World Not Following Trump's Lead on Tariffs as Global Trade Winds Shift

Amid pomp and parades in London, President Donald Trump and Prime Minister Keir Starmer toasted the trade deal they agreed in May as fresh reinforcement for the “special relationship” that binds Washington and London. What they will not stress is that outside this agreement, the two countries are actually headed in opposite directions on trade. While the United States continues to build steep tariff barriers, the United Kingdom—and most of America’s key trading partners—are trying to tear them down.

Beyond the pact, the United States has moved toward steeper tariff barriers. The Trump administration’s measures have lifted average U.S. tariffs to 17.7% from levels below 2% in recent years, and sectoral tariffs on pharmaceuticals and semiconductors are expected to push the total higher. The World Trade Organization projected that overall trade volumes would contract slightly this year before rebounding to about 2.5% growth in 2026. Services trade, less affected by tariffs, could rise around 4% over the same period. The global backdrop includes a rise in trade-restrictive rules and a push toward near-shoring as supply chains fragment and reshape.

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Outside Washington, policy directions diverge. European Union and Japan have accepted reciprocal tariffs on their exports to the United States while slashing their own tariffs to zero on some U.S. imports, a sign that retaliation can be calibrated without erasing all benefits of trade. The European Union and Indonesia have completed an agreement reducing tariffs to zero on 80% of imports, while talks continue with India, Australia, and Mercosur. Canada is pursuing free-trade talks with ASEAN, and Japan is negotiating with Gulf states as well. Awkwardly for Prime Minister Starmer, the United Kingdom signed a free-trade agreement with India over the summer, just before Trump imposed 50% tariffs on Indian imports tied to Russia-related oil purchases. British negotiators were the first non-Pacific country to join what was once the Trans-Pacific Partnership, a pact Trump-renounced on his first day in office.

Supporters of protectionism argue that tougher U.S. policy is needed to restore manufacturing jobs lost to global competition. Critics note that many advanced economies have faced manufacturing shifts for decades due to automation as much as trade policies, and that slapping higher tariffs often distorts prices for consumers and erodes global efficiency. Even so, the revenue side of tariffs remains a strong political incentive in Washington: estimates put extra federal revenue from tariffs at about $2.4 trillion over the next decade, a figure that makes any reversal politically challenging for both parties. In this context, even as partners forge new or expanded trade arrangements, the overarching trend in major economies appears to be a continued commitment to lower barriers where possible, even as the United States pursues a more protectionist stance.

Global observers note that, despite the United States’ tariff push, the world economy cannot easily pause or reverse the momentum toward freer trade. The WTO’s forecast for 2026 implies a modest recovery in goods trade after this year’s softness, and services trade—less susceptible to tariff changes—could keep growing. In the longer run, many governments and corporate leaders are recalibrating expectations: diversification of supply chains, more regional trade cooperation, and targeted policy tools that aim to address unfair practices without re-creating the broaditarion era of blanket protectionism. The balance between protecting strategic industries and preserving open markets remains a central challenge for policymakers around the world, with implications for economies, workers, and consumers alike.