LONDON — Britain has confirmed plans to join an international trade dispute system — a move that risks riling up its U.S. allies, while bringing Britain closer to the EU. Ministers announced on Wednesday night that the U.K. would sign up to the World Trade Organization’s Multi-Party Interim Appeal Arbitration Arrangement (MPIA). The mechanism was set up in 2019 as an alternative to the WTO’s appeals court, the Appellate Body, which has been paralyzed since the United States blocked new judicial appointments. The dispute system includes 27 WTO members, including the EU, Canada, Australia and China — but notably not the U.S. In a release touting its new Trade Strategy, due Thursday, the U.K. government said joining the MPIA was a demonstration of its commitment to an “effective rules-based international trading system.” The move is likely to go down a treat with the EU, a key proponent of the mechanism. But the news may not be received so well by the Trump administration “Brussels will be happy to see that the U.K. is joining the MPIA — many see this as long overdue,” Emily Lydgate, co-director of the UK Trade Policy Observatory at the University of Sussex Law School told POLITICO. “China is also a party to MPIA, so the U.K. is continuing to walk a tricky line between making trade deals with Washington D.C. and working constructively with other important trade partners.” CHANGE IN TONE The U.K.’s decision to join the MPIA marks a change in tone from its previous stance on the WTO trade dispute system, which was in line with the U.S. position, said Lorand Bartels, a professor of international law at the University of Cambridge.  “The U.K. used to say that the reason it was not joining [the MPIA] was that it wanted to focus on durable reform of the WTO dispute settlement system,” he said. “This was also the stated view of the U.S. and it seems plausible that the U.K. was aligning with the U.S. on this issue not only out of conviction but also to maintain the relationship.” Bartels said it was not clear if the move would affect the U.S. relationship. “It is possible that the U.S. is less concerned now about the MPIA than it was,” he said. “But even if this is not the case, the U.K. must now have decided that trade relations with the U.S. are sufficiently stable for it to be able to sign up to the MPIA anyway.” “There is an alternative explanation,” Bartels added, “which is that this was a ‘reset’ deal-breaker for the EU, and the U.K. chose the EU over the U.S. But that seems less likely.” PRIORITIES ELSEWHERE But Simon Lester, President of WorldTradeLaw.net and a fellow at the Baker Institute, cautioned against reading too much into the U.K.’s decision, which he describes as a “commonsense way forward so that it can take full advantage of WTO dispute settlement.” “It is possible that some people in Brussels and Washington may try to read into it a broader statement related to U.K. alliances and alignment,” he added. “I think it is probably a mistake to view it this way, though, as the impact of the U.K.’s decision to join the MPIA is fairly narrow, and is much more limited than, say, the substantive trade deal that the U.K. government recently signed with the Trump administration.” A senior consultant familiar with the Office of the United States Trade Representative’s stance on WTO matters said: “Their position is that they’re immune to pressure at the moment on restoring the appellate body. Until China, the EU and India come forward with meaningful WTO reform, proposals are not going to move.” The consultant, who was granted anonymity to speak freely, added: “While they won’t love the U.K. announcement, they’ve got bigger issues on their plate — not least all the bilateral deals which are meant to be done in the next two weeks.”

BERLIN — Donald Trump makes light of trade wars, claiming they are easy to win. We’re about to find out if he’s right. The U.S. president has imposed tariffs of 10 percent on China from Tuesday, while Mexico and Canada won last-minute stays of execution on 25 percent tariffs. He’s also threatening to hit the European Union — a major exporter of cars, medicines and food to the United States. Trump says he wants to use the tariff weapon to halt the flow of fentanyl and illegal migrants across the northern and southern borders of the United States. To do so he has invoked emergency powers — even though the U.S. economy is growing strongly and is at full employment. He also wants to close the $1 trillion U.S. trade deficit with the rest of the world. Team Trump argues that throwing up a tariff wall will force companies to move investment and jobs back to the U.S. — think of all those silicon chips now made in Taiwan or iPhones made in China. But critics warn that Trump’s trade war will result in higher prices, lower growth, lost jobs and disrupted supply chains — both at home and abroad. They also argue that tariffs are the wrong tool to fix a trade deficit caused by America’s borrowing and consumption habits. Here’s what Trump’s trade war is all about: WHAT’S A TRADE WAR? First up, a trade war isn’t an actual war: It’s a conflict that results when one side feels that a trading relationship is unfair. Let’s say you flood my market with cheap steel, at prices below the cost of production. Companies in my country are going to the wall. They are laying off workers. My voters. That’s dumping and, under the rules of global trade, I can retaliate by imposing tariffs on your