The story of the EU-India trade deal is not over yet

On Tuesday, India and the European Union announced a “historic” free trade agreement that would remove or reduce tariffs on more than 90% of goods traded between them.

The deal, almost two decades in the making, will see India reduce tariffs in two of its most politically sensitive sectors, agriculture and automobiles. It also comes amid a growing wave of bilateral trade deals, as countries recalibrate their supply chains and trade ties in response to Washington’s increasingly heavy-handed use of tariffs.

This broader change is already visible. Earlier this month, Canadian Prime Minister Mark Carney visited China, the first leader in that role to do so in 17 years, in a bid to expand economic partnerships with the world’s second-largest economy. British Prime Minister Keir Starmer is next expected to make a three-day trip to China, the first by a British prime minister since 2018.

Yet the India-EU deal, memorably dubbed “the mother of all deals” by European Commission President Ursula von der Leyen, has yet to clear its most unpredictable obstacle: US President Donald Trump.

Trump, who has imposed punitive tariffs on friends and foes alike, has yet to weigh in on the India-EU deal. His silence is remarkable.

In August last year, the United States imposed higher taxes on Indian goods on purchases of Indian oil from Russia, days after imposing a 25% duty on New Delhi.

With Trump’s recent escalation of rhetoric toward the EU, including threats related to Greenland, his response appears to be a lingering cloud over the “historic” deal. And that cloud darkened further when US Treasury Secretary Scott Bessent criticized the EU for striking a trade deal with India in an interview with ABC News on Sunday.

But perhaps it’s not all doom and gloom, as the United States and India are at a “very advanced stage” of finalizing a much-anticipated deal, Indian Minister of Petroleum and Natural Gas Hardeep Singh Puri told CNBC on Tuesday.

Another cloud weighing on investors’ minds is that of the US Federal Reserve, which concludes its policy meeting on Wednesday. Rates are expected to remain unchanged, but Chairman Jerome Powell’s remarks will be closely analyzed amid renewed political pressure on the central bank.

Is a US-India trade deal on the cards? The two countries are “at a very advanced stage” of finalizing an agreement, Indian Minister of Petroleum and Natural Gas Hardeep Singh Puri said. told CNBC on Tuesday.