Brussels is betting on a new trading order of friendshoring and conditional openness

The post-war liberal trading system isn’t simply fraying. It is being deliberately replaced, and Brussels is doing the replacing.

In globalisation’s previous chapter, the prevailing logic was that trade should be liberalised. Goods flowed where costs were lowest, capital moved where returns were highest. The predictable, rules-based system that governed global trade is now over. 

Trade is now increasingly an instrument of statecraft, with export controls, sanctions and tariffs used for a variety of objectives. The European Union (EU) sits at the centre of geopolitical and trade dynamics as it deals with an unreliable US administration. 

At the same time, in globalisation’s newest chapter, the EU is attempting to craft a new trade order with like-minded partners.  

EU-US trade relations are set to deteriorate further

The latest collapse of EU-US trade talks underlines just how dramatically the global trade landscape has shifted. The European Parliament voted in late March to advance a revised version of the framework deal agreed in July 2025, one that would see the EU accept a 15% blanket tariff and lower tariffs to zero on a range of American imports. 

The EU trade commissioner, Maroš Šefčovič, also visited the US in late April and signalled that the EU could implement its side of the deal by June if talks went well. 

This all changed in early May as US President Donald Trump threatened 25% tariffs on European cars and trucks. Trump accused the EU of not fully complying with the trade deal agreed last year, placing increasing uncertainty back into the trade relationship. 

Ongoing trade uncertainty, combined with US threats over potential digital services taxes in Europe, will constrain investment and business sentiment in 2026 – at a time when growth is weakened by the conflict in the Middle East and the subsequent energy price shock. 

For the EU, this is the latest sign that the US is no longer a reliable trade partner. Brussels, in response, is now building a new way of navigating global trade; with implications beyond the transatlantic relationship.

Friendshoring first

The centrepiece of the EU’s response to today’s trading system is diversification. Europe is expanding trade ties with both new and existing partners, reflecting a broader strategic shift. 

Recent trade deals with Mercosur, India, and Australia show Brussels’ determination to build a rules-based trading system, focused on deepening ties with like-minded countries. 

The proposed Industrial Accelerator Act (IAA), a broad legislative programme intended to strengthen Europe’s industrial base and speed EU countries’ green transitions, would mark a significant shift. It would build preferential treatment for trade agreement partners. Its guiding principle is friendshoring: aligning supply chains and investment with trusted geopolitical partners. 

The IAA’s most consequential provisions concern local-content rules. Under Chapter 3, goods from countries with free trade agreements (FTAs) with the EU, or those that participate in existing origin-cumulation frameworks, would count as having ‘union origin’. 

In effect, goods from partner countries would be treated as European for the purposes of procurement and industrial policy; goods from non-partners would not. This may sound ‘just’ technical. In fact, it would fundamentally redefine what it means to stand inside or outside Europe’s economic sphere. 

The IAA also tightens conditions on foreign direct investment. For projects worth more than €100 illion in strategic sectors, such as electric vehicles, solar panels, batteries, and critical raw materials, investors from countries that account for over 40% of global production would have to meet at least four of six conditions. 

These include joint ventures with EU firms, the sharing of intellectual property, and commitments to local research and development. The aim is not to exclude foreign capital, but to ensure it operates on European terms. Countries with existing trade agreements would be exempt. 

Selectively protectionist, conditionally open

Brussels is accelerating negotiations with like-minded partners and exploring closer ties with Canada, in line with Mark Carney’s “middle-powers” strategy. 

If enacted, the IAA would make the benefits of trade-agreement status increasingly tangible: lower barriers, better procurement access, and greater freedom for investment. For mid-sized economies, the incentive to align with the EU would become harder to ignore.

This is not the open-market idealism of globalisation’s previous chapter. It is something more pragmatic: a system built on shared rules, trusted partners, and the credible threat of exclusion for those that do not follow them.

The IAA’s flexibility clauses are important here. Even countries with trade agreements could lose ‘union origin’ status if they fail to grant equal treatment to EU goods, or if Brussels judges their dependence on them to pose a supply chain risk. 

The EU recognises the fragility of alliances and is building safeguards into the system accordingly. The IAA, therefore, amounts to a blend of protectionism and selective openness towards preferred partners.

The stakes beyond Brussels

None of this is happening in isolation. The weaponisation of trade and economic interdependence has made the old rules-based order increasingly untenable.

The world is not dividing into neat blocs; the reality is messier and more expensive. Instead, it is fragmenting along lines of trust and political alignment, and those divisions are hardening. 

Companies that treat this as a temporary disruption rather than a structural shift risk being caught out.

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What Brussels is constructing is less Fortress Europe’ – where EU policies focus on strict border controls and self-containment – and more a preferential network: open to those that accept its rules, increasingly costly for those that do not. 

The post-war liberal order rested on the premise that openness benefited everyone. The emerging order rests on a different assumption: one that champions that trust must be earned, and that alignment brings advantages. 

The EU has decided it wants to shape those rules, rather than merely follow them.