steel. For a trade conflict like this to turn into a trade war, things need to escalate. And that’s what is happening here: Trump is still threatening to hit America’s closest trading partners with tariffs on pretty much everything. That means we could be about to embark on the biggest trade war since the 1930s. HOW DO TARIFFS WORK? Trump claims that his new tariffs will make Americans rich — he’s even promised to set up a new External Revenue Service to collect all the revenues that they throw off. He also says foreign companies will pay them and that they won’t hurt U.S. consumers. That’s not how they work, however. Tariffs are a tax that is paid by the importer at the border. If they go up, the importer faces a choice — to pass on the price increase to the consumer, or to accept a squeeze on their profit margins. Price increases from Trump’s across-the-board tariffs would show up immediately in consumer inflation, economists say. And although he has promised to offset their impact with tax cuts elsewhere, there is no sign of that happening yet. As for the potential revenue from tariffs, Trump likes to hark back to the late 19th century, when tariffs accounted for over half of U.S. federal revenues. But that was before income tax — which today supports a government much larger in relation to the overall economy. There is just no way that tariff revenues can pay for a modern state. WHEN WAS THE LAST TRADE WAR? In Trump’s first term. He imposed 25 percent duties on steel and 10 percent on aluminum in 2018 — while the European Union responded by slapping $6 billion in tariffs on Harley Davidson motorbikes, Levi’s jeans and bourbon. Trump threatened to escalate by hitting imports of European cars — but it never came to that. Eventually, the tariffs were suspended by both sides. The EU truce expires at the end of March, meaning that even if Trump doesn’t hit Europe with tariffs now, their trade dispute could still get out of hand. The clearest precedent is likely the so-called Nixon shock of 1971. The starting point was comparable to today: The costs of the Vietnam War and of the Great Society policies of the 1960s had tipped the United States from surplus into deficit. In an attempt to restore the balance, President Richard Nixon abolished the gold standard — forcing the trading partners of the U.S. to revalue their currencies. He ordered a 90-day freeze on wages and prices. And he imposed a 10 percent import tax. Nixon’s actions are considered to have been a political success but an economic failure. The import tax was scrapped within months. And the U.S. economy struggled for years with stagflation — a combination of low growth and high inflation — that was only squeezed out of the system in the 1980s by Federal Reserve Chair Paul Volcker’s tough monetary policies. WHO IS THE REAL ENEMY? China. Although Trump has only threatened to hit China with tariffs of 10 percent, the tariffs still hanging over Canada and Mexico are indirectly aimed at Beijing. That’s because, under the USMCA trade accord (the successor to NAFTA), Chinese companies — e.g. makers of electric vehicles — would normally enjoy duty-free access to the U.S. market if they locate production in North America. In recent years there has been bipartisan consensus in Washington on the need to fight back against China and its economic model, which has created vast industrial overcapacity and has flooded world markets with surplus production. Since taking office, however, Trump has dialed back the rhetoric, saying he just wants a “fair” trading relationship with China. One thing to watch: Will Trump drop the tariffs against America’s allies if they agree to align with the United States in shutting out China? That’s one straw the European Union is clutching at in the hope of keeping the transatlantic peace. HOW FAR CAN THIS ESCALATE? Trump, in his second incarnation as U.S. president, has shown no inhibitions in questioning the territorial integrity of other nations — jibing that Canada should become the 51st U.S. state or staking a claim to Greenland, a protectorate of EU member Denmark. A greater concern is that, in playing fast and loose with international law, Trump is playing into the hands of leaders — like Russia’s Vladimir Putin — who want to overturn the status quo. In a world where multiple fires are burning, Trump is liberally splashing gasoline and tossing matches to start new ones. CAN EUROPE ESCAPE TRUMP’S WRATH? The U.S. president has been amping up his rhetoric, on Sunday night calling the EU an “atrocity.” Brussels is desperate to engage, offering to buy more U.S. liquefied natural gas or weapons as Trump presses European governments to spend more on defense. Last time, Brussels answered Trump’s steel and aluminum tariffs by retaliating against motorbikes, jeans and bourbon — measures targeted to cause maximum pain in Republican strongholds.  The EU could do the same again — or wield its trade “bazooka,” the anti-coercion instrument, which would put retaliation on a stronger legal footing. Experts worry, though, that the anti-coercion instrument may be too slow, because it foresees a period of consultation before action. The EU needs a new, bigger bazooka that can be fired in real time, they argue. CAN TRUMP BE STOPPED? Trump is, for the first time, invoking emergency powers under the 1977 International Emergency Economic Powers Act (IEEPA), so far only used by Joe Biden to impose sanctions against Russia over Putin’s war against Ukraine.  