EU, India close ranks against Trump to seal trade deal
POLITICO - Tuesday, January 27, 2026NEW DELHI — The European Union and India locked arms against U.S. President Donald Trump’s tariff offensive and China’s flood of cheaper goods to conclude talks on a landmark trade pact on Tuesday.
Under the deal, India will lower tariffs on European cars and wine, while the EU signaled it would assist Indian companies with decarbonization and negotiate duty-free quotas for Indian steel.
“Two giants who choose partnership, in a true win-win fashion. A strong message that cooperation is the best answer to global challenges,” said European Commission President Ursula von der Leyen, standing next to Indian Prime Minister Narendra Modi.
The announcement rounded off a year of intensive negotiations in which the EU sought to lock down a trade deal with the world’s most populous nation. Von der Leyen and European Council President António Costa were guests of honor at India’s exuberant Republic Day celebrations on Monday.
Ties between India and the U.S. reached a low point last August, when Trump imposed a 50 percent tariff on goods from the South Asian nation over its purchases of Russian oil.
“Both know that they need each other like never before and in this fractured world where trusted partnerships are very, very hard to come by,” said Garima Mohan, who leads the German Marshall Fund’s work on India.
Under the deal, India will gradually slash tariffs on European cars, reducing tariffs from 110 to 10 percent on 250,000 cars every year.
A range of agricultural goods will also see their tariffs drop, coming as a reassurance for the European Parliament and the EU’s farmers who have been heavily protesting in recent months over fears that they would be undercut by cheap farm produce.
Tariffs on wine will be reduced from to 20 and 30 percent from 150 percent now, depending on value. European olive oil will also enter duty free into India, instead of facing a 45 percent tariff.
Steel deal
The stickiest issues related to steel and the EU’s carbon border tax: New Delhi, a major steel exporter, wanted to make sure that its metals wouldn’t be impacted by an upcoming 50 percent EU tariff on steel, and the carbon levy that has just entered force.
In response to those concerns, the EU plans to give India a significant share of the 18.3 million metric tons of steel allowed to enter the bloc duty free — Brussels will negotiate this with its partners as is required by global trade rules.
“There will of course be a difference in how you treat this negotiation on application of steel measures between FTA and non-FTA partners. Therefore I think it was strategic from both sides that we have the agreement now and that India will be treated as an FTA partner,” EU trade chief Maroš Šefčovič told POLITICO.
On the carbon border tax, a new levy on carbon emissions that has irked countries such as the United States and Brazil, Brussels will “help Indian operators to have a smooth introduction of CBAM with all the technical assistance and all the additional advice we can provide,” Šefčovič added, stressing that the Commission would treat all its partners equally.
For India, the deal represents an opportunity to boost its exports of pharmaceuticals, textiles and chemicals.
This story has been updated.