How Trump's tariffs are reshaping global trade at Davos

President Donald Trump's use of tariffs as a foreign policy tool added fresh impetus in Davos this week to efforts to boost global trade beyond the U.S., with frustration palpable among many of Washington's top trading partners.

Tariffs roared back into focus when Trump last weekend threatened new tariffs on European allies opposing his designs on Greenland, before stepping back from them on Wednesday after announcing a deal framework with NATO over the Arctic island.

"It's the speed, scale, and scope of change that is really rattling the world," Canadian Finance Minister François-Philippe Champagne said during a panel discussion on tariffs at the World Economic Forum's annual meeting in the Swiss mountain resort.

The WEF is meeting in Davos for the first time since Trump last year hiked U.S. tariffs to their highest level in nearly a century, sending countries scrambling to pick up the slack by trading more with each other.

Trump, who says his policies are bringing back jobs to the United States, spurring trillions of dollars in investment and firing up growth, is ever present in WEF debates over how to temper exposure to the U.S., which studies forecast will play a lesser role in overall global trade than it did in the past.

Canada's Champagne said countries were diversifying their commercial relations and doing more at a regional level to make their economies more resilient to trade policy shocks."When you talk to CEOs today, what do they want?

Stability, predictability, and the rule of law. I would say it's in short supply," he said, days after Canada and China struck a deal to slash tariffs on electric vehicles and canola.

Hot on its heels came the signing of a free trade agreement this month between the European Union and South American bloc Mercosur after 25 years of negotiations - the EU's largest ever trade pact, if it overcomes remaining legal obstacles.

Diversification of supply chains and reducing over-dependence are backed by the World Trade Organisation, whose director-general Ngozi Okonjo-Iweala said such moves helped spread job creation and growth to other countries.

"This helps build global resilience and we are very supportive of it," she told Reuters in Davos.

Boston Consulting Group forecasts the U.S. share of global goods trade could decline from 12% to 9% in the decade through 2034, giving way to more domestic U.S. economic activity.

"Trump is sawing on the branch he's sitting on," Dirk Jandura, head of Germany's BGA exporters' association, said this week after data showed German exports to the U.S. falling by 9% during the first 11 months of 2025.

Volker Treier, foreign trade chief of the German Chambers of Industry and Commerce, said surveys showed tariffs on raw materials like steel and aluminium were making it dearer for companies to build up U.S. industrial capacity.

U.S. manufacturing activity contracted for a tenth month running in December, according to a closely watched survey, opens new tab.

"The world has become more expensive, and structurally it will get even more expensive," Treier said.

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