Transcription
Global trade is shifting, and new alliances are being formed. After decades of stop-start talks, Europe has been on a deal-signing spree, inking mammoth pacts with major powers. Take a look.
For decades, new EU trade agreements cropped up gradually as the bloc looked beyond its borders. But here's the turning point. In 2025 and 2026, the EU secured long-stalled deals with some of the world's biggest economies, from Asia to South America. This is a story of how the world recalibrates when the US goes rogue.
"A big uh thank to President Trump. He scared a lot of European countries," and the race to rely less on China. It's also about Europe's quest to claw back geopolitical clout in a world of rivalry.
"Maybe sometimes it take us longer, but we always respect the agreement," and that competition for influence is flipping some past power dynamics.
"I think the European Union is gradually gradually understanding this new reality."
Developing countries are right to point out this hypocrisy and now are rightly asking for something in return. But are these new partnerships a genuine boost to multilateralism or just globalization's last gasps? And will internal divisions see Europe's trade ambitions go up in smoke?
"We've seen a heavy political presence." That's all coming up on Business Beyond. We're in the Monte Cara Mountains in southeastern Brazil, around 5 hours drive from São Paulo. These lush landscapes look peaceful, but they're part of a global power clash. And they're one of the reasons the EU has just signed off on a trade mega-deal with four South American states in the Mercosur bloc.
So, right now, this is a corn field. You can see most of the plants are are taller than me, but it's what's beneath my feet in the land here, which makes this such a crucial place. And there's a plan to transform it. You can see some of the work toward that is already going on here. Exploratory drilling by the Australian-owned and Brazilian-run firm Meteoric has revealed major rare earth metal deposits here, some of the largest of their kind in the world. The clues were found in this reddish soil, forged through the region's age-old tropical climate. And there's a few more years to go before a full mine is up and running. But less than an hour downhill, a pilot processing plant is already in action, and we've been granted rare access.
"There's actually quite a lot of stuff they've asked us not to film here, and that's because there are patents pending and there's kind of innovation going on. I think that just gives you an idea of just how strategic this process and these minerals really are."
Meteoric plans to massively scale up this small operation once Brazilian environmental and mining authorities give their green light. Through washing, filtering, and a series of chemical reactions, the clay and metals are separated, and this is the final product: mixed rare earth carbonates. It's a hugely sought-after material because the magnets it helps produce are crucial for the EU's energy transition and its drive for defense autonomy, used in everything from wind turbines to electric vehicles.
"Missiles, drones, uh planes, everything is is built with a lot of rare earths, so it's very strategic. And until now, there is only one market developed right now, which is China. They produce 70% of the total rare earths in the world, but they produce 90% of the magnets. So the European Union, US, the Western markets are totally dependent on only one market. So they can do the price, they can, you know, they can move the price wherever they want. So there is an urgency for new markets to to raise."
Brazil ranks second after China in proven rare earth reserves, but Brazil's mining and processing capacity is much smaller. Executive Director Marcelo de Carvalho says this site could be uniquely placed to start shaking up the supply side of this sector because operational costs are similar to those in China.
"We really don't want to keep the monopoly going. So we we are not talking with China right now. We we prefer to develop a new market, which is a western market. So yeah, every single day matters."
And Brazil isn't just sitting on rare earths. It's also a key player in markets for other crucial raw materials like natural graphite, niobium, aluminum, and tantalum. Let's zoom out. The rush to access these ingredients for independence is a key part of Europe's drive to seek out new trade partners. Instead of just looking for the cheapest option, states are trying to diversify suppliers to reduce risks of over-reliance. Chinese rare earth export restrictions in 2025, though subsequently eased, put those risks into sharp focus. Trade deals like the EU-Mercosur Pact not only slash tariffs and make it cheaper for Europe to import Brazilian minerals. They also reduce rules so it's simpler for EU investors to get a stake in projects like Meteoric's plant or to fund similar schemes in the future. That won't make any overnight change to China's rare earth dominance. But without these kind of steps, that reality is unlikely to shift at all.
So, we know this trade, we think, is partly about relying less on China. But that goal's been on Europe's radar for a while now. It took something else to really kick EU efforts into overdrive. You guessed it: the Trump factor.
"China 67."
"The tariff policy the US president unleashed on the world in 2025 caused major supply chain disruptions and radically changed the country's reputation as a reliable bet for doing business."
