Trade in an Uncertain World: What Comes After the Collapse of Trust?

With the return of President Donald Trump to power, we are seeing a dramatic shift in how the world’s largest economy approaches trade — not as a vehicle for shared prosperity, but as a tool of domestic politics and short-term advantage. “America First” has taken a more protectionist turn, sending signals to allies and competitors alike that even negotiated, signed, and ratified commitments may no longer be guaranteed.

This is not without precedent. During Trump’s previous term, the United States imposed sweeping tariffs on allies, including Canada, under the guise of “national security.” It withdrew from the Trans-Pacific Partnership, blocked the functioning of the World Trade Organization Appellate Body, and put its role as a dependable and reliable partner in doubt. That trajectory is now being revived with new intensity.

The fracturing of global trade

We are entering a period unlike anything we’ve seen since the creation of the modern global trading system after the Second World War. For more than 75 years, the United States, alongside allies like Canada and other leading democracies, helped shape the institutions, norms, and rules that made global trade more open, stable, and predictable. Together, we built a system rooted in trust, transparency, and the belief that economic cooperation could promote peace and prosperity. That system allowed countries of all sizes, including Canada, to trade with confidence and predictability.

The consequences of undermining that system are immediate and far-reaching. When the United States signals its willingness to revisit or reinterpret its obligations under the US-Mexico-Canada Agreement (USMCA) — imposing new tariffs despite a signed agreement — it raises a troubling question: Can any deal with the US be counted on to last? If agreements are only reliable until the next election cycle, then the very foundation of modern trade is at risk.

The ripple effects around the globe

The erosion of trust in US trade policy has effects far beyond North America. When America destabilizes the system it once championed, the rest of the world takes note — and acts accordingly.

In Asia, countries are accelerating efforts toward regional integration. Agreements like the Regional Comprehensive Economic Partnership (RCEP), which includes China, Japan, South Korea, and the Association of Southeast Asian Nations (ASEAN) nations, are growing in importance. The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), of which Canada is a founding member, is now seen by many as the gold standard for modern trade — and a hedge against geopolitical volatility.

I saw this shift first-hand when I chaired the CPTPP Commission in 2024 and led Canada’s engagement in the Indo-Pacific. But I also saw it in Canada’s work with the European Union, in our deepening ties across Latin America and the Caribbean, and in our growing collaboration with Africa. Countries were eager to deepen ties, not just with Canada but with each other, on the basis of shared interests, stable rules, and mutual benefit. They were looking for partners who would show up, honor their commitments, and stay the course. More than that, they continue to pin their hopes for better livelihoods for their people, and recognize that more trade — built on modern and progressive rules — is key to creating jobs and opportunity.

What happens to rules-based trade?

The deeper question is what becomes of the global rules-based system itself.

Today, the WTO is struggling to remain relevant. Its Appellate Body — once the crown jewel of global trade governance — has been paralyzed for years, weakening the finality of dispute resolution. But the challenge runs deeper: the WTO has also been unable to update its rulebook to reflect the realities of the modern economy—from digital trade to curbing state-led distortions. Without credible enforcement or meaningful rule-making, we are left with a world of ad hoc retaliation where the most powerful often prevail and smaller economies are left vulnerable.

This is dangerous.

Without rules, trade becomes a matter of power. And power, unchecked, leads to instability. We are already seeing this play out with tariffs that punish rather than protect, with trade restrictions that distort rather than stabilize, and with political decisions that upend longstanding commercial relationships. The effects reach far beyond boardrooms and border crossings. They land squarely on consumers, workers, and families. Prices go up. Jobs become less secure. Small businesses face uncertainty. People lose faith that the global economy is working for them and blame – often incorrectly – trade in itself.

There is also a growing tendency to conflate national security with economic protectionism. While safeguarding critical infrastructure, sensitive proprietary technologies and essential supply chains is necessary, something Canada has done with intention, we must resist the urge to label everything a security risk. Otherwise, we risk sliding into a world where any country can justify any action, at any time, under the pretext of “protecting national interests.”

