EU FTA Changed the Math: Why Trump Fast-Tracked India Trade Deal After Tariff Tensions, Experts Explain

Donald Trump, the President of the United States, considers himself a master deal maker. For months, that self-image was on display in Washington’s hardening posture towards New Delhi. Then, the tone shifted, urgency replaced brinkmanship as Trump himself announced a reduction of tariffs he had earlier imposed on India. This time, the clock may not have been set by the White House alone. India's freshly concluded free trade agreement with the European Union seems to have quietly altered the negotiating terrain, signalling that New Delhi is no longer a suitor with limited options but a market with alternatives. Trump’s initial approach followed a familiar script. India was repeatedly singled out for its tax structure. India was called "tariff

king" by Trump and his team, with warnings that higher duties or retaliatory measures were on the table if New Delhi did not open up further. The messaging suggested that patience was running thin and that pressure would eventually force India to allow concessions. India, in this reading, was expected to negotiate defensively.However, India stood strong, and the calculus changed when India concluded a free trade agreement with the European Union just last week, billed as the 'Mother of All Deals'. The EU is one of the world’s largest consumer markets, and a free trade agreement with Brussels not only offered India access to markets across multiple sectors, but also sent a strategic signal that India was no longer negotiating from a position of constraint.As one trade expert put it, India’s trade agreement with the EU demonstrated that New Delhi had options on the table for its goods. "The fact that India concluded a free trade agreement with the European Union just last week shows that India has some options on the table for its goods, which could have prompted the US to want to speed up its own trade agreement with India..." Lisa Curtis, the Director at Centre for New American Security, told ANI. Canadian trade specialist and government affairs lawyer Jacques Shore opined that the historic India-EU trade deal triggered the 'fear of missing out' in Trump, prompting him to call PM Narendra Modi. "When you look at the 1.5 billion in India, and almost half you look at 500 million in Europe. You look at that and you say it's quite incredible that I think the United States, which felt maybe they were somewhat left behind and recognise this is a moment for them to actually address the trade issue which is obviously an important one for them but what I find remarkable is we are seeing yet again another very very strong example of using trade as a leverage," Shore said in an interview with CTV News.According to European Council leader Carl Bildt, the India-EU "mother of all trade deals" made Washington "nervous" and prompted a rapid policy response. The India-EU FTA "obviously made Trump nervous," and prompted the US President to "quickly adjust American policies," he said in a post on X, sharing a TV interview clip featuring US envoy Sergio Gor.

India-US Trade Deal: The Moment Trump Blinked

Earlier this week, India and the US agreed on a framework for a trade deal under which Washington will bring down tariffs on Indian goods to 18 per cent from the current 50 per cent. Trump said India will move forward to reduce "tariffs and non-tariff barriers" against the US to zero, adding New Delhi would buy American goods, including energy, worth more than USD 500 billion. Trump had spoken to Prime Minister Narendra Modi before making the deal announcement on social media. "It was an Honor to speak with Prime Minister Modi, of India...We spoke about many things, including Trade...He agreed to stop buying Russian Oil, and to buy much more from the United States and, potentially, Venezuela. This will help END THE WAR in Ukraine, which is taking place right now, with thousands of people dying each and every week! Out of friendship and respect for Prime Minister Modi and, as per his request, effective immediately, we agreed to a Trade Deal between the United States and India, whereby the United States will charge a reduced Reciprocal Tariff, lowering it from 25% to 18%," the US President posted.

Understanding How Tariffs Impact Trade

Tariffs are customs or import duties which a country imposes on goods bought from other nations. An importer has to pay this duty to the government. Normally, companies pass on these taxes to end users or consumers. Import duty makes goods expensive in the importing country. Besides, a few other factors also play a role in this. For example, duty on India's competitor nations such as Bangladesh (20 pc), Vietnam (20 pc) and Thailand (19 pc); and quality and standards of items.

The Low Phase in India-US Ties And Then a Boom

During a meeting in February last year, PM Modi and President Trump had agreed to finalise the first tranche of a bilateral trade nu autumn. Negotiations kicked off; however, what followed was months of unprecedented estrangement between New Delhi and Washington, triggered by Trump's tariffs. The two sides held several rounds of negotiations, but forward movement on the trade deal stalled after tariff imposition. In August 2025, the Trump administration had imposed a 25 per cent tariff on India along with another 25 per cent punitive duty for buying Russia's crude oil and military equipment, taking the total to 50. Trump had claimed trade deficit with India the reason for imposing steep tariffs. Trump had repeatedly called India "tariff king", accusing New Delhi of unfairly taxing American goods. He said that India was “very tough” on market access and had “not treated the US well” on trade. The US Commerce Secretary, Howard Lutnick, claimed last month that Washington was not very keen to seal the deal with India soon. In a podcast, Lutnick said that the trade deal between India and the US couldn't be sealed last year, as Prime Minister Narendra Modi did not make a telephone call to President Donald Trump, a claim rejected by New Delhi as "inaccurate".The tone changed with the US Ambassador to India, Sergio Gor, taking charge. Gor signalled Washington's intent to rebuild ties, saying that no country is as essential as India to the United States and friendship between Trump and PM Modi is "real" and will help in resolving "differences". "Real friends can disagree, but always resolve their differences in the end..." Gor said. Days later, the trade deal was announced. Lisa Curtis says, "There have been disagreements between the US and India, for example, on the aftermath of the India-Pakistan conflict... In terms of what led to this announcement - it could be many things such as Ambassador Sergio Gor arriving in New Delhi on January 9th, making positive statements over the last several weeks."

The MOTHER OF ALL DEALS

On January 27, PM Modi had officially announced the signing of the India-EU Free Trade Agreement, saying that it accounts for 25 per cent of global GDP and one-third of global trade. He said that the FTA with the EU will complement agreements with Britain and the European Free Trade Association (EFTA) and will strengthen both global trade and the supply chain. The two sides started negotiations for a trade deal in 2007, which was stalled in 2013 due to a gap in ambition. The negotiations were relaunched in June 2022. India and the European Union also finalised a technology and defence partnership. With this, India became the third Asian nation after Japan and South Korea to have such a security partnership with the European bloc.