27 Countries Just Made a Move That Has Washington Completely Blindsided

The European Union and India concluded a free trade agreement on January 27 that creates a unified market of 2 billion people and represents 25 percent of global GDP. Negotiations that began in 2007 were finalized as Washington threatened both sides with steep tariffs.

India will slash tariffs on cars imported from the EU to 40 percent from as high as 110 percent, according to Reuters. The deal eliminates or reduces tariffs on over 96 percent of EU goods exports.

European carmakers will see Indian customs duties gradually reduced from 110 percent to 10 percent. Wine and spirits duties drop from 150 percent to around 20-30 percent, while olive oil duties are cut to zero from 40 percent. Tariffs in machinery, chemicals and pharmaceuticals will be almost entirely eliminated.

A 27-Country Negotiating Position

Commission President Ursula von der Leyen stood in New Delhi to announce what officials called "the mother of all trade deals." She framed the partnership as "a clear choice" of strategic dialogue and openness.

The timing matters. Washington is targeting both India and the EU with steep tariffs. India faces an extra 25 percent levy on Indian goods for its purchases of discounted Russian oil, bringing combined US tariffs to 50 percent.

The EU proceeded with its India partnership the same week Canada abandoned a China trade deal after Trump threatened full tariffs. The contrast reveals the power of negotiating as a 450-million-person bloc rather than going it alone.

Washington Didn't See This Coming

Brussels has accelerated its outreach to markets around the world with deals signed with Japan, Indonesia, Mexico, and South America under the catchphrase "strategic autonomy." According to ISPI, this approach is akin to decoupling from a US seen by most European leaders as erratic.

The agreement would support the EU's broader strategy to diversify trade ties and reduce reliance on the US and China.

Indian trade analyst Ajay Srivastava told Business Today the agreement is about "creating a stable commercial corridor between two major markets at a time the global trading system is fragmenting."

A combined market accounting for nearly a quarter of global GDP would instantly place the pact among the world's most influential trade frameworks.

The Federation Advantage

Twenty-seven countries negotiating as one unit can create alternatives to US-dominated trade patterns. Individual European nations would face the same pressures as Canada when confronted by larger powers. As part of a bloc, they flip the equation.

The EU's 450 million people and 15 trillion euro economy provides Brussels with negotiating power that no individual European nation could match. The bloc's recent assertion of strategic autonomy has included new partnerships across Asia, Africa, and Latin America.

Bilateral trade between India and EU stood at 136.5 billion dollars in 2024-25. Both sides hope to increase that to about 200 billion dollars by 2030.

The EU contingent marched in India's Republic Day parade on January 26, carrying four flags including the flag of the European Union. The symbolism coincided with the final push to conclude negotiations.

What Happens Next

The EU aims to double goods exports to India by 2032, saving around 4 billion euros a year in duties. Sensitive agricultural products including beef, chicken, rice and sugar have been excluded from the agreement.

Geopolitics is adding urgency on both sides. The EU is accelerating efforts to diversify away from single-country dependencies, while India is positioning itself as a central player in restructured global supply chains, according to the European Council on Foreign Relations.

Brussels sees India as a key partner in building what it calls "a multipolar trading system." The deal includes provisions on digital trade, green technology, and mutual recognition of standards.

For observers in Washington, the message is clear. Twenty-seven countries negotiating as one can reshape global economic power while the White House focuses on tariff threats. The EU-India partnership represents a new economic pole outside US influence.