"I don't think that the administration has thought that hard yet about what it means to have more fragmentation in the global economy because of their actions." That's trade policy analyst Inu Manak. "There has been a notable shift among all US trading partners in thinking about where they can diversify their trade lengths, where they can deepen them, and what are some missed opportunities that they can seize that maybe have been lingering for a while and they never quite got around to concluding the deals." And that's especially true of Europe. Dependent on Washington for its defense and fearful for Ukraine's future security, the EU played nice in 2025 and accepted higher US tariffs. But in parallel, it was pursuing another strategy to try and cushion the blow.
The EU's pact with South America was one of the longest lingering and most controversial. Negotiations kicked off back in 2000. But for years, differences on environmental standards and agricultural rules were major bones of contention that kept these sides apart. Repeated delays and dashed expectations caused frustration. Then in January 2026, the EU and Mercosur marked a major turning point. We went to Paraguay to witness the pivot.
Something is happening inside this building that many thought would never come to pass. And it's seen as a really major moment for the global trade order. A deal that has been more than two decades in the making is being signed.
"With a stroke of a pen and a handshake, Europe and South America made a historic connection." After the ceremony, Paraguay's president told us what and who pushed these sides closer.
"A big uh thank to President Trump, of course, because he came with this uh new uh agenda on tariffs and this scared a lot of European countries, so they thought that it was good to sign an agreement with other regions."
Similar stories have played out in new EU trade agreements with Indonesia and India. Negotiations once blocked over disputes on environmental standards suddenly made it over the line. So how were these deals pushed through after all this time? What had to give?
"The European Union in general has been very demanding, you know, when it comes to uh climate change issues, uh energy transition, and so on. But I would say that the behavior of the European Union, uh especially the European Commission, has been changing, you know, gradually over the last years."
Lucas Ferraz is a professor based in São Paulo and Brazil's former trade negotiator. He thinks the EU has been making concrete concessions in its race to gain partners.
"The European Union nowadays is, you know, in a very, I would say, uncomfortable uh uh geopolitical and economic position. The European Union has signed, I would say, a very bad trade deal with uh uh the Trump administration. We have the war uh between Russia and Ukraine. I think we have, you know, let's say, very uh tense, you know, bilateral relations between the European Union and China. Uh so, uh when you consider all the factors, it seems to me the European Union is kind of realizing that he they need to be more flexible in their trade relations."
Some European climate campaigners are furious about this new flexibility, arguing it's more proof the EU is watering down its big climate promises and sacrificing green ambitions at the altar of geopolitics, just as the world needs more climate leadership. But the new pacts do contain more sustainability commitments than older trade deals. And when we sat down with the EU's trade chief, he was unapologetic about this change in tone.
"I will continue and accelerate the simplification of some of regulations in Eur in the European Union. And I have to admit that this is also very much welcome by our FTA partners because, uh indeed, sometimes uh our European law has been very complicated for them uh to to implement, and I think it's a mutually reinforcing process that we try to simplify, and our free trade agreement partners would like to benefit uh more from the relationship they are building in the field of trade with the European Union."
Climate campaigners aren't the only ones railing against the EU's trade rethink.
"We've seen a heavy political presence."
European farmers have also been out on the streets at rallies like this one across the continent. Despite safeguards and reassurances from Brussels, farmers fear they'll face unfair competition from South American sellers. All this debate and division led to major political roadblocks for this mega-pact. Several EU states, including France and Poland, voted against it. Then a razor-thin majority of EU lawmakers voted to send the deal for judicial review.
"Vote is closed."
After heated internal debate, the EU's executive used a legal loophole to push ahead and kick the deal into action. It's a sign of just how difficult it can be for Europe to make good on its big geopolitical ambitions. But EU policymakers say priorities have to shift because, let's be clear, Europe's economy just isn't as mighty as it used to be. Take a look.
When the EU began negotiating its South America pact back in 2000, it was on the up. By 2005, it accounted for a quarter of global GDP. But over time, that share slipped as China rapidly expanded and other regions' shares also increased. Fast forward to the most recent data, and the EU's stake had slipped to 17.6%. The US also lost out over time, but it's maintained a bigger share than the EU. But look at a list of the world's biggest economies. The EU is still an economic heavyweight in absolute terms, and it's a trade giant. More of its GDP is linked to buying and selling internationally than the US or China. That's something the EU prides itself on, but it also leaves Europe more vulnerable to external shocks like tariffs, export restrictions, or conflict.
This is a list of the EU's biggest exports. Vehicles and machinery rank first, followed by chemicals, manufactured goods, then food, drinks, and tobacco. That means companies like car parts maker Schaeffler are supposed to be the backbone of Europe's economy. But manufacturers have been feeling the heat. German car exports to the US fell 14% year-on-year in the first three quarters of 2025, and sales to China also slumped dramatically. Now the auto industry says it needs new customers fast.
