ABP Live Deep Dive | How Much Does India Gain From The US-Europe Spat-And Why Trump May Regret It? Explained

Trump’s tariff-driven disruption is not without precedent. In 1971, US President Richard Nixon ended the dollar’s convertibility into gold.

The India-EU FTA, now in its final stage, could combine nearly a quarter of global GDP and create access to a market of close to two billion consumers.

Source : ABP LIVE

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Key points generated by AI, verified by newsroom

• US trade friction with Europe spurs India-EU free trade agreement talks.
• India-EU deal could boost markets, lower costs, and enhance strategic ties.
• FTA may weaken dollar dominance by increasing rupee and euro trade.

US President Donald Trump’s aggressive tariff posture-and his escalating friction with the European Union over Greenland-is inadvertently creating an opening for India. With Europe increasingly keen to reduce its dependence on Washington, New Delhi and Brussels are now fast-tracking a long-pending Free Trade Agreement (FTA), hailed by both sides as the “mother of all trade deals”.

Speaking at the World Economic Forum in Davos, European Commission President Ursula von der Leyen signalled the bloc’s intent to stand on its own economic footing, even without American support. The shift comes as Europe faces uncertainty over US trade threats and a more assertive geopolitical line from the White House. For India, the EU move could translate into new markets, cheaper imports, and greater strategic leverage.

America Has Shaken Global Trade Before

Trump’s tariff-driven disruption is not without precedent. In 1971, US President Richard Nixon ended the dollar’s convertibility into gold, the move that dismantled the Bretton Woods system and forced global currencies into a floating exchange-rate regime. Nixon also slapped a 10% surcharge on foreign goods, triggering international economic instability.

Trump is walking a similar path, while Franklin D Roosevelt is cited as another leader remembered for major institutional and economic confrontations. Von der Leyen, referencing the 1971 moment, framed Europe’s current challenge as a push to escape US economic dominance.

Why India-EU Deal Could Hit The Dollar

The India-EU FTA, now in its final stage, could combine nearly a quarter of global GDP and create access to a market of close to two billion consumers. For India, sectors such as textiles, leather, jewellery and handicrafts could gain duty-free entry into Europe, replacing the existing tax burden. For Indian consumers, European wine, spirits, dairy products, premium cars and high-end bikes could become cheaper as import duties fall.

The deal could also loosen mobility rules, making it easier for Indian IT professionals and skilled workers to live and work in Europe. Beyond trade, stronger ties may spill into defence cooperation, cyber security, maritime security and counter-terror coordination.

Crucially, the pact could weaken dollar dominance if India and the EU expand trade using the rupee and euro. India’s push for rupee-based trade through special vostro accounts, already supported by over 22 countries, could accelerate that shift, reducing reliance on the dollar for a significant share of global commerce.