Europe and the trade wars

Global trade is not collapsing. It is expanding — and reorganising.

According to the latest UN Conference on Trade and Development update, world trade in goods and services is on track to exceed US $35 trillion in 2025, rising by around 7 per cent. Despite years of tariffs, sanctions and protectionist rhetoric, trade volumes have proved remarkably resilient. The trade wars did not break global commerce.

That headline resilience, however, conceals a deeper shift. Growth is no longer concentrated along the traditional North–South axis that defined the late twentieth century. Instead, momentum is moving toward intra-regional and South–South networks, with uneven outcomes among advanced economies. Trade is not retreating — it is being rerouted.

This matters because the forces driving that rerouting are political as much as economic. Instability in the United States — expressed through sanctions, export controls, extraterritorial regulation and abrupt policy shifts — has injected persistent uncertainty into global value chains. Firms and governments are not abandoning trade with the US, but they are actively reducing exposure to it. The assumption that America will anchor the global economic system in a predictable, benign way no longer holds.

At the same time, dependence on China for critical inputs has become a strategic liability, particularly in areas such as batteries, semiconductors and advanced manufacturing. What is emerging is not deglobalisation, but a search for alternative routes through the global economy.

The question is no longer whether value chains will move, but where they will land.

Europe is already feeling the consequences. As the Economist recently noted, President Emmanuel Macron’s declaration of a “European state of emergency” reflects not crisis theatrics, but recognition that Europe is being squeezed by forces it does not control: US trade volatility on one side, strategic dependence on China on the other. What is emerging is not deglobalisation, but a search for alternative routes through the global economy.

Trade resilience, supply-chain rigidity

The supply chains that underpin modern trade are not fragile. They are deeply entrenched — built over decades for efficiency, scale and political convenience. That makes them slow to unwind, costly to reconfigure, and vulnerable at a small number of strategic choke points where power is concentrated.

These production networks lock in dependencies over inputs, processing capacity, standards and logistics. Once political interests intervene, they cease to be neutral infrastructure and become contested terrain. Resilience in trade volumes masks rigidity in structure.

Nowhere is this clearer than in the race for critical minerals. These inputs underpin the energy transition, digital infrastructure and defence manufacturing. Competition is no longer just about extraction, but about control over processing and downstream value — the links in the chain where profits, learning and strategic leverage accumulate.

The prevailing model in this sector remains overwhelmingly extractive. Minerals are dug out in developing countries, often under dangerous conditions, shipped abroad for refining, and re-imported at far higher value. This is not a temporary imbalance. It is a structural design choice — and one that is increasingly being challenged.

Africa is no longer passive

What distinguishes the current moment is not only pressure from outside, but a shift within Africa itself. African governments are no longer positioning themselves as passive suppliers competing for access. They are increasingly setting terms.

Across critical minerals and energy-linked resources, countries are demanding local processing, refining, local content requirements and equity participation. Export restrictions on unprocessed ores, beneficiation policies and industrial strategies aimed at value capture are becoming more common. The lesson is clear: exporting raw materials alone entrenches volatility, weakens state capacity and sustains dependency.

The politics has shifted decisively from access to terms.

This shift is reinforced by the African Continental Free Trade Area, which expands effective market size and strengthens bargaining power by anchoring industrial policy in a continental framework. Engagement is no longer negotiated solely country by country, but increasingly through a regional logic focused on manufacturing, jobs and learning.

For external partners, this changes the calculus. The old model — extraction in exchange for rents — is becoming politically and economically unsustainable. Alignment now requires engaging with Africa’s agenda as it is, not as external actors might prefer it to be.

Rerouting value chains — not reshoring them

As global value chains adjust to US instability and geopolitical rivalry, Africa has emerged as one of the few regions capable of absorbing a meaningful rerouting. Not as a substitute for trade with the US or Asia, but as a diversification strategy that alters the structure of the system rather than tightening it.

Redirecting value chains toward Africa does not mean charity or aid. It means moving value creation closer to source: refining minerals where they are extracted, processing agricultural goods regionally, and building manufacturing ecosystems linked to global demand.

In practical terms, this can:

• Reduce exposure to US political risk

• Avoid the inflationary costs of full reshoring

• Diversify supply without deepening dependence on China; and

• Provide African economies with a stake in production and decent jobs rather than extraction alone

  
  

It is one move with multiple effects — economic, political and developmental.

Competition is already under way

This opportunity is not unfolding in a vacuum. China has long treated control over value chains as a source of power, coupling infrastructure and trade with strategic objectives. Its engagement with Africa has delivered capacity in some areas, but has also reinforced extractive patterns and dependency.

More recently, Gulf states have emerged as central actors. Capital from the United Arab Emirates and Saudi Arabia is flowing into ports, logistics corridors, mining, agribusiness and energy — often in fragile or conflict-affected contexts. These investments are not neutral. They are aimed at securing land, resources and strategic routes, sometimes alongside political destabilisation and proxy conflicts.

This is not development finance. It's strategic capture.

Africa is not a battleground because it is weak. It is a battleground because it is structurally central to the next phase of global production.

What this means for politics and diplomacy

Rerouting value chains is not just an economic adjustment. It has political consequences.

As economic ties shift, so do political alignments. The post-war international order rests not only on institutions, but on coalitions of interest. While the paralysis of the UN Security Council is well known, less attention is paid to how economic disengagement has eroded Western influence in the General Assembly. China and Russia have systematically converted trade and infrastructure into political support across the developing world, particularly in Africa — support that has been mobilised to block or dilute international action in multiple conflicts.

This is not primarily a failure of values. It is a failure of strategy. Influence follows investment. Alignment follows value chains.

For Europe, engagement with Africa under these conditions is not an act of leadership or benevolence. It is a response to a global system already in motion — one in which US instability is forcing rerouting, and Africa is increasingly setting the terms of participation.

Done well, this shift could anchor Europe’s external relations in mutual interest rather than moral obligation. Done poorly — or not at all — it leaves the field open to actors with fewer qualms and clearer intent.