NEW PROTECTIONISM AS THE NEW PARAMETER OF GLOBAL TRADE IN 2026

This year will be one in which two distinct dynamics, which are radically transforming global trade, reach their peak. The first is China’s growing influence in the global economy and, consequently, in the international trading system. By 2025, China’s total trade surplus exceeded the $1 trillion mark. Clearly, it will no longer be possible for other economies to absorb such a large net export item. China has an economic system that creates a high national savings surplus by suppressing consumption domestically on the one hand and directing the financial system through public means on the other, and then channeling this capital to the productive sector on favorable terms. We should not expect this system to change in the foreseeable future. Any change, i.e., a transition to an economic model based more on domestic consumption, would have political consequences. The Chinese Communist Party plans to spread the necessary transformation over a long period in line with this understanding.

However, China’s model has begun to pose a serious problem for the rest of the world. Benefiting from both advantageous access to capital within its own borders and economies of scale, Chinese production has gained a cost advantage that has enabled it to increasingly replace local production in many markets at even higher rates. This economic shock originating from China has now become a social problem rather than just an economic one for importing countries. In these countries, which have suffered production losses due to Chinese competition, the social contract that had been agreed upon for many years has been broken. This situation has also led to the weakening of centrist parties and the rise of more radical political formations. The first widespread response to these negative developments came from the US in 2025. US President Trump, who was re-elected for a second term, imposed high tariffs on China, arguing that China had harmed the US economy by abusing multilateral rules. This trade tension between the US and China would inevitably spread to global trade. Because China, whose access to the US market was now restricted due to high protectionism, would have to export more to other markets, primarily Europe. In parallel with this process, which can be described as a domino effect, the EU is now expected to be forced to adopt higher protectionism in its foreign trade. Therefore, 2026 will be a year marked by rising protectionism among the countries with the largest share in world trade.

WHAT DOES SUCH A GLOBAL CONJUNCTURE MEAN FOR TÜRKİYE?

For Türkiye, the primary goal should be to avoid protectionist policies in its traditional export markets. When this is not entirely possible, the goal should be to at least maintain its export advantage over competing countries. Indeed, in 2025, despite facing an additional 15 percent tariff increase from the US, Türkiye still faces lower import barriers than many countries competing in the US market, such as China, India, and Vietnam. However, the European Union remains the largest and most critical market for our exports. It would be beneficial for Türkiye to closely monitor and evaluate the new protectionist measures gaining ground in many areas (CBAM, “Made in Europe,” etc.) within the EU and to aim to remain outside the scope of these measures through economic diplomacy. In this context, it should be emphasized that our existing Customs Union is a significant advantage. Precisely for this reason, updating the aforementioned Customs Union in light of the current geopolitical environment and global economic situation is even more important. Therefore, the second target for 2026 should be to initiate negotiations on the revision of the Customs Union.

Finally, in light of increasing protectionism at the global level, it will be important for Türkiye to further develop its existing institutional capacity to closely monitor and counter any import pressure that may arise in its domestic market.