumble. Companies that must reinvent themselves or close. Workers put out of work. Governments searching for answers with no margin for action.
That is why, with this post, we invite you to run a global marathon with us. But not a physical marathon... but a geopolitical and economic marathon. An intense, strategic, long-distance race. Where what is at stake is not a medal, but world leadership.
And in this race, the United States has not come just to compete. It has come to lead the world.
Under a new Trump administration, the country has adopted a confrontational, repositioning and hard power approach.
The message is clear: Regain lost leadership against China, Reassert its economic hegemony, and to do so through tariffs, control of strategic resources and a nationalist, aggressive and uncompromising policy.
In this post, will explore several thematic blocks. Each of them will help us to understand this strategy inside out, its motivations, its consequences and, above all, what Europe can - and should - do in the light of this new global chessboard.
At the end, we will leave a space for an exchange of comments and debate, because this is not just a subject for experts: It is a challenge that concerns us all.
The US Grand Strategic Shift
What we are seeing today is not a simple direction adjustment. It is a deep change in the way the United States is positioning in the world. And this huge strategic shift did not begin today. It was gestating during Donald Trump's first term in government, between 2017 and 2021. But in 2025, with his return to the presidency... that model is back, stronger than ever.
Under the usual slogan: ‘America First.’ During his first term, Trump made decisions that broke with decades of foreign policy.
He withdrew the US from the Paris Agreement. He criticised and attempted to leave the World Health Organisation. He questioned the role of the UN...
And it even called into question NATO's utility.
For many, it was a sharp turn. But for Trump, it was necessary.
And then came Biden. Yes, he tried to rebuild some bridges: He returned to the Paris Agreement, he returned to the WHO, he reopened dialogue with allies, he returned to support for the multilateral trading system.
That is in other words: the turn was not a system error.... It was a new logical approach.
And now, in his second term, Trump has made everything even clearer.
America wants to renegotiate its role in the world, but it will do so on its own terms. It will do so by force, not by traditional diplomacy. From the basis of convenience, not global cooperation. From the immediate national interest, not from international responsibility.
And how does this mean? First, in cuts in aid to international cooperation. By reducing development grants and eliminating aid to countries that, according to Washington, ‘do not return the favour’.
Second, by reducing its participation in multilateral organisations. Ending the logic of automatic engagement. So, each alliance, each agreement, is evaluated according to a simple question: What does the US gain from this?
And thirdly, in a diplomacy of force. Through economic pressure, sanctions, tariff threats, even military presence......
All are on the table as legitimate negotiating tools.
This approach is making waves. Traditional allies feel disorientated. Europe, for example, is beginning to talk seriously about strategic autonomy. China and Russia, for their part, are taking advantage of the situation to expand their influence.
And all this brings us to an important conclusion: We are entering a world that is more fragmented, more competitive, and less cooperative.
A world in which major challenges - such as climate change, pandemics, migration - become more difficult to manage, because solutions are no longer being sought by all.
What we are seeing is not just a new foreign policy. It is a reflection of a domestic transformation in the United States. A country that is seeking to rebuild its identity and its economy... and has decided that it no longer wants to be the ‘world's policeman’. It no longer wants to sustain a global order that it considers unjust. It wants to go back to basics: protecting its borders, its industry and its power.
And that message - whether we like it or not is changing the rules of the game for everyone.
Tariffs as Fiscal Policy: The New US Experiment
One of the first analysis we have to do to find some logic in this new situation is to look at the domestic situation in the United States, which is currently facing a critical fiscal situation. In March this year, its public debt reached 36.5 trillion dollars, which represents 124% of the national GDP.
But the most worrying fact is this: one third of that debt - some $12 trillion - expires in 2026. And what happens? Revolving that debt at current interest rates of 5% or more is basically unsustainable
This has led the government to take a number of unorthodox measures. One of them has been to impose what they call a ‘universal 10% tariff’
This tariff has three main objectives:
- To increase revenue for the Treasury.
- To restrain the economy and contain inflation.
- To put pressure on the Federal Reserve to reduce interest rates.
In other words, what is being attempted is to provoke a moderate and controlled economic recession. A kind of ‘artificial recession’, so that inflation falls, interest rates are relaxed, and then, yes, the massive debt can be refinanced at lower cost.
For the first time in decades, tariffs are no longer used just to protect industries, but to manage monetary policy and public debt. In other words, they are being used as a tool of fiscal policy.
This strategy is based on a three-stage cycle:
First: restrain the economy with tariffs and consumption restraint.
Second: take advantage of the economic recession to reduce interest rates and refinance the third part of the debt ($12 trillion) expiring in 2026 at a low interest rate.
And third: to initiate a process of economic revival and growth with deregulation measures, especially in relation to industrial stimulus, investment attraction and energy liberalization.
This approach is reminiscent - but with differences - of what happened in the 1930s, with the famous Smoot-Hawley Act. Those tariffs also aimed to protect the domestic economy, but ended up provoking a trade war that aggravated the Big Depression.
Can this new experiment work? Possibly. But it is not risk-free. A recession, however managed, can affect employment, reduce investment and damage international trust. Moreover, the retaliatory actions of other countries could lead to a new cycle of global trade tensions.
