Historians may look back at the winter of 2026 as a period of burgeoning new trade agreements after a year of US President Donald Trump’s tariff tantrums. On Jan. 17, the European Union and Mercosur, South America’s largest free-trade zone, signed a free-trade agreement, creating a market of 735 million people. On January 27, the EU and India signed an FTA, creating another market of 2 billion people.
The EU also has existing FTAs with Canada, Japan, Mexico, South Korea and the UK, among others. With new agreements in 2026, the EU now has FTAs with nations that have 35 percent of the world’s population and produce 42 percent of the world’s GDP.
Other nations are moving quickly to secure new trade deals. In January, Canadian Prime Minister Mark Carney visited China and agreed to reduce trade tensions. This follows a year of diplomatic maneuvering by Carney to diversify Canada’s export markets with an eye toward doubling non-US exports by 2030.
Nations in the Middle East are busy making trade deals as well. On Feb. 3, Turkish President Erdogan arrived in Riyadh to finalize a long-awaited FTA between Turkey and the Gulf Cooperation Council comprising Saudi Arabia, UAE, Qatar, Kuwait, Bahrain and Oman. This will create a trading bloc with a gross domestic product worth $2.4 trillion.
India, meanwhile, is continuing to look for FTA partners, including an FTA with the UK early in 2026. Southeast Asian nations, such as Indonesia, Malaysia, the Philippines and Vietnam are pursuing trade agreements with partners around the world. Indonesia, for example, reached Comprehensive Economic Partnership Agreements with the EU and Canada in September.
South Korea, which Trump targeted along with Canada in a recent tariff tantrum, is working to strengthen many of its trade agreements. Currently, the country has 22 FTAs in force covering 59 countries and over 85 percent of the world’s GDP.
These are impressive statistics that suggest globalization is alive and well, despite years of populist efforts, on the right and the left, to derail it. Why has globalization remained so resilient?
Critiques of globalization first emerged on the political left with the Occupy Wall Street protests in the early 2010s. Then, globalization was castigated as a ploy by large corporations to increase profits by shipping production to low-wage countries at the expense of manufacturing jobs in developed countries.
By 2016, the critique had gained traction on the political right as populist politicians such as Donald Trump and Nigel Farage blamed “globalist elites” and immigrants for the plight of the working class. The populist wave pushed Brexit over the top and put Donald Trump in the White House.
Following the one-term Biden presidency, an unshackled Trump spent his first year back in the White House throwing tariff tantrums, most of which were aimed at traditional US allies, including South Korea. Trump justifies his tariffs as a tool of coercion and as a way to bring manufacturing back to the US. He also thinks that tariffs will make the country rich. However, they end up costing American consumers of imports, not the exporters abroad.
One year in, events have proved Trump wrong. Repeated bullying of traditional US allies through repeated tariff tantrums has weakened alliances that were critical to projecting US power and influence after World War II. They have not collapsed yet, but trust has been broken. In response, bullied allies have moved quickly through FTAs to reduce their reliance on the now-unreliable US. Trump claims that his actions have spurred NATO allies to increase defense spending, but Russia’s invasion of Ukraine in 2022 already prompted much of that surge.
Meanwhile, manufacturing jobs in the US have not come back. Instead, they have declined even though economic growth has been strong. Consumer spending, long the main driver of the US economy, remains strong. The AI boom has become another source of growth. Advances in AI and automation suggest that manufacturing jobs will continue to decline.
Inflation has come down since the post-COVID-19 highs, but it remains above the Federal Reserve Board’s target of 2 percent. The effects of the tariffs on inflation have been muted, but they remain inflationary.
Amid this turmoil, globalization has survived and even prospered because it provides a stable framework for economic growth. When economic actors leverage their competitive advantages through free trade, productivity and innovation drive economic growth, which lifts living standards and creates prosperity. The US knows this too, and will most likely recommit to globalization as the Trump era winds down.