"Well, in light of all the geopolitical um tensions, we actually see protectionism and and other dependencies. It's of utmost importance to find new markets, and there will be growths outside the established markets. There will be growths in Brazil, in India, in Southeast Asia."
New trade deals should see Indonesia, India, and Mercosur states all gradually lower duties on European vehicles, making them more affordable to customers there. And with middle classes expanding in those regions, the expected boost in car sales could be a lifeline for EU automakers. There's also another element at play here, though, that you might hear about less. The EU is tightening the screws on combustion engine cars. So the search for less regulated markets is also on. Manufacturers here will have to slash emissions by 90% on 2021 levels to comply with new EU rules next decade. And European firms lag behind heavily subsidized Chinese competitors on electric vehicle innovation and cost-effectiveness. That means it could become even more important to find places where Europe's standout products, more polluting petrol and diesel vehicles, have a longer shelf life.
But Europe isn't just competing with China for customers.
"It also wants to rival Beijing's growing influence on the global stage." So here's what we know so far. Europe needs new partners to access critical materials. European industries need new customers, and other parts of the world are gaining economic relevance. All that means that middle powers can wield much more sway in the negotiating room.
"It's really interesting to see sort of the evolution of trade agreements and trade negotiations in the last, you know, 30 years. And I would say that at one point, what we saw were developing countries and emerging markets really being the rule-takers. And what we're seeing now is that they're saying, well, maybe we don't have to take those rules. We're seeing countries innovate uh in how they do this, but also saying like, look, uh, we don't have to do a deal with you. We can do a deal among ourselves."
So-called South-South cooperation has surged over the past 30 years, outpacing global growth of trade in goods, and emerging economies are being more vocal about their own demands when dealing with wealthy Western partners like the EU.
"She asks India, for example, about, you know, how they felt uh about, you know, having more stringent uh sort of rules against China. um they would say, look, you guys are complaining now because it's affecting things that that you were competitive in, right? So whether it's, you know, manufacturing and, and sort of high-end vehicles or semiconductors, now now you're freaking out about China uh having a big stake here, but where were you all when they were replacing our textile industry?"
"I think that developing countries are right to point out this hypocrisy and now are rightly asking for something in return."
"They're also aware of what they're bringing to the table."
"When you think about the challenges for the next generation, how we going to feed a population that is growing? How we going to transition on the energy production, and how we going to maintain population level? And, and you see that 60% of all the protein that's consumed in the world is produced in the countries in Mercosur, and we have mostly a young population. So we think that uh our combination of wealth that is on the land and the people is the right combination for a society that wants to flourish and a continent that wants to grow."
All that means Europe is having to reframe its offer to better compete, and this is the message.
"Everyone knows that maybe sometimes it take us longer, but we always respect the agreements. We are predictable. uh we always look for mutually advantageous deals, and we see the global trade as a part of the uh new modern 21st century global century global economy, and, and of course, we work much more with those who share our philosophy and approach to trade than with others."
Beyond the numbers and the business case, that might just be the most crucial selling point for Europe. Because in an era where market-shifting announcements often come in a Truth Social post, lengthy trade agreements, full of jargon, negotiated line by line over years, well, those suddenly seem much more valuable.
"We need to preserve a multilateral trading system that is based on rules. We cannot live in a world where uh uh the law of the jungle is the rule. And this is especially bad, I would say, for developing economies like Brazil and Mercosur countries, because we need, you know, institutions to level the playing field, you know, when it comes to negotiations, when it comes to politics."
Let's go back to this map from the beginning. The EU is hoping to keep its trade momentum running in 2026, pursuing more pacts with places like Thailand, the Philippines, and the UAE. Getting those deals done won't be simple, but a year out from a Trump-sized body blow to the international trading order, the recalibration is well underway.
"We haven't seen the widespread protectionism a lot of people thought we would see in reaction to the United States. In fact, I think that most countries have been pretty measured. The international trading system is actually faring fairly well considering the fact that it's been uh, you know, dogged with with a lot of of weight. And I think that the the big trend that we we need to watch is just how countries navigate uh all of this through picking certain partners over others, and how that actually leads to maybe a new system emerging uh out of all of this mess."
Here's what we know for sure. A new trade order is emerging. It's more fragmented than what came before. And the world's biggest economies aren't the only ones dictating the rules anymore. Europe is still trying to work out its place in the mix. And this pivot to more partnership is part of its plan. That's all for now. Be sure to check out our other videos and tell us how trade is changing where you are.