Getting around Trump’s tariffs
Donald Trump’s tariffs has jolted New Delhi out of its earlier confidence about the stability of its trade ties with the United States. Whether Washington ultimately rolls back the latest duties on Indian goods or merely softens them, the signal is already loud and clear: India cannot afford to anchor its economic future to a single, unpredictable partner.
That is why the India–European Union free trade talks, now being described as the “mother of all deals,” matter far more today than they did even a year ago. These talks are no longer just about opportunity, they are about buying insurance.
The immediate trigger is Trump’s decision to slap tariffs on Indian exports, ostensibly to punish New Delhi for buying Russian oil. A senior aide of his has now floated the idea of a “path” to removing the 25 per cent levy, but the damage is already done. Trade diversification is now a basic economic self-preservation.
The European Union offers what the current US trade environment does not: scale, predictability. A comprehensive FTA would give Indian exporters preferential access to the world’s largest trading bloc, providing a much-needed cushion at a time when US tariffs are eroding competitiveness. For Europe, eager to reduce its dependence on China and wary of Trump’s trade brinkmanship, India looks like a stable, long-term partner.
This doesn’t imply turning away from the United States. India’s relationship with Washington runs across defence cooperation, technology partnerships and people-to-people ties. If the US reconsiders its tariff approach, as Trump’s aide has hinted, it would be both sensible and welcome. Penalising India for securing affordable energy for 1.4 billion people risks should not be used to penalize the country. That said, India has to ensure that it keeps its options open in a fast changing world where the US is moving away from the rule-based world it created and is open to using its power to advance its economic interests. So, the proposed EU deal opens up economic options for India that didn’t exist earlier and should thus be welcomed.
