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Controlled Trade: The New Normal in Global Trade?

The return of Donald Trump to the U.S. presidency will have major implications for global trade policy. On the surface, the narrative suggests a stark division: U.S. protectionism and unilateralism on one side, and European commitments to multilateralism and the virtues of free trade on the other. However, the reality is far more complex.

What we are witnessing is not merely a divergence between the U.S. and the EU but a broader transformation in the global trade landscape. The era of unrestrained free trade is being re-evaluated as nations grapple with the intertwined challenges of economic security, supply chain resilience, and geopolitical strategy.

United States: Shift Toward Unilateralism and Protectionism

In recent years, the U.S. has increasingly favoured unilateral trade actions, marking a departure from its historical commitment to multilateral trade agreements. This approach has been characterized by the imposition of tariffs and trade barriers aimed at protecting domestic industries and addressing perceived unfair trade practices.

For instance, the U.S. has invoked Section 301 of the Trade Act of 1974 to impose tariffs on countries accused of unfair trade practices, with China being a prominent target in recent disputes. This protectionist stance has heightened trade tensions and prompted retaliatory measures from trading partners, contributing to a more fragmented global trade environment.

A renewed "America First" agenda under Trump will likely intensify this trajectory, emphasizing national economic security and sovereignty over collaborative international trade agreements.

European Union: Balancing Free Trade with Protective Measures

The European Union, while traditionally a staunch advocate of free trade, has also adopted more assertive trade instruments to protect its markets and uphold its standards. While maintaining its commitment to multilateralism, the EU has introduced trade defence measures such as anti-dumping and anti-subsidy duties to shield its industries from unfair competition.

Additionally, the EU has increasingly used sanctions as a tool of foreign policy, imposing restrictive measures in response to geopolitical developments. For example, sanctions against Russia following the invasion of Ukraine illustrate the EU’s readiness to leverage trade policy as a means of political pressure.

These actions reflect a nuanced strategy: the EU remains committed to free trade principles while safeguarding its economic and political interests through selective interventions.

Implications for the UK: Navigating Controlled Trade as a Net Importer

For the United Kingdom, a net importer deeply intertwined with both U.S. and EU markets, the shift toward controlled trade poses significant challenges. Increased tariffs and trade barriers could raise costs for businesses and consumers dependent on imports, exacerbating supply chain disruptions and contributing to domestic inflation. This, in turn, could complicate the UK’s economic recovery and broader trade outlook.

Navigating this evolving trade environment will require British businesses to adapt quickly. At the French Chamber, we are committed to supporting our members through tailored insights, events, and working groups. We also facilitate regular dialogue with key stakeholders, including quarterly check-in calls with the EU delegation, the Bank of England, and the Service économique régional at the French Embassy.

For more information or to get involved in our advocacy work, please contact David Lutton at dlutton@ccfgb.co.uk.