Global Trade in Transition: Three Takeaways from Three Regions
Global Trade in Transition: Three Takeaways from Three Regions Recap of WLG’s Trade Group Virtual Meeting | February 7, 2026 Global trade continues to undergo structural change, shaped by tariffs, sanctions, industrial policy, and shifting geopolitical priorities. During WLG’s Trade Group virtual meeting on February 7, 2026, David Morfesi of MinterEllison in Australia moderated a discussion featuring regional updates from Mollie Sitkowski of Faegre Drinker in the United States and Michael Brüggemann of Taylor Wessing in Germany, with additional perspectives from members in Europe. At the time of the meeting, several U.S. tariffs were under review by the U.S. Supreme Court, and uncertainty surrounding their legal basis was already influencing business strategy. Shortly after the meeting, the Court ruled that the statute relied upon to impose certain tariffs did not authorize their use, reinforcing a central theme of the discussion: global trade rules continue to evolve, and businesses should expect ongoing adjustment rather than stability. Since the meeting, the Supreme Court has invalidated the President’s use of the International Economic Emergency Powers Act (IEEPA) to impose so-called "fentanyl” and "reciprocal” tariffs. Immediately after the Supreme Court’s opinion was released, President Trump imposed tariffs of 10% on products globally. However, he threatened to increase that rate to 15% via a Truth Social post, which has not yet happened. Three consistent themes emerged across regions. United States: Tariffs Expand in Scope — and Uncertainty Sitkowski outlined the breadth and complexity of tariffs currently affecting imports into the United States, including reciprocal tariffs, emergency tariffs tied to national security and foreign policy concerns, and product-specific tariffs imposed under Section 232. These measures affect a wide range of industries, including steel, aluminum, autos, semiconductors, timber, and critical minerals. In many cases, tariffs are layered, resulting in cumulative duties on a single product depending on its components and country of origin. She explained that while numerous trade agreements and tariff adjustments had been announced, fewer had formally taken effect, underscoring the importance of distinguishing between policy announcements and legally implemented measures. Tariffs do not become operational until U.S. Customs and Border Protection implements them, and businesses must rely on official government channels to determine when obligations change. Sitkowski also addressed the legal challenge to tariffs imposed under emergency economic authority, noting that lower courts had already questioned whether the President had authority to issue tariffs under that statute. She cautioned that even if courts ruled against the administration, tariffs would not necessarily stop immediately, as implementation changes and potential refund mechanisms would take time to resolve. Looking ahead, she noted that tariffs were likely to remain a central feature of U.S. trade policy. Even if certain legal authorities were invalidated, alternative statutory tools remained available, and ongoing investigations into sectors such as medical devices, pharmaceuticals, robotics, and semiconductors could lead to additional measures. More broadly, she emphasized that clients were navigating an environment where trade policy could shift rapidly, making it essential to monitor formal government actions rather than informal statements or policy signals. Europe: Tariffs Reshape Trade Flows and Accelerate Strategic Realignment Brüggemann described the significant impact U.S. tariffs have had on European manufacturers, particularly in Germany’s industrial and automotive sectors. While the baseline tariff framework established through negotiations provided some predictability, sector-specific tariffs on steel and aluminum created substantial additional costs. In some cases, these tariffs made exports to the United States economically unviable, prompting companies to suspend shipments or reconsider their market strategy. At the same time, companies across Europe were responding by restructuring supply chains, shifting sourcing and production to alternative jurisdictions, and exploring ways to reduce tariff exposure through customs planning and origin strategies. He also highlighted broader regulatory changes affecting global trade, including the European Union’s Carbon Border Adjustment Mechanism, which introduces carbon-based import costs, and due diligence rules requiring companies to monitor environmental and human rights risks in their supply chains. These measures are adding new compliance obligations alongside traditional tariffs. Trade diversification has also accelerated. Brüggemann noted major developments in free trade negotiations, including political agreements between the European Union and India, as well as progress toward implementing the long-negotiated EU-Mercosur agreement. These agreements are intended to expand market access and reduce dependence on traditional trade partners. At the same time, geopolitical tensions continue to influence trade policy. Export controls, sanctions—particularly those related to Russia and Iran—and tightening controls on critical materials are reshaping trade flows and forcing companies to reconsider long-standing sourcing relationships. Additional commentary from members in Brussels noted that European authorities are also facing rising volumes of imports from China, leading to discussions about new trade defense measures and sector-specific protections. Australasia: Diversification Becomes a Strategic Priority Morfesi provided an overview of developments across Australasia, where businesses and policymakers are responding by strengthening regional trade relationships and reducing reliance on individual markets. Australia and New Zealand have deepened cooperation through updates to regional trade agreements, including enhancements to rules of origin, e-commerce provisions, and regulatory coordination. Meanwhile, regional frameworks such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership continue to expand, creating new opportunities for trade integration across Asia-Pacific markets. India has emerged as an increasingly important partner, offering new sourcing and market opportunities as companies seek alternatives to traditional supply chains. At the same time, Morfesi noted that tariffs imposed by the United States have had direct economic consequences in Australasia, affecting export competitiveness and contributing to inflationary pressures. In response, companies have accelerated efforts to diversify markets, production locations, and sourcing strategies to reduce exposure to tariff-related risk. He emphasized that trade policy is no longer defined solely by liberalization, but increasingly by regulatory considerations, industrial policy, and national strategic priorities. Governments are seeking to balance openness with resilience, while businesses are adapting to a more fragmented and less predictable global system. A Structural Shift, Not a Temporary Disruption Across all regions, participants emphasized that global trade is undergoing structural transformation. Tariffs, sanctions, and regulatory measures are no longer isolated tools but part of broader economic and geopolitical strategy. While companies are adjusting through diversification, supply chain restructuring, and closer monitoring of policy developments, the overall direction is clear: trade policy is becoming more complex, more strategic, and more closely tied to national economic priorities. As Morfesi noted in closing, recent developments do not represent a temporary disruption but rather a fundamental shift in how global trade operates. Businesses and their advisers must now operate in an environment where change is constant and adaptability is essential. Author: Hanna Shea, WLG Director of Business Development
Contributors: Michael Brüggemann, Taylor Wessing; David Morfesi, MinterEllison; Mollie Sitowski, Faegre Drinker