The IEEPA hasn’t yet been used to justify tariffs — and it’s possible that business groups which suffer financial injury as a result will take legal action. It’s unlikely, however, that a judge would issue an immediate injunction against the tariffs. Any litigation would likely be drawn out. The U.S. Congress might also have the power to halt Trump’s trade war. On top of the doubtful justification that fentanyl and illegal immigration represent an economic emergency, the legislature has also delegated broad responsibility for trade policy to the president — it first did so to Franklin D. Roosevelt back in 1934 — and can take it back. But with both the Senate and the House of Representatives under Republican control, a major rift would have to open up on trade to stop him in his tracks. And that looks unlikely right now. Then there’s the World Trade Organization — a global body created 30 years ago to act as an umpire in trade disputes. It’s currently unable to fulfil that role, however, after both Trump and Biden blocked the appointment of judges to its Appellate Body, or highest court of appeal. THE BOTTOM LINE For Trump there are no rules. It’s the law of the jungle out there. So unless there is a strong political or judicial backlash in the United States against his trade war, he will be hard to stop.  Then again, he might just do a deal. This story has been updated.

Countries around the world are nervously waiting to see if — and how — Donald Trump follows through on his drastic tariff threats after he’s sworn in as U.S. president on Monday.  If Trump does all he’s said he’ll do, he could saddle U.S. firms with an estimated $640 billion in import costs and drive up domestic inflation, as his promised 60 percent tariffs on goods from China, 25 percent on Canada and Mexico, and universal flat tariffs of up to 20 percent on other nations bite. Unlike in 2017, when many governments were blindsided by Trump’s aggressive trade actions, leaders in Ottawa, Brussels and Beijing have been hunkering down and wargaming how to fend off the economic shockwave that the heavy duties on U.S. rivals and allies alike would send rippling around the globe. They’re also drawing up plans to retaliate or give Trump a sweetheart deal to make them go away. -------------------------------------------------------------------------------- CANADA MEXICO CHINA EU U.K. LATIN AMERICA MITIGATION OPTIONS -------------------------------------------------------------------------------- NORTH AMERICA CANADA — Sue Allan TRUMP’S THREATS Trump has vowed that slapping Canada with 25 percent tariffs will be a first-day priority. “As one of my many first Executive Orders, I will sign all necessary documents to charge Mexico and Canada a 25% Tariff on ALL products coming into the United States, and its ridiculous Open Borders,” he announced on Truth Social in November.  THE RETALIATION PLAYBOOK The threats have consumed Ottawa, which is saying a lot in a town turned upside down by news that Prime Minister Justin Trudeau is ready to resign as soon as his Liberal Party can find his replacement.  Despite his self-inflicted lame-duck status, Trudeau is using time on U.S. networks to warn Canada’s neighbors that their pocketbooks are at risk of becoming collateral damage in Trump’s trade war. “Anything an American president does to hurt the Canadian economy will also hurt American consumers and American workers and American growth,” he told CNN’s Jake Tapper. Ottawa has a set of retaliatory measures set to drop on Monday if Trump takes action. There is talk of Canada leveraging energy exports in its retaliatory response. “Everything is on the table,” the prime minister said after gathering with his provincial counterparts in Ottawa. The prime minister likes to point out that Canada is the top export partner to about 35 states. “Anything that thickens the border between us ends up costing American citizens and American jobs,” he said earlier this month. At the outset of 2024, Trudeau enlisted Canada’s U.S. ambassador and top ministers to travel across the U.S. meeting with lawmakers, governors and business leaders in a bid to “Trump-proof” the bilateral relationship. They tracked their outreach on spreadsheets — West Virginia, South Carolina, Texas, Arizona and beyond — and insisted they were ready for battle.  HOW WILL IT PLAY OUT?  Trudeau insists that Trump is using threats to annex Canada to distract from any conversation about his tariffs. Canada’s provincial leaders have also rallied in response to Trump — though admittedly not always together. Ontario Premier Doug Ford showed up on Fox News to announce that Canada is not for sale. Alberta Premier Danielle Smith recently found her way to Mar-a-Lago where she says she had a constructive conversation with Trump. “I emphasized the mutual importance of the U.S.-Canadian energy relationship, and specifically, how hundreds of thousands of American jobs are supported by energy exports from Alberta,” she said in a statement. Smith does not want Alberta oil and gas included in Canada’s retaliation measures. All of Canada’s provincial leaders are expected to descend on Washington on Feb. 12 for a full-court press. back to Top MEXICO — Ari Hawkins and Doug Palmer TRUMP’S THREATS Donald Trump has focused his tariff threats in particular on Mexico and threatened to impose a 25 percent tariff on the country as well as Canada if the United States’ two North American neighbors fail to crack down on irregular migration and the flow of fentanyl from their countries.  