With new tariffs on trading partners forthcoming, the United States government may be inadvertently accelerating the development of global trade alliances that don’t include America.
Two preeminent trade blocs—the European Union and the Comprehensive and Progressive Agreement for Trans-Pacific Trade (CPTPP)—are reportedly drafting anti-tariff commitments to strengthen trade across more than 40 nations in the wake of U.S. tariff escalation, according to Politico.
New Zealand Trade and Investment Minister Todd McClay told the outlet that one element of the talks is a commitment not to engage in tit-for-tat tariff increases—a promise “that neither side will escalate tariffs against each other, in the way the U.S. has been against many of us.”
Signed into law in 2018, the CPTPP initially included Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. The United Kingdom signed the accession protocol in 2023, and Costa Rica was granted accession in May.
McClay told Politico that he believes the trade blocs have “enough in common” that they may be able to start shaping rules that benefit the countries involved. For example, the EU and CPTPP countries already ban countries from levying duties on certain digital activities and content.
They are also looking into non-binding commitments to follow established trading rules and refrain from imposing new barriers to trade—including tariffs.
Meanwhile, Canada, a CPTPP member that has faced icy treatment from U.S. trade officials in its U.S.-Mexico-Canada Agreement negotiations in recent months, is forging and strengthening offshore trade partnerships as its biggest export market gives it the cold shoulder.
After forging a strategic partnership with China in January, the country is now looking to deepen bilateral trade and investment with Indonesia through the forthcoming ratification of the Canada-Indonesia Comprehensive Economic Partnership Agreement (CEPA). Over the weekend, Canadian Prime Minister Mark Carney spoke with the nation’s president, Prabowo Subianto, about the impacts of the war in Iran on the global economy and energy markets.
According to Carney’s office, the two pinpointed opportunities to build upon CEPA, which is expected to be finalized in the second half of the year and enter into force on Jan. 1, 2027. Signed last September, the deal is Canada’s first bilateral trade agreement with an ASEAN nation, and it aims to lower trade barriers and create a more “transparent and predictable environment” for trade and investment in sectors like critical minerals, agriculture and clean technology.
Under CEPA, about 95 percent of the current duties on Canadian exports to Indonesia will be slashed or eliminated. Canada is eyeing Indonesia as a potential market for wheat, potash, wood, and soybeans, which the government believes will enjoy more competitive benefits on the Indonesian market.
