India and the European Union announced a free trade deal on Tuesday that will remove or reduce tariffs on over 90% of goods traded between them, a pact described as “landmark” by both sides. The agreement, nearly two decades in the making, comes as countries reassess global trade relationships amid increasing tariffs and geopolitical shifts.
The deal will see India lower tariffs in the agriculture and auto sectors. It lands amid a growing wave of bilateral trade agreements, as countries recalibrate supply chains and commercial ties in response to Washington’s increasingly muscular use of tariffs.
Earlier this month, Canadian Prime Minister Mark Carney visited China, the first leader in his role to do so in 17 years, in an effort to expand economic partnerships. UK Prime Minister Keir Starmer is scheduled to follow with a three-day trip to China, the first by a British prime minister since 2018.
The India-EU pact, dubbed the “mother of all deals” by European Commission President Ursula von der Leyen, still faces potential hurdles from the U.S. President Donald Trump, who has previously imposed tariffs on both India and the EU.
Trump has yet to comment on the India-EU agreement. In August, the U.S. imposed higher levies on Indian goods following India’s oil purchases from Russia, and a 25% duty on New Delhi.
U.S. Treasury Secretary Scott Bessent criticized the EU for forging a trade agreement with India in an interview with ABC News on Sunday. However, India’s Minister of Petroleum and Natural Gas Hardeep Singh Puri stated Tuesday that the U.S. and India are at “a very advanced stage” of finalizing their own trade deal.
Key Takeaways
- India will lower tariffs in the agriculture and auto sectors.
- The EU is one of India’s largest trading partners, rivaling the U.S. and China.
- The U.S. and India are reportedly close to finalizing their own trade agreement.
The S&P 500 closed at a record high on Tuesday, driven by gains in Big Tech stocks. European stocks also ended higher following the announcement of the EU-India trade deal.
A partial U.S. government shutdown is possible beginning Saturday, due to disagreements over funding for the Department of Homeland Security and other agencies, following the recent killing of a U.S. citizen by federal agents in Minneapolis.
AI company Anthropic closed a funding round totaling between $10 billion and $15 billion, led by Coatue and Singapore sovereign wealth fund GIC.
The India-EU free trade agreement will see the EU reduce tariffs on Indian textiles, leather, marine products and gems and jewelry.
In 2024, India accounted for 2.4% of the EU’s total trade in goods, significantly less than the U.S. (17.3%), China (14.6%), or the U.K. (10.1%).
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