The Supreme Court has rejected Donald Trump's attempt to impose tariffs by invoking emergency powers. The ruling and the US president's counter-reaction, imposing a universal tariff of 10%, open up unpredictable scenarios. This will be discussed in the coming months, between now and the midterm elections. For the moment, this plunges all the agreements signed by the administration to date into uncertainty.
Last June, we predicted a season of flourishing free-trade agreements in the winter of the crisis in the world order, in response to the tariff war declared by Trump against the whole world. Since then, the EU has announced agreements with Indonesia, the South American bloc Mercosur, and India: a historic hat-trick that will improve European access to markets with a combined population of 2 billion. The European Commission is pursuing other negotiations, especially in Asia, and is looking towards convergence with Japan in the big Trans-Pacific Partnership (TPP).
Similar expansionary trends involve the Chinese-led Regional Comprehensive Economic Partnership (RCEP) in Asia. Mercosur is also being courted by Beijing and New Delhi. Everyone is negotiating with everyone else, with agreements and negotiations blossoming everywhere. This is not a new springtime for liberism, but a confirmation that US economic nationalism has not, for now, triggered a global protectionist freeze.
European sprint
In ten days, Ursula von der Leyen secured two results that the EU has been pursuing for decades. On January 17th, in Paraguay, the president of the European Commission celebrated the agreement with Mercosur, and on January 27th, in New Delhi, she announced the conclusion of negotiations with Narendra Modi's Indian government. The Union stakes a claim to the most ambitious trade opening ever granted by India, even if the reduction of reciprocal tariffs will take place gradually over a decade, and with extensive exceptions for several sensitive sectors, especially the food industry. According to Alan Beattie of the Financial Times, the absence of protests in France is worrying because it means that the agreement with India does not impose significant internal liberalisation in Europe. Conversely, major newspapers such as France's Le Monde and India's The Hindu approve of the decision to set aside the most sensitive economic issues and forego a degree of openness to achieve a result, thus sending a political signal with global significance.
One could speak of pragmatic liberism
, in the sense that Mario Draghi attributes to his federalism, pragmatic because we must take the steps that are currently possible, with the partners who are actually willing, in the domains where progress can currently be made
.
A colossal Switzerland
The Brussels Commission hails the largest free trade agreement ever
between the EU and India, the world's largest democracies, bringing together 2 billion citizens and the second and fourth largest economies in the world. In fact, according to estimates by the IMF and the World Bank, India's GDP is still in fifth place, at around $4 trillion, just below Japan's, but overtaking it is imminent. However, a place for India on the podium—occupied by the US, the EU, and China, which are between seven and five times larger in GDP—is a long way off.
India's lag compared to the world's three largest economies is even more pronounced in the field of trade. According to WTO data, in 2024 Chinese exports of goods amounted to $3,577 billion, 17.8% of the world total, followed by those of Europe (13.9%), and the United States (10.3%). India, with $443 billion, accounts for only 2.2% of world exports, a share equivalent to that of tiny Switzerland, with 9 million inhabitants, a very small fraction of the Asian giant's population. Even taking these proportions into account, India's trade openness remains a huge opportunity and a real stake in the global contention.
Furthermore, the population law of imperialist maturity highlights the value of India's demographic power, which could become a strategically important reservoir of labour-power for the old metropolises with their declining birth rates. The Times of India advises the Modi government to combat illegal emigration to be able to offer itself to the West as the biggest exporter of skilled manpower
. India's population is equivalent to the EU plus 1 billion! Beyond the illusion of the possibility of managing processes of such immense dimensions in an orderly manner, demography is a winning card in the Indian bourgeoisie's deck.
American response
Less than a week after the Euro-Indian announcement, on February 2nd, Trump reacted with a typically informal statement on social media. In a phone call with Modi, one of my greatest friends
, an agreement was reached, effective immediately
: this provides for the reduction of American tariffs from 50% to 18% in exchange for India's commitment to gradually eliminate tariffs and non-tariff barriers against the US, purchase $500 billion worth of US products over five years, and stop importing Russian oil, in order to help end the war in Ukraine.