Trump has also complained repeatedly about auto imports, accusing Mexico of being a back door for China, and floated 200 percent tariffs or higher on vehicles from south of the border. THE RETALIATION PLAYBOOK Newly-elected Mexican President Claudia Sheinbaum has sharply pushed back on the president-elect’s threats and vowed to retaliate in a letter she sent to Trump in November, which underscored the potential economic consequences for both countries.  “For every tariff, there will be a response in kind,” Sheinbaum wrote. Mexican officials are eyeing the agricultural sector for potential retaliation — and are planning a range of responses based on whether or not the Trump administration follows through on his most aggressive proposals.  Mexican officials tell POLITICO that, despite the back-and-forth, they are cautiously optimistic that Sheinbaum’s defiant response to Trump’s threats could garner his respect, and help facilitate the type of (at times) warm relationship Trump shared with former President Andrés Manuel López Obrador. But the Mexican government has more recently tried to present itself as committed to combating illegal drug trafficking and has implemented crackdowns after Trump’s threat. It also says it has taken steps to curb irregular migration and wants to work with the United States to diversify supply chains in both countries out of China.  HOW WILL IT PLAY OUT?  Sheinbaum has spoken to Trump at least twice since the election to stress the value of collaboration on trade concerns.  Economy Minister Marcelo Ebrard has expressed confidence that Mexico will find a solution that persuades Trump not to follow through on his threat. Ebrard noted that Trump threatened similar tariffs during his first term but did not impose them after announcing that Mexico had taken sufficient action to address his concerns. The U.S. trade deficit with Mexico has skyrocketed in recent years, underscoring the economic risks to both countries from a trade war. Trade data released in February will most likely show it reached a record level of around $170 billion, despite Trump negotiating a new trade agreement during his first term to replace the decades-old North American Free Trade Agreement. It has also, however, drawn the scrutiny of U.S. politicians, particularly Trump, who believes trade deficits are a sign of economic weakness. And it will raise the pressure on Mexico in the upcoming year six review of the U.S.-Mexico-Canada Agreement to agree to a number of new U.S. demands. Those could include new limits on Chinese investment in Mexico, particularly in key sectors like autos.  back to Top CHINA — Phelim Kine TRUMP’S THREATS Trump has repeatedly floated a tariff of 60 percent — and possibly even higher — on all Chinese goods imported into the United States, telling Fox News host Maria Bartiromo last year, “I’m not looking to hurt China. I want to get along with China, but they’ve really taken advantage of our country.” The president-elect also said in an October interview with the Wall Street Journal that if China invaded Taiwan, “I’m going to tax you at 150 percent to 200 percent.”  And in a post-election post on Truth Social, he warned he would raise tariffs on Chinese imports by 10 percent until Beijing stopped the flow of Chinese-produced fentanyl into the U.S.  Trump’s campaign platform, meanwhile, states he would revoke China’s “most favored nation” trade status — a move that would open the door to tariffs of up to 100 percent. THE RETALIATION PLAYBOOK Unlike with Mexico and Canada, there has been far less public trade diplomacy between Trump and Chinese leaders, although the president-elect had a “very good call” with President Xi Jinping on Friday, he said in a post on Truth Social, that included talk of “balancing trade, fentanyl and TikTok and many other subjects.” The Chinese government has been cagey about how it will respond if Trump follows through on his steep tariff threats. China “will firmly safeguard its sovereignty, security and development interests,” if Trump violates international trade rules, Chinese embassy spokesperson Liu Pengyu told POLITICO last week.  That may mean a replay of China’s response to tariffs that the first Trump administration imposed on Chinese imports in 2018 — a round of retaliatory tariffs targeting the U.S. agricultural sector that cost it $10 billion in lost export revenue. That ultimately prompted negotiations which led to the 2020 signing of the U.S. China Phase One trade deal, which Trump then hailed “a momentous step … toward a future of fair and reciprocal trade.” Beijing has, however, failed to deliver on key commitments, including buying U.S. goods and services, regulatory changes to speed imports of genetically modified agricultural products, and patent approval for U.S. pharmaceutical products. HOW WILL IT PLAY OUT?  Beijing’s response may hinge on the degree to which it feels “singled out” for trade punishment, said Greta Peich, the former general counsel of the Office of the United States Trade Representative. “China is less likely to be aggressive if [Trump’s] trade action is impacting all trade,” Peisch added. Beijing likely wants to avoid an escalatory trade war as it tries to maximize exports to stimulate its sputtering economy.  