Anchal Vohra is a Brussels-based international affairs commentator. On a smog-filled day in New Delhi, I watched as a few German cars struggled to navigate a massive traffic jam. A British SUV was also in the mix, trailing not so far behind. Last year, these foreign cars accounted for only 0.1 percent of India’s imports, with Germans in the lead and the British coming in a near second. However, British businesses have gained an edge ever since the U.K. and India inked a free trade agreement earlier this year, with India finally lowering its protectionist guard. Once this deal fully comes into effect, overall bilateral business is expected to grow by more than 50 percent in about a decade-and-a-half, as New Delhi slashes its car tariffs from 100 percent to 10 percent, and its tariffs on scotch from 150 percent to 40 percent over a period of 10 years — all despite the cost to its domestic industries. It also gains particular advantage for its textile sector, which was hard hit by U.S. President Donald Trump’s 50-percent tariff, removing tariffs on Indian textiles exported to the U.K. The EU, meanwhile, remains the single largest market in the world, with a much higher chance of growing its exports to a country packed with over 1.46 billion consumers. Yet, negotiations between New Delhi and Brussels are forever hitting roadblocks, even as negotiators shuttle between the two capitals to get a deal across the finish line — a deadline that’s now been postponed to Jan. 26. And as these talks continue, the bloc could stand to learn from the flexibility of its former member. According to an Indian official in New Delhi, granted anonymity in order to speak freely, the biggest barriers to an agreement are currently the EU’s insistence on greater market access in the politically sensitive agriculture sector, and its insistence on a carbon tax under the Carbon Border Adjustment Mechanism (CBAM). On top of all this, the bloc’s protectionist tendencies — displayed by its higher tariffs on steel and its recent decision to curb rice imports from India — are also unexpected hurdles. In contrast to this rigidity, India’s concessions in its deal with the U.K. emerged from the flexibility it was granted in the agriculture sector, which was largely insulated from British products, the official said. “For all its faults, [the U.K.] understands India and Indians better.” Nearly half of Indians depend on agriculture for their livelihood, and farmers make up a strong voting bloc that holds strong political clout. Back in 2021, farmer protests even forced Prime Minister Narendra Modi to withdraw agricultural reforms and apologize. In fact, I have been told by former Indian officials and experts that the U.S. tariffs on India weren’t punishment for the country’s purchase of Russian oil, as Trump has claimed, but rather for its refusal to let U.S. food products flood the country. Nearly half of Indians depend on agriculture for their livelihood, and farmers make up a strong voting bloc that holds strong political clout. | Jagadeesh Nv/EPA “The interests of our farmers are top priority. India will never compromise on the interests of its farmers, dairy farmers and fishermen,” Modi had said at the time. But these same differences now threaten the EU-India relationship before it even properly takes off. “The Europeans could learn from the British,” the Indian official noted. “They excluded dairy, chicken and apples from the deal,” he explained, listing products particularly important to India. “In exchange, we let them bring in salmon, cod and lamb.” He also alluded that India could consider dropping tariffs on cars and wine if the bloc kept out of agriculture: “In liquor, luxury cars and wine, there is always room, since that doesn’t affect our most vulnerable people.” Instead of any such changes,, however, India is now growing peeved by what it sees as last-minute pressure tactics by Brussels. Just this month, the EU decided to “limit rice imports from India” and other Asian countries to the benefit of domestic rice growers and millers. And the bloc’s unexpected decision to spike tariffs on steel imports outside its quota to up to 50 percent has rattled Indian negotiators. New Delhi was already opposed to the EU’s incoming carbon tax, believing it would make its steel exports uncompetitive. The Secretary of India’s Ministry of Steel Sandeep Poundrik described the European carbon tax as a bigger threat to Indian exports than Trump’s tariffs. On top of all this, the bloc’s