India and EU Set for ‘Mother of All Deals’ as Trump’s Tariff Uncertainty Looms

India and the European Union are moving closer to what officials are calling the “mother of all deals”, as both sides accelerate negotiations on a long-awaited free trade agreement amid growing uncertainty over potential tariff changes under a renewed Donald Trump presidency.

The proposed pact, if finalised, would be one of the largest trade agreements in the world, covering a combined market of more than 1.9 billion people. With the US signalling a tougher stance on trade and the possibility of sweeping new tariffs, India and the EU see deeper economic cooperation as a strategic necessity rather than a choice.

Why the Deal Matters Now

Trade talks between India and the EU have stalled and restarted multiple times over the past decade. However, recent geopolitical and economic developments have injected new urgency into the negotiations.

Donald Trump’s return to the White House has raised concerns across global markets about the reintroduction of aggressive tariff policies. During his previous term, Trump imposed wide-ranging tariffs that disrupted supply chains and strained relationships with both allies and rivals.

For India and the EU, the prospect of renewed US protectionism has underscored the need to diversify trade partnerships and reduce reliance on any single market.

What the Agreement Could Include

Negotiators say the proposed deal would go far beyond a traditional free trade agreement. Key areas under discussion include:

Reduced tariffs on goods such as automobiles, pharmaceuticals, textiles, and machinery

Greater access for EU companies to India’s services and public procurement markets

Improved protections for intellectual property

Sustainability and labour standards

Easier movement for professionals and skilled workers

If concluded, the agreement could significantly boost bilateral trade, which already exceeds €120 billion annually.

Benefits for India

For India, the deal represents an opportunity to accelerate economic growth and strengthen its role as a global manufacturing hub. Improved access to the EU market would benefit Indian exporters, particularly in sectors such as textiles, chemicals, IT services, and generic medicines.

Indian officials also see the agreement as a way to attract more European investment, support domestic job creation, and integrate more deeply into global supply chains.

At a time when India is positioning itself as an alternative to China for manufacturing and technology, closer ties with Europe could prove strategically valuable.

What the EU Stands to Gain

The European Union, meanwhile, views India as a critical long-term partner in a rapidly changing global economy. With China becoming a more complex and politically sensitive trading partner, Brussels is keen to deepen economic links with other major emerging markets.

European companies are particularly interested in gaining better access to India’s vast consumer market, which is expected to become the world’s third-largest economy within the decade.

The deal would also align with the EU’s broader goal of strengthening relationships with democratic partners and promoting rules-based trade.

Obstacles Still to Overcome

Despite renewed momentum, significant challenges remain. Previous rounds of talks broke down over disagreements on tariffs, market access, and regulatory standards.

The EU has pushed for stronger commitments on environmental protection and labour rights, while India has expressed concerns about the impact of such requirements on its domestic industries.

Agriculture remains another sensitive area, with both sides seeking to protect farmers and food producers from increased competition.

Negotiators acknowledge that compromise will be essential if the agreement is to be finalised.

The Shadow of US Trade Policy

Trump’s unpredictable approach to trade looms large over the talks. During his previous term, he withdrew from major trade agreements and frequently used tariffs as a negotiating tool.

If similar policies return, they could disrupt global trade flows and increase costs for exporters worldwide. For India and the EU, a comprehensive bilateral deal could serve as a buffer against external shocks and reduce exposure to US policy shifts.

Trade experts say the situation highlights a broader trend toward regional and bilateral trade agreements as countries seek stability in an uncertain global environment.

Geopolitical Implications

Beyond economics, the deal carries geopolitical significance. A stronger India-EU partnership could help shape global trade norms and counterbalance the influence of both the US and China.

Analysts say the agreement would signal a commitment to multilateralism and open markets at a time when protectionism is on the rise.

It could also strengthen cooperation in areas such as climate policy, digital regulation, and supply chain resilience.

What Happens Next

Officials on both sides say negotiations are entering a critical phase, with the goal of reaching a political agreement in the near future. However, any final deal would still need to be approved by EU member states and India’s parliament, a process that could take time.

While optimism is growing, experts caution that trade negotiations of this scale are complex and prone to last-minute hurdles.

Conclusion

As uncertainty over US trade policy intensifies, India and the European Union are seizing the moment to push forward what could become one of the most significant trade agreements in modern history. The so-called “mother of all deals” reflects not only economic ambition but also a strategic response to a rapidly shifting global landscape.

If successful, the agreement could reshape trade flows, strengthen political ties, and provide a measure of stability in an increasingly unpredictable world.