That may tempt Beijing to respond by “impeding the Chinese operations of some U.S. companies,” rather than tit-for-tat tariffs, said Peter Harrell, former senior director for international economics in the Biden administration.   Beijing may even try to stop a new trade war before it starts by “preemptively making an offer to Trump of a deal to avoid new tariffs … or putting a trade offer on the table early to try to head off an escalation,” Harrell added.  back to Top EUROPE EUROPEAN UNION — Camille Gijs TRUMP’S THREATS Trump has vented his fury at the European Union for not buying enough American autos or farm produce and is said to be “obsessed” by the number of German cars on the streets of Manhattan. But, since his Nov. 5 election triumph, he hasn’t directly threatened anything beyond universal tariffs. What he has done is stake a stunning claim to Greenland, coveting the Danish protectorate’s mineral riches and seeking to project power northward as the melting Arctic ice opens up new trade routes. THE RETALIATION PLAYBOOK Trade tensions between Washington and Brussels run deep, with the two sides unable to take advantage of friendlier ties under Joe Biden to resolve a festering dispute over U.S. steel and aluminum tariffs. A truce on the EU’s own retaliatory tariffs will lapse at the end of March — and Brussels hopes that will force Trump back to the negotiating table.  Ursula von der Leyen, the president of the EU executive, has already proposed buying more U.S. liquefied natural gas to even out the trade balance. But, in case things get nasty, the EU can resort to its growing arsenal of trade defense tools. Aside from classic subsidy and dumping investigations, its anti-coercion instrument — developed in response to a first-term trade fight with Trump — empowers the bloc to impose export controls or duties. This trade “bazooka” could be used in response to any threat by Trump to trigger tariffs if, for instance, the EU declines to join the U.S. in putting up trade barriers against China. Another option is for the EU to impose similar tariffs to the ones imposed by Trump on goods it doesn’t depend on, such as Harley-Davidson motorbikes, Jack Daniel’s bourbon or Levi’s jeans. “Let’s not be naive,” former European Commission official Ignacio García Bercero told POLITICO. “Because if the negotiations fail and if the United States feels that we don’t have a credible retaliation option, then we are not going to go anywhere.” In the meantime, the EU is pushing to diversify its trading relationships, overhauling its existing accord with Mexico on Friday to expand opportunities in services, strengthen supply chains and bolster investment protections. That follows a long-awaited trade accord with the Mercosur bloc of South American nations sealed in December.  HOW WILL IT PLAY OUT?  The EU’s biggest countries — Germany, France, Italy and Ireland — might be at greater risk of incurring Trump’s wrath as they have wide trade surpluses with the United States.  Never a fan of Brussels, Trump is expected to prefer dealing with countries bilaterally, and that could put fragile EU unity to the test. Recent visits by Italy’s Giorgia Meloni and Hungary’s Viktor Orban to Mar-a-Lago show that several countries are already trying to  curry favor with Trump directly — and dodge his tariff onslaught. Brussels finds itself in a dilemma over whether to align with Washington and resist China’s $1 trillion export overhang. If it does, its approach would diverge from that of the U.S., according to García Bercero, now at the Bruegel think tank: “If there’s a willingness to align more closely on how to deal with Chinese overcapacity, each side will be doing it its own way. In the EU, we will mostly focus on trade defense, including more safeguards.” back to Top UK — Graham Lanktree and Sophie Inge TRUMP’S THREATS Trump hasn’t threatened the U.K. specifically like he has China, Canada and Mexico. Still, an economic hit to those nations would be felt in London, with tariffs on Beijing contributing to a shift in supply chains forecast to slow U.K. trade with its sixth largest economic partner long-term.  THE RETALIATION PLAYBOOK Whitehall officials are desperate to avoid getting in the middle of an escalating tariff war between the U.S. and China but will have to rely more on diplomacy than economic might post-Brexit to avoid being caught in the crossfire. Nevertheless, the Labour government has dipped into the U.K.’s retaliation playbook from the first Trump administration and could immediately strike back with duties on those familiar targets: Harleys, Jack Daniel’s and Levi’s. Carrots to sweeten a deal for the U.K. to avoid duties are more useful, trade experts say, like aligning with the U.S. on its hefty duties against Beijing by opening an investigation into state subsidies for China’s electric vehicle industry and buying more American oil and gas. HOW WILL IT PLAY OUT?  British Prime Minister Keir Starmer wants talks for a U.K.-U.S. trade deal with Trump’s team to get going in the weeks ahead, he told POLITICO in an interview Thursday. The PM and Trump have already discussed meeting in the U.S. next month. “I have been clear that we would like to have discussions about a trade deal with the U.S.,” Starmer said. Ministers are reportedly now increasingly confident that Trump won’t immediately slap tariffs on U.K. exports. But worries linger: “Any G7 trade minister like myself would be concerned about the talk of tariffs,” U.K. Business and Trade Secretary Jonathan Reynolds told POLITICO last November. While he’s likely to go after other countries first, British ministers are still preparing for the worst, with one senior trade official pointing out that “there is some low-hanging fruit that we might be vulnerable to.” They wouldn’t get into specifics, but the U.K.’s automotive and pharmaceutical sectors are often brought up by trade experts as pressure points with supply chains in China. Negotiating a U.K.