protectionist tendencies — displayed by its higher tariffs on steel and its recent decision to curb rice imports from India — are also unexpected hurdles. | Piyal Adhikary/EPA Moreover, some experts like former trade negotiator for India Sangeeta Godbole argue the EU stands to gain more from an FTA whereas India stands to lose if the carbon tax provision isn’t reconsidered. “Nearly 80 percent of Indian exports to the EU even now face miniscule tariffs below 1 percent,” she noted recently, demanding India shield exports “from excessive environmental rules” the EU is trying to impose. To that end, the country has decried the bloc’s tax on carbon intensive imports via CBAM as a violation of the Common But Differentiated Responsibilities (CBDR) principle, which doesn’t hold developing countries equally responsible for climate change due to differences in historical contributions and the state of their economic development. And here, too, India argues, the understanding with the British could be emulated. Although it failed to gain an exemption on the U.K.’s version of the carbon tax, India has reserved the right to retaliate if the FTA’s benefits are negated by this tax. For its part, the EU claims the carbon tax is intended to encourage the use of clean energy in heavy polluting industries. And as Commissioner for Trade Maroš Šefčovič said back in September: “We also need an understanding from the Indian side that we also have our constituency, we also have our audience” to consider — especially after the farmer protests over the recent deal with Mercosur nations. Meanwhile, the EU is also concerned about whether a deal with India might end up benefiting China. The bloc is desperately trying to reduce its dependence on Beijing in strategically important sectors and hoping India could replace it, but India itself is heavily reliant on China as well — for example, nearly half of the components in Indian semiconductors are imported from there. It also gains particular advantage for its textile sector, which was hard hit by U.S. President Donald Trump’s 50-percent tariff, removing tariffs on Indian textiles exported to the U.K. | Divyakant Solanki/EPA However, speaking with a highly placed EU insider who was granted anonymity, I learned the bloc is now ready to make concessions, offering to jointly manufacture cars to encourage India to lower its tariffs, to leave out access to certain agricultural products, and to possibly even relent on garment duties. And last week, negotiators went through sector by sector once more, trying to get a better deal for their domestic industries, trying to keep the balance sheet even. The truth is, India — home to a large number of people living below the poverty line despite its rapid economic growth — needs an FTA with the single largest market to attract foreign investment. But the EU needs India too.

Listen on * Spotify * Apple Music * Amazon Music Ein besonderer Tag für den Kanzler und ein politischer Geburtstag mit viel Berliner Realpolitik. Friedrich Merz wird 70 Jahre alt. Während er in der Fraktion gefeiert wird, warten Streit über Rente, Wehrpflicht und Bürgergeld auf ihn. Gordon Repinski blickt auf den Tag des Kanzlers und formuliert fünf politische Wünsche für das neue Lebensjahr. Im 200-Sekunden-Interview spricht Roland Koch, früherer Ministerpräsident von Hessen und Weggefährte über Freundschaft, Geduld und Führungskraft. Er erklärt, warum Merz Stabilität braucht, wie schwer die Koalition wirklich zu führen ist und weshalb der Kanzler international schon überzeugt, aber innenpolitisch die Überzeugung noch auf sich warten lässt. Danach geht es mit Hans von der Burchard nach Brüssel und Straßburg. Dort steht das Europäische Parlament vor einem Machtproblem. Die alte Mehrheit aus Christ- und Sozialdemokraten bröckelt. Rechte Fraktionen gewinnen an Einfluss und gefährden zentrale Gesetze wie den geplanten Bürokratieabbau. Ein Thema, das auch den Kanzler trifft und ärgert. Die Machthaber-Folge über Friedrich Merz findet ihr hier und das Freitags-Spezial mit Georg Mascolo und Katja Gloger hier.  Das Berlin Playbook als Podcast gibt es jeden Morgen ab 5 Uhr. Gordon Repinski und das POLITICO-Team liefern Politik zum Hören – kompakt, international, hintergründig. Für alle Hauptstadt-Profis: Der Berlin Playbook-Newsletter bietet jeden Morgen die wichtigsten Themen und Einordnungen. Jetzt kostenlos abonnieren. Mehr von Host und POLITICO Executive Editor Gordon Repinski: Instagram: @gordon.repinski | X: @GordonRepinski.