So this is not just a change in US economic policy. It is a move that could redefine the role of the state, the global fiscal logic... and even the geopolitical balance of the world.
And the question is: Can the US decelerate its economy, reposition its debt and then relaunch itself, without causing collateral damage globally?
Only time - and the markets - will tell us.
Tariffs as a Power Tool
Unlike other countries or trading blocs, such as the European Union, which are committed to concluding an extensive network of free trade agreements, the United States has long opted for another path, derived mainly from the fact that it has no signed free trade agreements: direct tariff pressure.
The logic is simple, yet forceful: Raise the cost of access to the US market to force other countries to concede at the negotiating table.
In other words, encourage the use of tariffs as a bargaining power tool.
This strategy, often seen as unilateral or disruptive, has become an extension of US economic power.
In order to understand this strategy, it is necessary to analyze three key moments:
- Donald Trump's first term presidency,
- the transition with the Biden administration,
- and the current turning point, in Trump's second term government since 2025.
First period: Trump's mandate between 2017 and 2021.
With the slogan ‘America First’, Trump broke with decades of liberal consensus. He imposed tariffs of 25% on steel and 10% on aluminium, even on allied countries. He launched an unprecedented trade war against China, affecting more than $360 billion in goods. And used tariffs as a bargaining chip to renegotiate NAFTA, putting pressure on both Mexico and Canada.
But it didn't stop there. He also imposed tariffs on washing machines, solar panels, European wines, agricultural products. It was a broad policy. It was also strategic.
In many cases, the threats were more effective than the sanctions themselves: Japan, South Korea, and even the EU all negotiated under pressure.
Biden's Administration
Then came the change of administration. Joe Biden took over the US presidency in 2021... and many expected a change of direction.
But that did not happen. While avoiding Trump's aggressive tone, Biden kept the protectionist basics in place: tariffs on China remained in place, and subsidy investigations were launched in sectors such as electric batteries.
The discourse changed, though. There was no longer talk of punishment... but rather of resilience, industrial security and productive sovereignty in the face of Chinese overcapacity.
Second Trump Admministration (2025)
But the real breaking point comes this year, in 2025, with Donald Trump's return to power.
And this time... protectionism is no longer a tactic. It becomes a doctrine
On 2 April, known as ‘Liberation Day’, the US officially declares its shift towards industrial self-sufficiency. And it launched an unprecedented new tariff regime.
- A universal 10% tariff on all imports.
- An additional 25% on steel, aluminum and automobiles.
- 145% on Chinese goods, including 20% linked to the fentanyl crisis.
- Establishes a series of ‘reciprocal tariffs’ with those countries with which the US has a trade deficit.
And what's more: it makes direct threats to companies such as Apple and Samsung if they do not relocate their production to the US.
It even gives a margin for negotiation afterwards: a 90-day truce, during which a free trade agreement has already been signed with the UK and a possible pact with the European Union is being negotiated.
We are no longer simply talking about trade.
We are talking about geopolitical strategy.
International trade has become a struggle for sovereignty, influence and power.
US vs. China: Trade War and Redesign of the Global Order
What we are witnessing is not just a trade dispute between the United States and China.
It is much more than that. It is a struggle for global leadership in the 21st century. And in that struggle, tariffs have become silent weapons, but with very noisy consequences.
As we have discussed before, the starting point was 2018, when the Trump administration imposed tariffs on more than $50 billion worth of Chinese goods.
The official pretext? The trade deficit; intellectual property theft and forced technology transfer.
But the reality is that this gesture marked a paradigm change.
The US ceased to see China as a partner and began to treat it openly as a systemic rival. China's response was immediate: Tariffs on soybeans, corn, pork... Right to the political heart of Trumpism: the American countryside. The result of this first trade war between the US and China was that by 2020, more than 60% of bilateral trade between the two countries was under tariffs.
But this was not just trade. There were deeper effects:
- Investments were frozen.
- Supply chains began to fragment.
- And technological distrust... became state policy.
Con la llegada de Biden en 2021, muchos esperaban una distensión. Pero no la hubo. Biden mantuvo gran parte del andamiaje arancelario. Y fue más allá: restringió exportaciones de microchips, fortaleció la industria local con la CHIPS Act, y excluyó a China de sectores clave de innovación.
But the turning point in this war came in April 2025 with the 2nd Trump administration's ‘Liberation Day’ declaration. The United States imposes a tariff of... 145% on all Chinese goods. Yes, that's right, 145%.
And it's not just trade. It includes a 20% component linked to the fentanyl crisis. Sending a clear signal: If China doesn't cooperate on national security issues... there will be consequences
In this way, trade becomes punishment. A tool of diplomatic pressure. A covert defence policy.
However, following high-level meetings in Geneva in May, a 90-day truce is agreed. The United States lowers its tariffs from 145% to 30%. And, China reduces its tariffs from 25% to 10%.
Is this a solution? No. It is a breathing space. A strategic pause, not a permanent peace. As the clock ticks down to the 12 August deadline for the agreement.