-U.S. trade deal with Trump would still see Labour draw red lines on food standards, but No. 10 says Starmer has spoken at Cabinet about “his determination to pursue a partnership with the US for the 21st century, which would protect security, advance our economic growth and leverage the opportunity of new technologies.” That sounds a lot like he has a security and tech pact in mind. back to Top LATIN AMERICA — Jakob Weizman TRUMP’S THREATS Like Europe, Latin America has painful memories of a dispute over the steel and aluminum duties Trump imposed in his first term. But, with the U.S. enjoying a trade surplus with South and Central America, the main concern there is that Trump’s punitive tariffs against Beijing could unleash a flood of redirected Chinese exports.  THE RETALIATION PLAYBOOK South America lacks the depth of trade cooperation that — still — exists between the U.S., Canada and Mexico in their common free-trade area, or in the European Union for that matter. And, whereas Argentina’s right-wing populist President Javier Milei was the first foreign leader to pay homage to Trump at Mar-a-Lago on his election victory, Luiz Inácio Lula da Silva’s Brazil has fought running legal battles with Trump crony Elon Musk and his X social media platform. Both are members of the Mercosur trade bloc, which includes Paraguay and Uruguay, and which finally sealed a trade deal with the European Union in December after 25 years of trying. Importantly, that deal put up some preemptive protection against a potential flood of Chinese electric vehicle imports by establishing safeguards — effectively a trigger to impose higher tariffs once a critical import threshold is hit. Yet a lack of unity among the bloc’s members might make it difficult to maintain a common front in the face of trade stress with the U.S. and any further expansion into the region by China, which is already investing in local EV production. That’s especially so with Brazil dominating Mercosur and having a seat at the table in the BRICS emerging markets forum. HOW WILL IT PLAY OUT?  Trump’s attempt to contain China’s international expansion may come up short, and it’s likely that Latin America will end up being more of a bone of contention between Brussels and Beijing. The region’s raw materials and rising integration into global trade networks make it a geopolitical battleground, with China holding the high cards and Europe held back by its restrictive rules of engagement and a lack of enthusiasm to do deals. Regarding freer trade with the EU: “The real concern is that it might foster a much stronger relationship between the EU and Brazil rather than between the EU and Mercosur as a whole,” says Argentinian economist Riccardo Carciofi, cautioning that this could spill over into further national discrepancies in bargaining power towards other trade partners.  back to Top MITIGATION OPTIONS Aside from trade retaliation, countries and regions have other options to try and mitigate Trump’s trade onslaught: They can do trade deals with each other, for example, or agree workarounds at the World Trade Organization to uphold the established rules of international trade — even if the U.S. no longer wants to. For the EU and Latin America, ratifying the Mercosur deal would open up important export markets. But with France leading a rearguard action to kill the pact, that is by no means a slam dunk — and China in any case knocked Europe off the top spot as Mercosur’s top trading partner years ago. The U.K., meanwhile, recently joined the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a 12-nation group that includes Canada and Japan. Work is under way to set up a new CPTPP secretariat to coordinate on Trump’s trade threats. The U.K. and EU also want to ramp up trade talks with India — although deals look challenging. As well as refreshing its Mexico deal, Brussels wants to talk to Indonesia and Malaysia too. The U.K. has committed to resetting relations with the EU after a long post-Brexit stalemate, including plans for a veterinary agreement to smooth the flow of trade. Ministers have also hinted at closer alignment on chemicals and mutual recognition of qualifications. While potentially beneficial for U.K.-EU trade, closer alignment with EU rules could undermine the U.K.’s negotiating leverage in any trade talks with the U.S. As countries seek to parry Trump’s trade thrusts, dispute filings are sure to pile up — and get stuck — at the WTO. Its highest appeals court, the Appellate Body, has been out of action since the first Trump administration blocked judicial appointments. Now, after years of talks on reforming the court, Trump’s return is likely to again stall progress. Countries that still want to play by the rules have, meanwhile, created their own backup dispute panel. Taken together, the mitigation strategies might offer marginal relief — but would be nowhere near sufficient offset the hit to trade, growth and prices of a full-scale tariff war with the United States. That leaves those on the receiving end of Trump’s tariff onslaught hoping that his strategy might end up looking something like theirs: Escalate to de-escalate. back to Top -------------------------------------------------------------------------------- Sue Allan reported from Ottawa, Ari Hawkins, Doug Palmer and Phelim Kine from Washington, Camille Gijs and Jakob Weizman from Brussels, and Graham Lanktree and Sophie Inge from London. Graphics by Paroma Soni.

