Challenges and opportunities to establish Climate-Aligned Trade policies during President Trump’s second term to tackle trade emissions
Tensions are high between the United States and its G7 allies, with President Trump once again threatening tariffs to pressure other countries into aligning with his economic agenda. However, it remains unclear whether these threats will materialize as seriously as they initially seem. For example, President Trump threatened to impose tariffs on imports from Canada and Mexico at the beginning of February before agreeing to put them on pause.
President Trump has historically fluctuated in his stance on trade, and his position on tariffs has shifted rapidly in the past depending on circumstances. While the tariff threats are real and must be treated with caution, there is potential for gains in trade collaboration within the G7, particularly when the situation stabilizes.
By focusing on shared economic interests, G7 leaders can work to find common ground with the United States—not only to address trade issues and trade emissions but also to reduce the risk of tariff-related conflicts. This approach could be particularly valuable in advancing climate-aligned trade policies that curb emissions.
The key is to learn “the art of the deal” and frame collaboration as a means to an end that resonates with President Trump’s priorities. By centering the political conversation around economic competitiveness, isolating China, and diversifying supply chains—rather than explicitly focusing on emissions reductions or carbon leakage—there may be opportunities for incremental progress among G7 countries despite the tense start.
The G7 and Trade Emissions
As an influential group comprising some of the world’s largest and most powerful economies, the G7 plays a critical role in shaping the future of both international trade and climate efforts. Given the ambitious climate goals set by its members, there is increasing recognition of the need to align trade policies with climate objectives. By leveraging their collective economic influence, G7 countries can reduce trade emissions and accelerate climate action.
Trade-related policies will be essential for reducing emissions as the world moves toward net zero. A fragmented, unilateral approach risks creating a patchwork of systems that hinder global trade, increase emissions leakage and complicate collaboration between governments and the private sector. However, coordinated trade strategies can help sustain or accelerate decarbonization, while isolated efforts will likely delay climate progress.
By working together, the G7 can implement coordinated trade policies that not only support climate goals but also drive economic growth, foster innovation, and create jobs in emerging sectors such as renewable energy and sustainable technologies. However, despite the clear benefits of cooperation, barriers remain that hinder alignment among G7 members.
Fragmentation of Trade Approaches In The G7
Although the G7 has made progress in linking climate and trade policies in recent years, its members have not always agreed on the best path forward. Each country faces domestic political and policy constraints that may complicate efforts to reach a unified approach.
Key sources of recent tensions include:
▪️EU and UK carbon border adjustment measures (CBAMs)
▪️Breakdown of the Global Arrangement on Sustainable Steel and Aluminum negotiations
▪️Debates over subsidies in the U.S. Inflation Reduction Act
Moving forward, the biggest obstacle to continued progress is the second term of U.S. President Donald Trump.
Challenges from the Trump 2.0 Agenda
Since taking office, President Trump has rapidly moved to implement his agenda, often by circumventing traditional norms. His first week saw multiple energy and climate-related executive orders, including:
▪️Withdrawing the U.S. from the Paris Agreement (again)
▪️Freezing a large portion of federal spending including climate programs
▪️Threatening tariffs on countries that challenge his administration’s policies, including this year’s G7 host nation Canada
These moves signal Trump’s willingness to test the limits of executive power—particularly in areas where climate action intersects with trade. As a result, the G7 faces significant challenges in advancing climate-aligned trade policies under an administration that remains skeptical of climate action.
Additionally, Trump’s “America First” ideology prioritizes unilateral economic gains over cooperation with U.S. allies. His aggressive tariff agenda could trigger new trade wars, raise consumer prices, undermine economic growth, and further fracture G7 unity.
The impact of Trump’s trade policies remains uncertain, but they could lead to major disruptions in global trade dynamics with unpredictable consequences. These shifts, combined with ongoing tensions within the G7, could make collaborative climate action even on trade emissions more difficult.
Possible Openings During President Trump’s Second Term
Despite these challenges, there are still opportunities for progress in climate-aligned trade—if discussions are reframed to align with Trump’s priorities.
At a global level, G7 members could appeal to Trump’s economic agenda by ensuring that U.S. businesses remain competitive in global markets. Trump’s focus on countering China’s economic influence could also serve as a pathway to securing trade policies that align with climate goals.
Potential strategies include:
▪️Positioning climate-aligned trade policies as tools for strengthening U.S. industry—particularly in steel, aluminum, and cement
▪️Framing decarbonization efforts as national security imperatives to reduce dependency on foreign energy and raw materials
▪️Leveraging Trump’s interest in countering China by promoting U.S. leadership in green technology manufacturing
By emphasizing the economic and security benefits provided by trade policies, that just so happen to also decarbonize key industries, the G7 could gain support for its climate and trade goals—even under a Trump administration skeptical of climate action.
A Path Forward for the G7 on Trade Emissions
The era of Trump 2.0 presents significant hurdles for climate-aligned trade, but opportunities remain for the G7 to navigate these challenges. Success will depend on strategic messaging, economic framing, and leveraging shared interests to drive progress without triggering new trade conflicts.
Please see here for the Climate Advisers report on the G7 and climate-aligned trade and keep an eye out for our next piece in this series on what the G7 could achieve at the Canada-led 2025 Summit on climate-aligned trade.
*The insights in this article are those of Climate Advisers and may not necessarily represent the perspectives of all those associated with CCAT.