By elevating average US tariff rates to the 1940s level, the administration shifted from rules-based cooperation to “reciprocal” leverage and economic nationalism, he says.
Bi identifies three dismantled pillars: multilateralism giving way to bilateral ‘Mar-a-Lago Accords’ with countries like Japan, Korea, and India; prioritising national security and resilience over efficiency in strategic sectors; and weaponising tariffs geopolitically through “secondary tariffs” on non-aligned nations.
Brazil and India, major economies with substantial trade relations with Washington, now face 50 percent tariffs on their exports to the US.
US imports from Canada and Mexico, which remained free-trade partners of Washington for decades because of trouble-free diplomatic relations and geographic proximity, are now subject to a tariff of 35 percent and 25 percent, respectively.
This exclusionary approach, Bi says, generated revenue and near-shoring but fractured the trading system and downgraded global growth projections.
The economic fallout in 2025 was significant yet uneven.
Grabow describes tariffs as “a tax, and a particularly inefficient one at that,” but adds that their global impact remained “mild, with continued expansion of trade”.
The value of global trade expanded by about $500 billion in the first half of 2025, according to the UN Trade and Development. In fact, global trade is on track to surpass its 2024 record-high level despite volatility, policy shifts and persistent geopolitical tensions.
Key mitigating factors included US reductions in initial ‘Liberation Day’ rates and limited retaliation, with the exception of China.
Meanwhile, other nations advanced liberalisation: “Just this week… the UK and South Korea signed an upgraded free trade agreement, and the EU and Mercosur continue to work on finalising (a free trade agreement),” Grabow says.
China appears to have weathered the tariff storm rather successfully. Even though its exports to the US dropped in 2025, Beijing managed to increase its sales of goods to the rest of the world, resulting in an all-time high trade surplus of over $1 trillion.
Bi, however, insists the tariff war caused substantial disruption. “A large-scale tariff war… significantly disrupted international trade flows and dampened global economic output,” he says, with institutions like the IMF and World Bank citing a “measurable growth drag” despite truces and exemptions.
Responses from major partners varied. Grabow praised the EU’s approach: “The EU’s decision to forgo retaliation and even somewhat reduce its own trade barriers is a commendable response,” he says.
This avoided escalation and benefited its economy, with hopes that US tariffs would prove temporary.
Bi highlights China’s “institutional resilience” that accelerated self-reliance and domestic consumption amid tariff wars. Proactive stimulus led the IMF to upgrade China’s 2025 growth to around five percent, fuelled by innovation and leverage in critical supplies.
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Pragmatism carries the day
Amid the turmoil, Türkiye adopted a pragmatic strategy to survive the global comeback of tariffs, Mian Waqar Badshah of Istanbul University tells TRT World. “Rather than retaliating aggressively, Ankara emphasised strengthening regional trade ties… to reduce dependency on traditional Western markets,” he says.
Domestic support for exports and WTO engagement demonstrated Ankara’s resilience and diplomacy, avoiding confrontations and safeguarding national economic interests, he says.
Going forward, uncertainty persists amid ongoing legal battles.
Lower courts ruled IEEPA tariffs illegal, with the Supreme Court hearing arguments in November 2025 and a decision pending.
Grabow expects tariffs to endure for the remainder of Trump’s administration but notes potential replacements with levies under other authorities in case the US Supreme Court strikes them down.
“Undoing tariffs… will require leadership, and it’s an open question whether that will be forthcoming.”
Bi sees consolidation going forward. “The global consensus… is that the era of low-tariff, globalised trade is firmly in the rear-view mirror,” with 2026 solidifying a “new normal” of higher trade barriers.
Badshah says tariffs will remain a headline issue, driven by geopolitics and climate policies like the EU Carbon Border Adjustment Mechanism that imposes carbon tariffs on carbon-intensive products.
“For countries like Türkiye, this means staying agile and focused on trade diversification,” he says.