Trade wars arise from political incentives, lobbying, and strategic rivalry rather than pure economic logic (comparative advantage, Smart Specialisation Strategy, sustainability, etc.). Under President Donald Trump’s second term (2025–2026), U.S. trade policy has shifted sharply toward broad, security-justified tariffs, breaking with post-WWII multilateral norms, raising costs, increasing uncertainty, and provoking retaliation – especially from the EU.

This trajectory risks fragmenting global trade into rival blocs, with the most likely path being managed strategic decoupling, while escalation could trigger severe economic and geopolitical instability. The least risky and most beneficial option remains a negotiated reset that stabilises trade rules while managing great-power competition. Five alternative trade policy scenarios outline possible futures. The most likely baseline is Managed Strategic Decoupling, where major powers selectively restrict trade in strategic sectors while maintaining most global commerce. Higher-risk paths include an Escalating Tit-for-Tat Trade War, marked by retaliatory tariffs and volatility, and Bloc-Based Trade Fragmentation, where the global economy splits into competing geopolitical and technological blocs. The most severe outcome is a Full-Scale Global Trade War, involving systemic breakdown, sanctions, and major economic contraction. A low-probability but high-benefit alternative is Negotiated Reset and Competitive Coexistence, in which global rivalry is stabilised through renewed rules, sectoral agreements, and conflict-management mechanisms.