In this trade war, the stakes are not just one point of global GDP. It is the future of the global economic order. If this truce collapses, we could see:
- A global slowdown.
- The strengthening of regional economic blocs.
- Trade based on allies (friend-shoring).friend-shoring).
- And most worryingly, a total technological breakdown, with two parallel systems: one led by the US and the other by China.
The US-China trade war is therefore no longer about trade. It is a fight for the rules of the 21st century. For control of the data, chips and strategic resources.
Everything... has become a contested terrain.
So 12th August could mark not only the end of a truce.
It could be the day when the world decides whether to rebuild the global order or whether it consolidates its ultimate fragmentation.
Europe in the global trade war: collateral damage or strategic actor?
Although the tariff battle is focused on these two giants, the European Union, for example, is suffering important collateral effects:
An increase in export costs by 15-20%. Estimated losses of more than €10 billion in exports so far this year alone.
And these numbers are not abstract.
We are talking about very specific sectors., such us automotive, beverages and agricultural products, and steel and heavy industry.
All of them... severely affected by this war that we have not declared, but that we are paying for.
But, as always in times of crisis, there are also alternatives. And one of the clearest - and most urgent - is to diversify our markets. We can no longer depend too much on China... or on the United States.
Yes, that agreement with the countries of South America that had been stalled for years. But which today - in this context - becomes strategic. As we pointed out in our article published in January: ‘EU-MERCOSUR AGREEMENT: Geostrategy and Opportunities’. (https://tradeandtrail.net/en/acuerdo-ue-mercosur-geoestrategia-y-oportunidades/). These Agreement:
- It would open up key markets such as Brazil, Argentina or Uruguay.
- It would allow us to compensate losses in Asia with opportunities in Latin America.
- And it would strengthen our supply chains in critical sectors.
Because what's at stake here is not just trade. It is strategic positioning in a fragmented world.
The global trade war forces us to choose: Will we be mere collateral damage or will we assume our role as actors with a voice of our own in the new global economy?
In short, Europe still has room for action. But it must act quickly, with vision and decisively. Because in geopolitics, it is not whoever has the most power that wins but he who is best able to adapt.
Multilateralism in Crisis: End of the global trade order?
The multilateral system, with the World Trade Organisation (WTO) as its central pillar, has regulated global trade for decades by establishing clear rules to facilitate trade, resolve disputes and reduce tariff barriers. But today this system is in deep crisis, and one of the actors contributing most to this fracture is the United States.
In recent months, nations such as China, Canada and the EU have taken the US to the WTO for violating the Most Favoured Nation principle. This principle says that any trade advantage that one country offers to another should automatically apply to all WTO members to avoid unfair discrimination. However, the US has applied unilateral tariffs that break this rule. For its part, the US defends itself using GATT Article XXI, which allows trade exceptions for national security reasons. So what was once a very limited use of this exception is now interpreted broadly to justify protectionist measures. This weakens the rules because if everything can be considered a security threat, the rules are no longer binding and other countries could do the same, creating a domino effect.
In addition, the US has for years blocked the appointment of new judges to the Appellate Body, the final instance for resolving disputes in the WTO. This means that even if a country wins a case, there is no way to enforce the ruling if the other side does not cooperate, leaving the system with no real power to enforce justice. So what we are experiencing is not just a technical crisis, but an existential questioning of the multilateral system. International trade is ceasing to function under common rules, and is beginning to look more like a war of nerves, where each actor is driven by immediate strategic interests, without reliable mechanisms to contain tensions.
So the big question is: are we facing the death of multilateralism, or its inevitable transformation into a more fragmented system based on blocs, selective alliances and flexible rules?
What is certain is that, if we fail to rebuild a common framework of legitimate and respected rules, global trade will cease to be a network of opportunities and become a chessboard of permanent tensions.
Final Remarks
We are living a key point in world history. The United States has taken a clear path: confrontation and protection’. Its tariffs are no longer just trade measures, they are tools of direct pressure, barriers that condition relationships and diplomatic levers to advance its own strategic interests.
The goal is very clear: to regain a leadership it feels threatened, especially in the face of China's growth and influence.
For Europe, this means a huge challenge. It is no longer enough to be passive or to maintain traditional positions. The EU needs to act quickly, devise clear strategies and build smart alliances that allow it to sail a fragmenting and fast-changing world.
Europe's ability to adapt and respond will be key to its relevance in the new global order..
And therefore, as we have always said in all our articles; today more than ever we must remember that ......
‘THERE IS LIFE BEYOND TURKEY.....!!’
To conclude, we leave open an in-depth reflection on the redefinition of global power and the future of international trade, so that you can leave us your comments:
- ‘Is the United States really regaining its global power, or on the contrary, is it accelerating its international isolation?’
- ‘What strategic role should Europe adopt in the face of these changing dynamics?’
- ‘Is traditional multilateralism viable and sustainable, or is this an era of strategic bilateralism and selective blocs?’
- ‘Will this US strategy of pressure and confrontation be sustainable in the long term?’
- ‘Finally, are businesses prepared to adapt to such a changing and complex environment?’