The European Union and its trade diversification
Jesús Arturo Córdoba[1], OBELA[2]
The European Union has trade agreements with over 100 countries. It hopes to sign 50 additional agreements in the coming years. Meanwhile, the EU–US trade agreement promoted by Trump in July 2025 has been suspended. This is due to Trump’s tariff announcements after the agreement, the Supreme Court’s ruling on tariffs, and the threat to annex Greenland. This article will review the progress of the European Union’s trade agreements with the rest of the world, as well as the evolution of bilateral trade with China and the US.
Since the creation of the GATT at the Havana Conference (1947), Europe’s trade relationship with the US has been characterised by the post-war alliance between the two. It was governed by GATT rules, and efforts were made to expand these through initiatives such as the New Transatlantic Agenda (1995), the Transatlantic Economic Partnership (1998), the Transatlantic Economic Council (2007), which in 2013 launched negotiations on the Transatlantic Trade and Investment Partnership (TTIP), which has the Trans-Pacific Partnership (TPP) for Trade and Investment in the Pacific Rim. The US in the Pacific Rim. It has withdrawn from the latter. The Atlantic- n agreements failed to materialise due to European governments’ fears of losing sovereignty and the unexpected policy shifts that accompany changes in the US administration. It was not until 2025 that President Trump’s administration created the ‘Framework for a Reciprocal, Fair and Balanced Trade Agreement’, known as the Turnberry Agreement, which changes the rules of the game and unilaterally imposes tariffs to be negotiated later, for example, in exchange for the import of $750 billion worth of US liquefied natural gas, amongst other considerations. This has been put on hold due to threats to annex Greenland and the subsequent US Supreme Court ruling that declared Trump’s tariffs illegal. The European Commission must now wait for the US to establish a new tariff framework. In the meantime, it has reached agreements with various countries.
Among the developments is the conclusion of negotiations on the agreement with Mercosur and its subsequent signing. Although the EU has not yet ratified it, the Mercosur countries (Argentina, Brazil, Paraguay and Uruguay) have already done so, allowing for its provisional application. Secondly, negotiations with India were concluded in January 2026, and the agreement is expected to enter into force in 2027. Thirdly, the new trade agreement with the Australian government was signed in March 2026. Fourthly, the renewal of the EU-Mexico Free Trade Agreement (TLCUEM) is pending, with ratification expectedin mid-2026. Finally, negotiations are underway with countries such as the USA and the Philippines, amongst others (see map).
The US is the EU’s main export partner, while China is its main import partner. European manufacturing value chains are closely linked to Chinese manufacturing. In 2024, the EU introduced tariffs on Chinese-made electric cars, which outperformed their European competitors. This move hindered any progress toward closer trade relations. Another complicating factor was the nationalisation of the semiconductor company Nexperia in the Netherlands, after pressure from the US. Nexperia, chinese firm in the Netherlands, produces microchips and components for the automotive sector in Europe. When Nexperia’s parent company in Shanghai suspended supplies to its Dutch operation, it disrupted the German automotive industry. Negotiations then led to an agreement that established shared ownership with Asian management.
The first modern rapprochements with China began in 1985, marked by the EC-China Trade and Economic Cooperation Agreement. In 2013, both parties began negotiating the Comprehensive Agreement on Investment (CAI); these talks were suspended in 2021 due to insufficient guarantees in sectors such as finance and healthcare, as well as sanctions and counter-sanctions related to human rights. That year, the Agreement on Geographical Indications (GI) entered into force, protecting over 100 agricultural products with a designation of origin from counterfeiting. While not a major market opening, the GI agreement is the most substantial recent progress in bilateral relations. Currently, German government talks focus on the automotive sector, and the EU has joined the US agreement with China on rare earths.
In short, Europe’s main priority is diversifying trade without aligning with major powers. The EU seeks to connect strategic sectors to boost global significance and enable integration with other countries. While the US promotes neo-protectionism, the EU aims to reduce US influence and offer alternative partnerships for global engagement.