That is not a system. That is chaos.

Canada’s place in rewiring a global trade system

Driven by necessity, we’re seeing a rewiring of global trade. Countries like Canada are accelerating their own diversification strategies. Through agreements like Canada’s Comprehensive Economic and Trade Agreement (CETA) with the EU, the CPTPP with Pacific nations, and bilateral agreements with nearly all of South America and the Caribbean, Canada now has preferential access to over 65% of the global economy in more than 51 countries. Negotiations with ASEAN are well underway and Canada’s trade architecture continues to grow.

The Trudeau government played a central role in forging these global relationships, strengthening Canada’s position as a trusted and forward-looking trading partner. From concluding the CPTPP with Pacific nations and CETA with the EU, to the Canada-UK Trade Continuity Agreement post-Brexit, and the Canada-Indonesia CEPA, to deepening ties with the Indo-Pacific, Latin America, and Africa, the foundation was built deliberately and strategically.

That same approach underpins the modernization of the Canada-Ukraine Free Trade Agreement, a strategic investment in the future. When the war ends and the work of rebuilding begins, Canada will already have in place a trade framework that allows businesses and partners to contribute to Ukraine’s economic recovery in a rules-based, transparent, and mutually beneficial way.

Now, the Carney government is building on that foundation, deepening ties with the UK, Europe, Australia, and other key partners. As Canada’s Trade Minister, I led efforts to take Canadian businesses into new and dynamic markets, even as we safeguarded our vital trading relationship with the United States—Canada’s largest and most integrated economic partner. That relationship remains essential for both our country and the continent. But the reality is that the global trade system is being rewired. These shifts demand that Canadian businesses fully leverage the trade agreements negotiated on their behalf. These agreements are more than just policy achievements. They are insurance policies against an increasingly uncertain and fragmented global economy. Canada must continue expand its reach, reduce over-reliance, and anchor its future in a more diversified, resilient global network.

Two possible futures

Standing here now, I see two very different futures for global trade. And we are already moving toward one of them.

1. The fragmented world

In this scenario, the world breaks into competing blocs. Trade wars escalate. Countries retreat behind tariffs and subsidies. Developing economies are squeezed out, unable to navigate a system built on power and privilege. Critical supply chains become battlegrounds. Inflation rises. Cooperation falters.

This world is less predictable, more volatile, and more prone to conflict. It is one where even the most successful businesses struggle with uncertainty—and where the most vulnerable countries and people pay the highest price.

2. A rewired system anchored in trust

In this future, countries recognize the limits of go-it-alone politics and come together to build new coalitions based on reliability and shared goals. A revitalized WTO emerges. Agreements like CPTPP expand and deepen. Digital trade, climate-aligned supply chains, and inclusive entrepreneurship become central pillars of the system.

This is not a return to the past. It is a step toward a better globalization. One that includes more voices, distributes benefits more fairly, and restores trust not only between nations, but between governments and their people.

A final reflection: trust, once broken, is hard to rebuild

As someone who has spent years sitting at trade tables around the world, I offer this reflection: Trust is the real currency of global trade. And right now, it is being seriously devalued.

We cannot build a resilient global economy on the whims of political cycles or the threats of tariffs. We need rules that apply equally, institutions that function reliably, and partnerships that endure.

When I decided not to seek re-election and concluded my term as Canada’s longest-serving Trade Minister, I left with a deep belief in what trade can be — a force for peace, prosperity, and progress. But that only works if we choose it. If we recommit to building a system where the rules matter, where businesses can plan for the future, and where countries, regardless of size, can compete fairly.

We are not powerless in this moment. But we have to take responsibility to make this happen. The choices made in the next two to three years will shape the next generation of trade.

The landing zone is still within reach. But only if we steer toward it — together.

To read the article as it was originally published by the Hinrich Foundation, click here.