Winners, Losers, and New Fault Lines: How Today’s Trade Policies Reshape Countries’ Prospects

Since the Second World War, global commerce moved from GATT rounds to the WTO and long supply chains. In the 2020s that arc bends back as targeted tariffs, security rules, and a border price on carbon reshape incentives. Trade is no longer a simple story of liberalisation. Current trade policies change prices, access to trade, and provoke uncertainty, implying trade benefits may transfer from some countries to others. The countries that have secure and reliable access to large markets, comply with new rules of origin and carbon reporting, and are capable of delivering goods efficiently are the winners. Countries which are not responsive to these changes will fall behind in the dynamic world.

The Global Outlook suggests that many firms pulled imports forward into 2025 to avoid higher duties, which were previously imposed. Trade volumes, thus, increased sharply in 2025. However, the trade growth rate of 2026 will only be 0.5 per cent because of higher tariffs (Financial Times, 2025a).

Establishing a pathway to large markets is a competitive advantage for countries which rely heavily on international trade. For example, there was a trade agreement established between the United Kingdom and India in 2025. Under the agreement, Spirits duties are cut in half and would continue to fall over time. Tariffs on cars move down to 10 per cent. The agreement, in fact, lowers tariffs on many goods exported to India. In a world of rising trade barriers, this agreement not only increases bilateral trade but also encourages investments, which is fundamental for economic growth (Financial Times, 2025b).

Once market access has been obtained, it’s the logistical strength that distinguishes whether a newly acquired advantage will seize a long- term market. The global soybean market is a tremendous example for such a case analysis. China, a major importer of soybeans, is shifting its imports away from the U.S. because of trade tensions and tariffs. The trade tension between China and the U.S. opens a huge market for Brazilian farmers. Brazil’s geographic advantage enables itself to become the largest producer of soybeans in the world. Brazil is gifted with vast arable land and has a favourable climate for farming along with advanced agricultural technology. When all these factors are combined with its strong logistics backbone, agriculture products could be reached to many destinations over the world. (Financial Times, 2025c; Reuters, 2025a).

To achieve their competitive advantage, Chinese firms have heavily invested and built factories in Mexico to ensure their products can reach US consumers at lower shopping and transactional costs. Shorter transport distance helps reduce carbon emissions. Cutting carbon emissions is one of the rules-of-origin requirements for USMCA Bloc memberships. To secure the long-term benefits generated by relocating firms and complying with rules-of-origin verifications, it’s essential to have a stable electricity distribution system and an efficient transportation system (Financial Times, 2024).

Compliance with regulations is another factor that determines if a country has access to trade. In 2025, a very high tariff imposed on Vietnamese goods adversely impacted this export-reliant economy. A lower tariff rate later was imposed on genuine Vietnamese exports however there were still heavy levies imposed on trans-shipped goods that failed origin tests. Relabelling was prohibited and would be penalised (Reuters, 2025b).

The European Union’s Carbon Border Adjustment Mechanism requires importers of steel, cement, aluminium, fertilisers, electricity, and hydrogen to report embedded emissions and to pay a carbon price, starting 2026 for internalizing negative externalities. All importers are required to register as authorised declarants. Exporters with cleaner power and credible measurement face fewer frictions, while those without such systems incur higher costs. Pricing carbon at the border will shift competition not only among firms but also among countries (European Commission, 2025a, 2025b).

Securing access to international markets implies stabilizing long-term demands for goods produced by exporting countries. The aim of trade agreements is to boost bilateral trade by lowering or sometimes removing trade barriers such as tariffs and other restrictions. Being capable of transporting goods efficiently and complying with standards and regulations set by trade partners all play a part in facilitating trade. All these factors explain the reason for Mexico putting much effort in attracting new energy and logistics investment, as well as the reason for Brazil having farm windfall rests on ports. Countries that delay improving infrastructure and are unable to meet or satisfy these criteria will face significant challenges in 2026.

What should countries do now? In practice, countries should respond according to their financial position and trading scenario. Rich economies should avoid big, sudden tariff hikes, since these raise prices and make firms delay investment. When trade protection is needed, it should be moderate and temporary. Consistent rules and clean power incentivize factories to invest and expand. For exporters in developing economies, they should firstly secure market access through reliable trade deals or by joining a bloc. Secondly, they should increase capacity in ports, power, and cold storage so orders can be efficiently delivered. Thirdly, it is essential to ensure compliance by tracking inputs to meet rules of trade partners and setting up emissions data to satisfy the EU’s border carbon rules.

Countries that secure access to trade and are able to deliver goods efficiently and to comply with regulations set by their trade partners will retain and capture larger shares of the international market in a more challenging world. Countries which fail to achieve these will anticipate rising costs, fading preferences, and a closed door of international trade. Global trade held up in 2025 because demand was brought forward, but the same process points to weaker growth in 2026 if barriers remain. The new fault lines are clear; what happens next depends on how quickly and effectively that the States will act on this three-part agenda. The implementation of trade policies should not be a zero-sum game. The policies, in fact, should aim to make the world a better place to live.

References

World Trade Organization. (7 Oct 2025). AI goods and front-loading lift 2025 trade; 2026 slows to 0.5%. World Trade Organization

Reuters. (6 May 2025). What’s in the UK–India trade deal? (tariff cuts and scope). Reuters

FT analysis (interactive). (15 Dec 2024). How China is setting up shop in Mexico (near-shoring and USMCA context). ig.ft.com

FT report. (26 Sep 2025). US soyabean farmers squeezed as China blocks imports and stockpiles rise. Financial Times

Reuters. (20 Oct 2025). China imports no US soybeans in September for first time in seven years. Reuters

European Commission, DG TAXUD. (21 Oct 2025 update). Carbon Border Adjustment Mechanism (CBAM): definitive period starts 1 January 2026; authorised declarants. Taxation and Customs Union

Reuters. (2 & 10 Jul 2025). US–Vietnam tariff deal: base 20% with 40% on trans-shipments; Vietnam tightens origin enforcement. Reuters+1