When India and the European Union announced their long-awaited trade deal in Delhi, the smiles were wide and the words upbeat. But behind the handshakes and photo-ops, one name hovered quietly over the agreement: Donald Trump.
The India-EU trade pact is not just about cutting tariffs or boosting exports. It is also a response to a more uncertain global order, shaped in large part by the unpredictable trade policies of the US under Trump. For both India and the EU, the deal is as much about reducing risk as it is about growing trade.
The EU is already India’s largest trading partner, with goods trade touching $142.3 billion in 2024, accounting for 11.5 percent of India’s total trade. Yet negotiations dragged on for nearly two decades. What finally broke the deadlock was a changing geopolitical climate — and growing unease over how trade is being used as a political weapon.
Trump has repeatedly used tariffs to pressure both rivals and allies. India has faced steep duties on several exports, including a 50 percent tariff that includes a penalty linked to its continued purchase of Russian oil. The EU, too, has been rattled by sudden tariff threats, even against close partners.
Against this backdrop, countries across the world are rushing to secure trade ties that reduce their dependence on the US market. The India-EU pact is part of that wider shift. Brussels recently concluded a trade agreement with South America’s Mercosur bloc, while Canada, the UK and others are also trying to reset economic relationships amid global uncertainty.
Both sides have described the India-EU agreement as the “mother of all trade deals”. European Commission president Ursula von der Leyen said the pact would reduce strategic dependencies at a time when trade is increasingly “weaponised”. Modi said it would help strengthen global supply chains in a world facing “great turmoil”.
The deal has not gone unnoticed in Washington. US treasury secretary Scott Bessent criticised the agreement, arguing that Europe was indirectly financing the Ukraine war by deepening trade with India, given Delhi’s oil purchases from Russia. India has rejected that view, saying its energy imports are driven by domestic needs.
Beyond geopolitics, the deal offers clear economic benefits. It gives EU companies better access to one of the world’s fastest-growing markets, while helping India reduce reliance on China and diversify defence and technology partnerships.
Still, the hard work lies ahead. Legal drafting, ratification by EU member states and approval by the European parliament could take months, if not longer. Issues such as agriculture, intellectual property and carbon rules remain sensitive.
However, India will not want to give up on its trade negotiations with the Trump administration as the US continues to be a vital and significant market for India. And the EU wouldn't want to upset Washington either.
But if this deal helps them both get more leverage in future negotiations with Trump, they will gladly take it.
How Trump would react to it is impossible to predict.