Listen on * Spotify * Apple Music * Amazon Music Ein Kanzler im Kurztrip auf Langstrecke für den Klimaschutz. Friedrich Merz fliegt zur Klimakonferenz nach Belém in Brasilien und bleibt dort nur wenige Stunden. Mit an Bord: eine Agenda zwischen Industriepolitik, Technologieoffenheit und der Frage, ob Deutschland beim Klima überhaupt noch als Vorbild gilt. Gordon Repinski begleitet den Kanzler und ordnet die vorher Reise ein. Zurück in Berlin: Da tagt vorher der Kanzlerreise der Stahlgipfel im Kanzleramt. Tom Schmidtgen vom POLITICO-Newsletter Industrie und Handel erklärt, woran die Stahlbranche wirklich krankt, warum Zölle gegen Billigimporte drohen und weshalb selbst der Industriestrompreis nicht hilft. Im 200-Sekunden-Interview spricht Ilse Aigner, Präsidentin des Bayerischen Landtags, über den Verdacht, dass die AfD mit parlamentarischen Anfragen sensible Daten zur kritischen Infrastruktur abgreift. Sie fordert strengere Regeln und ein entschiedenes Vorgehen gegen mögliche Spionage. Zum Schluss nimmt euch Gordon mit zum Launch-Event des Newsletters Industrie und Handel. Das Berlin Playbook als Podcast gibt es jeden Morgen ab 5 Uhr. Gordon Repinski und das POLITICO-Team liefern Politik zum Hören – kompakt, international, hintergründig. Für alle Hauptstadt-Profis: Der Berlin Playbook-Newsletter bietet jeden Morgen die wichtigsten Themen und Einordnungen. Jetzt kostenlos abonnieren. Mehr von Host und POLITICO Executive Editor Gordon Repinski: Instagram: @gordon.repinski | X: @GordonRepinski.

LONDON — Donald Trump’s tariffs have already hammered Britain’s embattled steelmakers — but the EU’s looming trade protection measures could hit them harder still. The EU is preparing to reduce foreign steel quotas by almost half as part of new measures set to be officially proposed on Tuesday. That’s a problem for Britain’s metal manufacturers, who export half of what they produce to the EU — their largest export market. The moves echo a French proposal backed in July by Europe’s steel lobby EUROFER and 11 EU nations, including Spain and Italy. That plan proposed slashing the bloc’s current steel safeguard quotas by 40 percent to 50 percent. Imports exceeding the quotas would catch a 50 percent tariff. “As a non-EU country, we will worry about this more than the U.S. tariffs,” said a British steel exporter, granted anonymity to speak candidly about commercially sensitive matters. The EU measures “would affect us directly and in terms of trade diversions,” they said, pointing to the further impact of exports diverted to the U.K. by Brussels’ new protections. “We are deeply concerned by reports that the European Commission is considering significant reductions to steel safeguard quotas,” said Lisa Coulson, chief commercial officer of British Steel. “Such measures would risk shutting British producers out of our largest export market at a time when the sector is already contending with 25 percent tariffs in the United States.” ‘PANIC STATIONS’ Some 1.9 million of the 4 million tons of steel Britain manufactures annually goes to the EU. The U.S., by comparison, imports just 200,000 tons of British steel. “In the case of steel, what the EU is going to do is very, very important,” said Carmen Suarez, co-CEO of the Trade Remedies Authority, Britain’s trade watchdog, adding the proposal will be “watched by many with lots of interest” in Britain’s steel industry and Department for Business and Trade. The EU’s proposals threaten to have a devastating impact on Britain’s steel industry. Alongside Trump’s tariffs, the sector has been rocked by bankruptcies and the failure of British Steel this year, requiring the government to seize emergency control of its operations. The EU’s move also risks setting back work in London and Brussels to repair the U.K.-EU relationship in recent months. A U.K. official said Brussels hasn’t yet approached the British government about the issue. “We are going to adopt by mid-October a very strong trade protection measure,” EU Trade Commissioner Maroš Šefčovič said earlier this month. France’s proposal is getting a lot of traction in Šefčovič’s office, two U.K. steel industry figures said. Yet it could still be watered down as it passes through the European Council and the Parliament before being implemented next year. “We are going to adopt by mid-October a very strong trade protection measure,” EU Trade Commissioner Maroš Šefčovič said earlier this month. | Thierry Monasse/Getty Images “Given the current context characterized by the new U.S. tariffs, it appears increasingly necessary to adopt a new protective mechanism, strongly requested by the European steel industry,” said an EU diplomat. “Together with the U.S., we will try to ring-fence our steel production,” Matthias Jørgensen, the European Commission’s head for trade with the U.S. and Canada, told POLITICO’s Competitive Europe Summit in Brussels on Thursday. “And thereby, I hope we will be able to achieve the normalization of trade steel across the Atlantic, and get rid of the U.S. tariffs,” he said, noting “we need to take action to address [overcapacity]” from China. Yet the EU’s proposal “would be halving our biggest market,” one of the two U.K. steel industry figures quoted above said, calling it one of the “biggest disasters” ever to befall Britain’s steel industry. “It could spell a significant injury,” they said, adding firms throughout the sector are at “panic stations.” The U.K. government has yet to publish its steel strategy for this year, which promises to set out a viable future for the sector in Britain. “We are backing a bright future for British steelmaking, committing up to £2.5 billion of investment to rebuild the steel industry and exploring stronger trade measures to protect UK steel producers from unfair behaviours,” a U.K. government spokesperson said, adding officials are awaiting the details of the EU’s plans. Camille Gijs contributed to this report.

