The world is undeniably in an era of self-help, when nations must increasingly fend for themselves. US President Donald Trump’s tariffs have transformed global trade into a geopolitical battleground, disrupting supply chains and reshaping alliances. International trade plays a crucial role in shaping global relations. In response to Trump’s tariffs, the EU is preparing countermeasures on $28 billion of US imports ranging from dental floss to diamonds. This aligns the EU with China and Canada in escalating the global trade war. American trade policy—a key element of its foreign policy once centred on long-term economic planning—has shifted to short-term leverage via tariffs, export controls and turning sectors such as semiconductors and rare earths into power tools to be used against both friends and foes.
China has responded with a 34 percent tariff on US imports to match Trump’s levy on Chinese goods. As Beijing positions itself as an alternative to US-led globalisation, it highlights the transformation of global political dynamics, too. Many Southeast Asian countries that are largely dependent on China for their manufacturing prowess are caught in this geopolitical crossfire. In the Asia-Pacific, countries such as like South Korea and Japan, heavily reliant on exports to the US, are now forced to reassess their trade strategies and seek to reduce dependence on the US while exploring practical ties with China. More and more countries are realising that the rules-based international trade system that once governed global economics is eroding. This shift compels nations to rethink their trade relationships and political alignments, while regional cooperation and shorter supply chains become more critical for economic stability and national security.
For India, this geopolitical shift presents both a challenge and an opportunity. It must adopt a flexible strategy, using its inherent political agility to align with the camp that best serves its interests, attract global companies through competitive sourcing and value addition, and explore new export destinations arising from the ongoing geopolitical changes. By focusing on regional partnerships, technological autonomy and securing supply chains closer to home, India can strengthen its position in the global manufacturing ecosystem, though such an effort takes time. The approach will not only help mitigate risks from global trade wars, but also ensure long-term economic resilience in a world increasingly defined by self-interest and Trumpian disruptions.