LONDON — He’s the former president notorious for his racially-charged rhetoric and a promise to impose blanket tariffs on all U.S. imports. She’s the first African woman to lead the World Trade Organization (WTO), championing causes like climate change, gender equality and development in trade. Donald Trump and Ngozi Okonjo-Iweala may stand worlds apart ideologically, but they share a common goal: both want a second term. Their paths first crossed in 2020, when Trump as president blocked Okonjo-Iweala’s appointment to the top trade job. This time around, the WTO has brought forward its election process by nearly two months from its Dec. 1 start — in a move former and current officials believe was designed to avoid any repeat obstruction from Trump should he win. The WTO strenuously denies this, saying the legitimacy of the process is “beyond question” and “fully transparent.” But the decision hasn’t gone unnoticed. Clete Willems, a former trade official under Trump, decried it as “completely politically tone deaf.” “By trying to expedite this process, you are essentially taking the position that you don’t care what the views of a potential Trump administration might be,” he told POLITICO. “You are therefore trying to undermine those views. And the reality is that, yes, the Trump administration has strong views about some of the inequities in the system.” Member countries have until Nov. 8, just three days after the U.S. election, to propose a rival. If no-one steps forward, Okonjo-Iweala will secure her second term unopposed. POLITICO spoke to current Geneva-based officials, as well as those who used to be involved in the WTO, to take stock of her record and anticipate the battle that may lie ahead. WHO WILL STEP FORWARD? So far, no challenger to Okonjo-Iweala has thrown their hat into the ring. “Even if nobody runs against her, I don’t know that you can take that as an overwhelming mandate for her,” said Deborah Elms, head of trade policy at the Hinrich Foundation.  Ngozi Okonjo-Iweala’s mandate attracts both criticism and praise. | Pool photo by Wang Zhao via AFP/Getty Images One Geneva-based official, granted anonymity to speak freely, said that when an accelerated selection process was first floated, a few members “didn’t say anything.” It wasn’t just the U.S. — India, Korea and the Gulf countries were also keeping quiet. Okonjo-Iweala’s mandate attracts both criticism and praise. She breaks the mold of previous director-generals (DGs) through her roughly 25-year experience working as a development economist at the World Bank, and has brought bold strategies to an organization often criticized as bureaucratic and slow-moving. “Very often, you think of the WTO as a sort of consensus-oriented body and the leader is there to facilitate consensus,” said SEC Newgate’s Allie Renison, a former trade adviser to the U.K. government who has known Okonjo-Iweala personally for a number of years. “She’s taken on a more direct, proactive role.” The DG frequently travels outside of Geneva to raise awareness of the WTO and engage with organizations like the climate and biodiversity COPs, and the World Bank and IMF on supply chains and climate. While some — like Peter Ungphakorn, who formerly worked in the WTO secretariat — believe Okonjo-Iweala will steer the WTO towards a more “think tank” model with “more glitz and less substance,” others — like Sidley Austin’s international trade lawyer Nicolas Lockhart — view this activism as making the organization “more relevant.” “Because members are not used to DGs being proactive — and the DG has been quite proactive — I think at times it has challenged orthodoxies,” said Lockhart, who was a former legal adviser at the WTO’s Appellate Body. NOT A TRADE PERSON Okonjo-Iweala’s previous experience in the World Bank focusing on development has, however, haunted her time as leader. It drew harsh criticism from Trump’s former trade representative, Robert Lighthizer, who later branded her “China’s ally in Geneva” in his memoir. “His stated view was that Ngozi doesn’t know the WTO and is not a trade person,” said Keith Rockwell, a former WTO spokesperson and senior research fellow at the Hinrich Foundation think tank. There are some members who “are really annoyed” about the director-general’s development focus on gender, indigenous rights, and climate, who Elms says see it as “everything except for trade.” It’s not a view limited to allies of Trump, either. Harry Broadman, a former trade official under the Clinton administration, said “Ngozi was a World Bank person, a finance minister, not a trade person.” “She’s smart, she’s very good, you know, diplomatically, but, and there are very few people who have the arcane understanding of the WTO,” he said.  