BRUSSELS — The European Commission said Friday that it stands ready to do a deal with the U.S. on tariffs, and plans no further meetings between the two sides over the weekend. “Our priority is to achieve an agreement in principle with the U.S.,” trade spokesperson Olof Gill said at the Commission’s midday briefing. “We await some indication from our American counterparts that they are ready to do the same.” There was no indication that this would happen imminently, Gill added: “Let’s see what happens when our friends in Washington wake up in a few hours from now.” The EU has been pushing for an agreement in principle with the White House that would anchor a 10 percent U.S. baseline tariff and provide relief for industrial sectors such as aircraft and spirits. A solution on car tariffs, which stand at 25 percent, is also under discussion. Trump told NBC on Thursday evening that he would soon notify the EU of new tariffs. The EU said Thursday, meanwhile, that it doesn’t expect a letter in the style of Japan, South Korea — and, on Thursday, Canada, which the U.S. president hit with a 35 percent tariff. The European Commission was not for now planning any more meetings with U.S. counterparts for Trade Commissioner Maroš Šefčovič or Commission President Ursula von der Leyen over the weekend. Gill stressed, however, that “that can change very quickly.” The U.S. this week suddenly extended the deadline for trade partners to seal a deal, from July 9 to Aug. 1. The uncertainty over Trump’s decision brings into play the question of the EU’s first package of retaliation measures against his tariffs. The bloc’s tariffs on U.S. goods worth around €21.5 billion will kick in automatically at 12:01 a.m. on Tuesday — unless the Commission decides to extend their current suspension. Gill said this step could be taken quickly by the Commission under a so-called urgency procedure. This would only require the subsequent approval of EU countries. “Should we decide to extend the suspension — or if we need to unsuspend it — we can do that with the drop of a hat,” he explained. That timeline gives the EU’s 27 trade ministers time to discuss the state of play at a meeting in Brussels on Monday, before — if there is still no deal — deciding on any possible retaliation.

President Donald Trump said Friday he is “terminating” all trade discussions with Canada, effective immediately, citing the country’s Digital Services Tax. “We have just been informed that Canada, a very difficult Country to TRADE with … has just announced that they are putting a Digital Services Tax on our American Technology Companies, which is a direct and blatant attack on our Country,” Trump said in a Truth Social post. He accused the country of copying the European Union, “which has done the same thing, and is currently under discussion with us.” Based on the Digital Services Tax he wrote, the U.S. was “hereby terminating ALL discussions” on trade with Canada. He added that he’d announce tariff levels on Canada within the next seven days. Canadian Prime Minister Mark Carney and Trump had previously agreed to secure a new economic and security deal by July 16, in which Canada was hoping Trump would lift tariffs on the country. Canada’s Digital Services Tax, which imposes a 3 percent tax on large foreign and domestic digital companies that make over C$20 million in revenue, is expected to come into force on Saturday. The tax applies to certain Canadian profits that companies make from online advertising, social media, online marketplaces and the sale and licensing of user data. The prime minister’s office didn’t immediately respond to a request for comment. But earlier this week, a Canadian official told POLITICO two meetings were scheduled with U.S. officials to discuss a deal.