Flint advises international businesses and investors on policy, politics, regulation and competition.
Flint advises international businesses and investors on policy, politics, regulation and competition.
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2025 reshaped the global trading environment. The first year of President Trump’s second term triggered the sharpest rise in US tariffs in decades, forced companies to re-price supply chains in real time, and accelerated a wider shift towards politically managed trade.
2026 will not repeat the shock of 2025, but it will consolidate it. Tariffs and other trade barriers are now politically and economically embedded; economic security will remain the organising principle of policy in the US, EU and elsewhere; and compliance obligations on cross-border businesses will intensify.
Below we list seven baseline assumptions going into 2026.
Applied US tariff levels will remain 15–20 percentage points higher than they were prior to Trump’s second term. Even if Trump’s IEEPA-based emergency tariffs are struck down by the Supreme Court, we expect them to be replaced using other legal mechanisms. However, a fragmented legal outcome could result in uneven tariff coverage, creating new opportunities for companies to argue for exemptions.
2025 saw a sharp rise in US enforcement actions against importers, increasing from 718 in 2024 to around 2,344 in 2025, according to Cato research. We expect this trend to accelerate as the US clamps down further on transhipment and on firms misdeclaring the origin or value of products to secure more favourable tariff rates. The risk of increased criminal prosecutions remains high.
The US–Mexico–Canada Agreement (USMCA) review will dominate trade-policy capacity from mid-2026. Expect US demands for tighter rules of origin, especially in autos and advanced manufacturing, and for deeper North American supply-chain integration. This will severely limit bandwidth for other case-by-case tariff negotiations, except where domestic political pressures are acute, increasing uncertainty for exporters hoping to secure better US market access terms in 2026.
Both sides are likely to try to keep the relationship stable ahead of a possible Trump state visit to Beijing in H1. Negotiations in the lead-up to the visit could deliver more trade or investment announcements, but the relationship will remain uneasy and prone to flashpoints. The Trump Administration is focused on economic competition with China, while China will continue to leverage its dominance in critical minerals and other strategic supply chains. China will adopt its 15th Five-Year Plan in March, where it is likely to double down on decoupling sensitive sectors from the global economy while simultaneously expanding manufacturing capacity for export. The structural tensions in the relationship will persist, leaving the longer-term outlook challenging.
Non-US governments want to avoid import surges triggered by US tariffs and to avoid becoming a lower-tariff backdoor into the US market. As a result, the EU, UK and ASEAN members will likely step up origin enforcement, increase supply-chain scrutiny and introduce targeted tariff measures to both prevent market diversion and comply with the supply chain security conditions of their deals with the US. Debates over aggressive EU safeguard options – such as in the steel sector – illustrate the global trend toward greater intervention to shield domestic industries from Chinese overcapacity and redirected competition. These pressures will stretch supply chains in the EU as the Carbon Border Adjustment Mechanism starts charging businesses for the embedded carbon in their imports.
Governments will seek to diversify trade relationships to offset US tariff exposure and reduce China-related risk, but progress will be selective and politically constrained, focused on supply-chain resilience rather than better market access. Many will likely take the form of sectoral agreements focused on critical minerals or digital trade.
EU: The bloc will push to conclude talks with India, Australia, Thailand and the Philippines, ratify Mercosur and Indonesia, and expand critical-minerals or “Clean Trade and Investment” partnerships. Domestic political constraints will limit outcomes.
UK: It will pursue negotiations with GCC, South Korea, Turkey and Switzerland, seek practical wins from the TCA review, and attempt a controlled China reset. Expect limited progress on new digital trade agreements with Brazil, Kenya and Thailand. Negotiating capacity remains a constraint and the UK will be increasingly at a relative competitive disadvantage as the EU advances multiple negotiations.
Indo-Pacific: CPTPP will move ahead with multiple accessions (Costa Rica, Uruguay, UAE, Philippines and Indonesia), reinforcing its role as the most active plurilateral platform.
US: Despite restricting its own market access to third countries, it will push for liberalisation of digital trade rules (including a permanent extension of the WTO’s e-commerce moratorium) and cooperate with countries on critical minerals to counter China.
Overall: Liberalisation in 2026 will be opportunistic and defensive, centred on critical minerals and industrial-policy alignment.
The UK’s desire to retain regulatory flexibilities, combined with the EU’s increasing use of sector-specific industrial-policy instruments (including emerging local-content requirements and defensive trade measures), have intensified existing disagreements on UK participation in EU defence procurement and the proposed Youth Mobility Scheme. These issues will significantly slow negotiations down. Any short-term accommodation on the 2027 rules-of-origin cliff edge for electric vehicles will likely be conditioned on explicit investment commitments and joint trade action, potentially targeting imported batteries and associated chemicals.
For business, 2026 will reward early adjustment. US tariffs and enforcement will stay high, defensive measures will spread to other major markets, and EU–UK negotiations will offer little clarity before 2027. Companies should assume rising compliance demands and redesign supply chains and pricing accordingly, rather than wait for conditions to ease.
Flint’s Trade and Market Access practice has exceptional people in London, Brussels, Amsterdam, Paris, Dublin and across Europe and the Asia-Pacific, able to help clients navigate this increasingly complex global trading environment, steer government policy, overcome regulatory and political barriers to trade, enter new markets and achieve their commercial objectives.
To find out more about how Flint can help you navigate and understand global trade policy, advise on the risks and opportunities of these developments, and support your global investments, get in touch.
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