India and the European Union recently signed a free trade agreement. This follows an agreement signed by Canada and China, as well as other agreements Canada is establishing with members of the European Union.
Evelyn Cheng, writing for CNBC, observed that countries that once avoided China “are now sending their leaders to Beijing for meetings with Chinese President Xi Jinping,” including visits in January by Canadian Prime Minister Mark Carney and British Prime Minister Keir Starmer, and are “keen to strike business deals.” Ireland, South Korea and Finland also sent leaders to China in January.
The European Union’s deal with India, wrote economist Paul Krugman of The New York Times, “shows that the world is becoming ever more estranged from an erratic, abusive United States. In other words, other countries are moving, step by step, toward an economic divorce from America.”
The European Union consists of 27 countries, including Austria, Denmark, Finland, France, Germany, Greece, Ireland, Italy, the Netherlands, Portugal, Spain and Sweden, among others. The EU’s economy is valued at around $20 trillion. In 2024, U.S. trade — both imports and exports — with the EU reached approximately $1.5 trillion. U.S. businesses export or sell about $370 billion worth of goods to the EU each year. Some of that $370 billion in exports could be at risk if the EU chooses to buy those goods and products elsewhere.
Between the U.S. and Canada, around $909 billion in imports and exports cross the border each year. U.S. businesses sell or export roughly $440 billion worth of products to Canada annually. That’s a significant amount of money at risk if Canada opts to buy their products from China or the European Union instead.
Yes, as Trump will note, the U.S. has a trade deficit and buys more from both the EU and Canada than we sell to them. But that is because the U.S. is large and rich, Americans like to buy stuff and we normally don’t pay attention to where that stuff comes from. Nor should it matter. Trade benefits both the exporter and the importer.
Importantly, Trump’s tariffs have not reduced the U.S. trade deficit, which is his main goal. In 2025, his first full year in office, the U.S. trade deficit was $1.02 trillion, up from $918 billion in 2024. Trump’s trade deficit grew, and U.S. businesses lost customers.
The free trade agreement between the EU and India allows them to trade goods without tariffs. This includes cars, aircraft, electronics, petroleum products, textiles, machinery, computers, pharmaceutical products and steel, to name just a few, which will now be bought in smaller quantities from the United States.
In response to these international deals leaving the U.S. high and dry, the Trump administration announced a new trade agreement with India on Monday. Prior to the agreement, the average tariff on imports from India was about 34.5% and as high as 50% on some products. With this agreement, U.S. tariffs on imports from India will be reduced to 18% if India agrees to end Russian oil purchases and purchase some oil from the U.S. But India already buys a significant amount of U.S. oil. Prior to Trump’s tariffs on India, according to the World Trade Organization, India had a “simple applied tariff rate of 15.6%” on imports into the U.S., not much different from Trump’s new 18%. Also, it is not clear how much more oil India will purchase from the U.S. than it already does. This begs the question: What was accomplished by Trump’s year-long trade war with India?
With Canada, the U.S. is in danger of losing customers for its machinery, cars and trucks, petroleum and other energy supplies, farm products, computers and tractors, to name a few. Canada can buy these products from India, China and the EU.
Krugman points out that the agreements between Canada and China, and between the EU and India, are signed, unlike the “fantasy international deals Trump claims to have negotiated,” which are based on “vague promises to invest in America” that Trump has received from multiple nations without any signed agreements. Trump frequently claims to have secured $18 trillion in international investments in the U.S., but “nobody knows where he got that figure,” writes Krugman.
These recent examples of major American trade partners signing trade agreements with China, India and the U.K. will have major implications for American businesses and the overall growth of the U.S. economy. International customers are necessary to remain in business. A key example is when U.S. soybean farmers lost China as their primary customer and were then bailed out by the U.S. government. Trump has said he and China reached a deal for China to buy American soybeans again, but the agreement appears to be only verbal, and China has yet to resume soybean purchases as it has in the past. American farmers are the biggest losers in Trump’s tariff war with China, even with the one-time bailout.
A second example is the boycott of American wine and distilled spirits in Quebec and Ontario, where American bottles were removed from the shelves in response to the severe tariffs Trump imposed on imports from Canada. Since 2024, U.S. wine sales have declined by 91%, and distilled spirit sales to Canada by 56%.
All of this started with Trump’s unpredictable tariff wars with our largest trading partners, which have had several negative effects on our economy. First, Trump’s tariffs increased prices for American consumers, and American businesses are paying more for supplies and parts. Second, in retaliation, other nations stopped buying or reduced purchases of American products as they identified other sources. Third, according to The Business Times, global GDP is smaller than it would have been without Trump’s tariffs.
As stated by the Associated Press, Trump’s tariffs “have sent countries seeking new markets to reduce their dependency on the American consumer.” India’s Prime Minister Narendra Modi, for example, said they are exploring other trading partners to bring “stability” amid “turmoil” in the global order.
The source of the turmoil, of course, is Trump, president of the United States. He is scaring away America’s best customers, and it may be decades before America can recover from these losses.
Everyone is saying the same thing. As the U.S. becomes less predictable as a trading partner, international leaders are seeking more reliable partners. As Cheng points out, these international visits to boost trade with other nations include “large business delegations.” Cheng noted that “nearly 60 British companies and cultural organizations sent representatives to accompany the U.K. prime minister on his China trip.” The results included a $15 billion investment in China by pharmaceutical company AstraZeneca.
China sees Trump’s tariff war as an opportunity to increase trade with countries that are not only facing Trump’s tariffs but are also being verbally insulted by him. I’ve said this before: China and Russia must think they are dreaming. Trump is the gift that keeps on giving to them.
Tom Zirpoli is the Laurence J. Adams Distinguished Chair in Special Education Emeritus at McDaniel College (tzirpoli@mcdaniel.edu). He writes from Westminster. His columns appear on Wednesdays.