I recently read The Hidden Life of Trees which tackles this question. Very good book, to the point, I highly recommend it.
In it there is proof that trees communicate with each other through the roots, different species can talk to each other, they share nutrients and sugars between each other and talk with fungi. Eg. they can warn each other about insect attacks and react with bitter leaves.
My favourite trivia from the book is that there are three currently accepted answer for how trees circulate water: capillary action, transpiration and osmosis.
Capillary action is the same force which holds rain drops together - that should push the water up in the trunk fibers.
Transpiration is basically works like trees evaporates (exhale) water through its leaves and that creates suction.
Osmosis is that if sugar in one cell is higher than the neighboring cell, the water will flow towards the more sugary one until both have the same amount of water.
Now, capillary action cannot work for more than 1 meter height, and water flow is highest in the trees at spring before the leaves open up so that rules out transpiration. Osmosis can only happen in the roots and leaves because trunk contains long tubes for water and not cells.
Which leaves us... Yeah. We don't know :D