Yet, her supporters like her development focus. U.K. Ambassador to Geneva Simon Manley praised her “forward-looking agenda on green digital services and inclusive trade,” emphasizing he has rarely “met somebody so committed, so hard working, so visionary, and so networked.” This year’s ministerial conference in Abu Dhabi was widely seen as disappointing, with few tangible outcomes beyond extending a digital services tax moratorium by one year. | Giuseppe Cacace/AFP via Getty Images U.K. Trade Minister Douglas Alexander, an old colleague of hers at the World Bank, emphasized “her enduring concern for the interests of the global south as well as her insights as a former finance minister.” “We see her as the right woman, in the right place, at the right time,” he told POLITICO. HER DELIVERY COULD BE BETTER  As she eyes a second term, the question remains whether Okonjo-Iweala’s tenure has produced substantive progress. Critics point to only modest achievements: a weak Covid intellectual property agreement and an incomplete fisheries deal, aimed at limiting harmful subsidies that lead to overfishing. The lack of tangible results isn’t all on Okonjo-Iweala, though, with the WTO struggling to make progress as it relies on consensus from all members. This year’s ministerial conference in Abu Dhabi was widely seen as disappointing, with few tangible outcomes beyond extending a digital services tax moratorium by one year.  A Geneva-based former official said that “they’ve heard a couple of times she’s so focused on delivering results, especially if they’re going to look good, that she’s not as thoughtful on how the WTO can best contribute to important conversations.”  Other examples included a “secretively handled” McKinsey review of the organization that never saw the light of day, and a global carbon pricing initiative presented to members without prior permission, which irritated many, said the former official. “Everybody came to the meeting with instructions to be critical in some way, and so the meeting was difficult. In fact, the proposal was creative and has merit,” they said. “It’s a good illustration of a broader dynamic where the DG’s innovative, she’s thoughtful, but sometimes people aren’t ready for that, and the ideas also weren’t delivered as effectively as they could have been.” TROUBLE AHEAD The WTO’s accelerated election process is meanwhile ruffling feathers. Norwegian Ambassador Petter Ølberg, who chairs the General Council, the WTO’s highest decision-making body, informed members he “detected convergence” to begin the process earlier. That angered U.S. officials, with a USTR spokesperson expressing concern over that “assumption of convergence rather than consensus,” which requires unanimous member agreement.  “Detecting convergence? There’s no decision taken? He decides?” said Rockwell. “This makes people think that this is an administration that doesn’t like the rules, because the rules are not being followed.”  Rockwell and other former officials believe Okonjo-Iweala orchestrated this shift, fearing that a Trump victory and Lighthizer appointment could lead to her re-election being blocked.  If Donald Trump does win, Ngozi Okonjo-Iweala could face her toughest challenge yet. | Chip Somodevilla/Getty Images Ølberg denied this, telling POLITICO it was initiated earlier than usual “at the direct request of a group of WTO members,” with the backing of “an overwhelming majority of the membership, following comprehensive consultations.” “Nominations remain open until November 8. During this period, all WTO members have the right to submit nominations, and the process will proceed fully within the bounds of established rules,” he added. The accelerated selection process follows calls from the African Group of countries at the WTO to allow more time to prepare for the next ministerial conference.  “You have these conferences every two years,” Rockwell shot back. “That’s not a reason.” He warned a Trump victory could lead to “a very tense situation” down the line.  GEOPOLITICAL FRAGMENTATION Trump’s unpredictability seriously complicates matters for the global trade body. “The WTO has far bigger problems than whether or not Ngozi gets re-elected,” said Hinrich Foundation’s Elms. “Like, the man is clearly gearing up to either demolish the whole institution or at least ignore it.”  The Trump campaign did not respond to a request for comment. If Trump does win, Okonjo-Iweala could face her toughest challenge yet. His proposal for aggressive tariffs — at least 10 percent globally and 60 percent on Chinese goods — could further fragment global trade, a trend that worries many officials. “We’ve already seen signs of trade fragmentation on geopolitical lines since the first wave of Trump,” said another Geneva-based official, also granted anonymity to speak candidly. “The movement towards fragmentation is something we are concerned about.” In the end, Okonjo-Iweala’s mission for a WTO that includes all players will face a defining test if both she and Trump secure their respective second terms.  Okonjo-Iweala often leans on anecdotes as she lays out her vision for global trade. “She likes to tell a lot of stories about Rwanda,” said SEC Newgate’s Renison, with the WTO emphasizing how individuals in a war-ravaged nation were able to build small businesses and engage with the world trade market. “I think she likes those kinds of anecdotes, because it’s trying to place the developing world as moving beyond its stereotype of being dependent on assistance and actually becoming players in their own right,” she said.  It’s a story of survival and thriving against the odds. Okonjo-Iweala will be hoping the WTO can similarly adapt in the face of massive challenges ahead. Emilio Casalicchio contributed to this report.