Abstract We tested the idea that functional trade‐offs that underlie species tolerance to drought drive shifts in community composition via their effects on demographic processes and subsequently on shifts in species' abundance. Using data from 298 tree species from tropical dry forests during the extreme ENSO‐2015, we scaled‐up the effects of trait trade‐offs from individuals to communities. Conservative wood and leaf traits favoured slow tree growth, increased tree survival and positively impacted species abundance and dominance at the community‐level. Safe hydraulic traits, on the other hand, were related to demography but did not affect species abundance and communities. The persistent effects of the conservative–acquisitive trade‐off across organizational levels is promising for generalization and predictability of tree communities. However, the safety–efficient trade‐off showed more intricate effects on performance. Our results demonstrated the complex pathways in which traits scale up to communities, highlighting the importance of considering a wide range of traits and performance processes.