A subsequent official joint statement on February 6th downplays the agreement as a provisional framework agreement
, leaves room for reducing but not eliminating Indian tariffs, and refers to India's intention
to honour its commitment to purchase $500 billion worth of goods. The Indian government has not officially confirmed that it will give up Russian oil. Trade Minister Piyush Goyal says it is in India's strategic interest to diversify its energy sources by buying oil and gas from the United States, but the agreement with Trump does not restrict the market choice of the large Indian private corporations.
20 years, 20 minutes
Sergio Gor, the new US ambassador to India, publicly quipped about the difference between the 20 years of negotiations conducted by the Brussels Commission and Trump's half-hour telephone conversation with Modi. Before the Supreme Court's rejection, it might have seemed that federal centralisation allowed the White House to intervene quickly and nimbly in foreign trade policy in a way that European institutions cannot match. But it is equally true that the EU-India agreement is a vast, traditional free trade treaty, with dozens of chapters—on health regulations, technical standards, intellectual property, antitrust rules, public procurement, and so on—detailing a myriad of aspects of the trade relationship.
Trump's agreements have nothing to do with this, either in form or substance. They are bare-bones provisional frameworks based on a highly asymmetrical exchange. To obtain a reduction in heavy US tariffs, they promise to open their markets to US exports and to purchase hundreds of billions of dollars' worth of energy and technology from the US. India is following suit in accepting this model, inaugurated by Keir Starmer's British government last May and then followed by the European Union, Japan, South Korea, Indonesia, and a dozen other large and small countries. Comments and statements suggest that these promises are inexpensive and free of constraints, allowing countries to appease the US, limit the damage, and buy time.
Rival partners
All the major governments that have resigned themselves to Trump's extortion have sought to highlight their relative advantage over their competitors: the UK's 10% tariffs compared to 15% for the EU and Japan, 18% for India, 19% for Indonesia, 20% for Vietnam, and up to around 40% for China. The benefit seems overestimated. However, the Court's ruling appears to put any agreement on hold, so much so that the European Parliament has postponed ratification of the EU-US agreement negotiated by Ursula von der Leyen.
The cost of tariffs is just one of many factors to be considered by companies that organise their production chains on the global market. It is a sign of the times, however, that the same countries that are negotiating among themselves to stem the tide of American tariffs are lending themselves to the divisive logic of these preferential agreements. Many liberist voices had called for a united front
in defence of multilateralism, but so far, competition for the least disadvantageous access to a US market that is still unavoidable seems to prevail. It is equally revealing, as noted by the Financial Times, that the proposals for reform of the World Trade Organisation recently put forward by both the US and the EU call for a review of the principle of non-discrimination
, the historic and symbolic pillar of the WTO system. An increasing degree of scission within the imperialist system is making its way also into historic multilateral institutions, and may erode their foundations.
Fragmented cycle
About a year ago, in January 2025, an editorial in our newspaper opened up a new line of thought: The categories of liberism and protectionism alone, in the face of American nationalism, have become less suited to grasping the sign of the cycle
. A similar line of reasoning can be applied to trade agreements, which are taking on increasingly different forms and meanings. The free-trade agreements promoted by the European Union and middle powers such as Canada, Japan, and India still aim to promote international economic integration. Politically, they express a logic of multi-alignment, the refusal to take sides in the duel between the superpowers of the US and China. At the same time, they are a form of possible multilateralism, partial agreements in the absence of a general agreement, an attempt to keep afloat the old WTO-centred order, upset by Washington's unilateralism.
Trump's bilateral trade agreements, on the other hand, explicitly attempt to impose an alignment of other nations with US interests and opposition to China, a demand that was actually written in black and white in the treaty with Malaysia. Finally, on a more strictly commercial level, Trump's agreements were intended to outline a new standard of American tariffs at 15-20%, giving concrete form to the threat of a universal tariff
by the world's leading economic power, which until recently was considered unthinkable. It remains to be seen how this policy will withstand the Supreme Court's rejection. The real sign of the cycle, after all, is the crisis in the world order.