The international community is witnessing a seismic shift in world order characterized by absolute hegemony of great powers, weaponization of the world economy, rising threats of tariffs, and global protectionism.
Mark Carney’s eye opening speech in Davos at World Economic Forum shed light on the “rupture in world order” where economic integration is being weaponized to ensure compliance; dependent countries are being coerced to fulfil questionable demands that jeopardise their sovereignty.
Unfortunately, the European bloc is experiencing such coercion since the Greenland dispute in which US President Donald Trump threatened the member states to impose sweeping tariffs in a bid to annex strategically important Greenland for national security.
The US and EU represent one of the world’s largest trading relationships, accounting for about 30 % of global trade in goods and services.
According to the United State Trade Representative Office, the US goods and services trade with the European Union totalled an estimated $1.5 trillion in 2024, up 5.7 percent ($80 billion) from 2023.
In the backdrop of turbulent geopolitical landscape and supply chain turmoil, the EU is actively inking new trade deals. Now the question arises: Whether the new trade deals are means of diversification or a strategy to counter rising tariff risks?
On Tuesday, the European Union finalized a landmark and “mother of all deals” trade agreement with India as both sides aim to deepen economic cooperation amid tensions with the US.
Under the significant deal which comes after months of intense negotiations, India will capitalize on the free trade with the 27-nation EU along with sharply reduced tariffs on EU products from cars to wine.
"People around the world are calling this the mother of all deals. This agreement will bring major opportunities for the 1.4 billion people of India and the millions of people in Europe," the PM Narendra Modi said in a statement.
The deal will expand market access for Indian exports to Europe while ensuring easy entry for European Investments and goods into Asia’s third-largest economy.
The EU is India's largest trading partner in goods, with bilateral trade amounted to $136bn in 2024-25, nearly doubling over a decade.
Prior to this notable deal with a South Asian country, the European bloc also inked a deal with Mercosur bloc.
The deal is meant to create one of the world’s largest free trade areas after 25 years of intensive negotiations between EU and Mercosur bloc members Brazil, Argentina, Uruguay and Paraguay.
“We choose fair trade over tariffs, we choose a productive long-term partnership over isolation,” EU chief Ursula Von der Leyen said at the signing ceremony in Asuncion, Paraguay.
The deal will open European markets for South American beef, sugar, rice, poultry, soybean and honey and favour European exports of wine, cheese and cars.
The trade treaty removes tariffs on more than 90 percent of bilateral trade and is expected to come into force by the end of 2026.
The slew of deals focuses on efforts to hedge against tariffs threats hurled and imposed by Donald Trump.
Even India is reeling from 50 percent tariffs imposed on Indian goods. And the European Union has already been caught in crosshairs over the Greenland issue.
Undoubtedly, the push for new deals will strengthen its economy, create job opportunities and secure supply chains by reducing trade barriers in the protectionist world.
Significantly, given the treacherous geopolitical landscape and controlled economy, the expansion of trade deals will act as bulwark in the face of a world battered by protectionism, unpredictability and coercion.