Members of President Donald Trump’s cabinet, including Energy Secretary Chris Wright, Commerce Secretary Howard Lutnick, Chief of Staff Susie Wiles, Treasury Secretary Scott Bessent and Secretary of State Marco Rubio, listen to Trump address the World Economic Forum (WEF) in the Davos Congress Center on Jan. 21, 2026 in Davos, Switzerland.

Chip Somodevilla | Getty Images

The U.S. is looking increasingly isolated when it comes to its global geopolitical and trade relationships as allies reassess their ties to the world’s largest economy and consider going it alone.

The new year has seen a number of nations and power blocs forging ahead with relationship resets, closer commercial ties and trade partnerships, sidelining a more hostile and volatile U.S. They include China’s "preliminary agreement" with Canada and rapprochement with the U.K., as well as the European Union’s agreements with India and South American countries.

Those deals and negotiations come after a year of U.S. President Donald Trump’s "America First" trade and foreign policy in his second term in office, which has seen the White House hit friends and foes alike with punitive trade tariffs, and even territorial threats, as it asserts its economic and geopolitical dominance.

But that strategy could be backfiring, particularly as the U.S.’ friends and partners look to diversify their trade policies, in no small part to protect themselves from Trump’s unpredictability.

"Given what’s happening with the U.S. and its foreign policy, which was articulated in the recently released National Security Strategy ... the ‘middle powers’ need to find their own agency and figure out different approaches," Damian Ma, director of Carnegie China, an East Asia-based research center, told CNBC on Thursday.

watch now

"Countries are going to align based on particular, specific à la carte interests, rather than a comprehensive values-based alignment," he said, noting that while this was not a return to a divided Cold War mentality of opposing power blocs, it was more a "recalibration" of national interests.

"Where that recalibration and that new equilibrium ends is anyone’s guess, but you’re seeing countries starting to make moves finally. The U.K. and Canada are not going to be the only ones," he said, predicting a "flood of countries recalibrating their approach" to superpowers like China and the U.S.

Diplomacy, sans Trump

That recalibration has certainly gathered pace of late with a flurry of diplomacy and trade deals being pursued since the new year, none of which have involved the U.S. or President Trump.

China has been particularly busy, with Canadian Prime Minister Mark Carney, Ireland’s Prime Minister Michael Martin, Finnish Prime Minister Petteri Orpo and Starmer all visiting Beijing this month.

Canadian Prime Minister Mark Carney shakes hands with President of China Xi Jinping at the Great Hall of the People in Beijing, China on Friday, Jan. 16, 2026.

Sean Kilpatrick | Via Reuters

China and Canada agreed to reduce trade barriers in early January, prompting a furious response from Trump, while British Prime Minister Keir Starmer was in Beijing to reset ties with President Xi Jinping, with both sides agreeing to lower barriers to trade and travel.

The EU has also been busy, making progress in its trade deal with Mercosur, as well as signing a long-awaited free trade agreement with India last week.

Those meetings have taken place after Trump’s tirade against allies during his speech to the World Economic Forum in Davos, Switzerland, in which he insulted and criticized various leaders, including French President Emmanuel Macron and Carney.

watch now

Jimena Blanco, chief analyst at risk intelligence company Verisk Maplecroft, told CNBC that there had been a measurable deterioration in how the U.S. communicated with its allies.

"Our data measuring verbal tensions between countries shows worsening U.S. relations with some key allies over the last year," she told CNBC on Thursday.

"The sharpest spikes were recorded with Canada, Denmark, Belgium, Japan, Ireland, New Zealand and France, reflecting the impact of public, tense exchanges between U.S. officials and their counterparts in allied nations."

Read more

But Blanco noted that U.S. allies have tended to respond to Washington’s policy shifts by diversifying their economic exposure, rather than reversing their integration in the global trade system.

"The EU, Canada, Japan, Australia and the U.K. can’t afford to disengage with the U.S. but are instead widening trade with large emerging markets as well as with each other," Blanco added, with emerging markets the "major winners" of this diversification.

Rocky patch

Likening this period of difficult relations with the U.S. as a rocky patch rather than grounds for divorce, analysts say the U.S.’ allies have little choice but to try to keep the U.S. on side, while exploring other avenues of trade and cooperation.

"Europe is too dependent on the U.S. not only for its security, but also technologically and economically, to prefer the divorced life today," Ivan Krastev, chair of the Centre for Liberal Strategies in Sofia, Bulgaria, said in a Goldman Sachs report earlier this week.

"For Europe, while there is much talk about finding new allies, aligning with others won’t be a quick or easy process," he noted, adding: "Instead, Europe will be focused on showing the U.S. that Europe matters."

watch now

Joseph Parkes, senior analyst at Verisk Maplecroft, agreed that the U.S. was too big to be isolated, ultimately: "It is simply too important from a tech, trade, currency and security perspective," he told CNBC on Thursday.

Nonetheless, key allies will aim to re-balance their global relationships in strategic areas in the long-term, he said.

"The nature of globalization will change. Trade fragmentation will create new and different groupings of countries seeking to increase economic resilience," he told CNBC on Thursday, with "geopolitical agility" increasingly important for businesses to navigate a more uncertain landscape.

"The recent volatility has accelerated a shift away from ‘just-in-time’ towards ‘just-in-case’ to strengthen supply chains," he noted, with companies turning to ‘nearshoring’ and ‘friendshoring’ in order to source materials from trusted allies.

In the meantime, Parkes said, governments would look to "expand trade agreements to build strategic flexibility and reduce market and supply-chain dependence on any given country."