By Anietie Anii-Bassey
A sweeping free trade agreement between the European Union and India is being hailed in Brussels as a strategic milestone, reflecting Europe’s determination to broaden its global partnerships at a time when political and economic tensions with Washington have unsettled long-standing assumptions about trans-Atlantic cooperation.
Announced Tuesday in New Delhi, the pact comes amid renewed anxiety in European capitals following tariff threats from U.S. President Donald Trump earlier this month, linked to disputes over Greenland and broader trade relations.
Although the White House later softened its stance, the episode reinforced concerns across the continent that the international framework underpinning decades of economic and security ties is becoming increasingly unpredictable.
The agreement with India is the latest in a string of trade initiatives pursued by the 27-nation bloc over the past year, alongside deals concluded or under negotiation with Japan, Indonesia, Mexico and the Mercosur group of South American nations. Together, the push underscores a broader recalibration of European foreign and economic policy toward diversification and strategic autonomy.
“The international order we relied upon for decades is no longer a given,” Cyprus President Nikos Christodoulides told lawmakers at the European Parliament last week as his country prepared to assume its six-month rotating presidency of the EU.
Calling for unity and decisiveness, he urged the bloc to become “more autonomous and open to the world,” sentiments echoed by officials across the continent.
European Commission President Ursula von der Leyen signed the accord after attending a military parade in India’s capital alongside Indian Prime Minister Narendra Modi and European Council President Antonio Costa. She described the agreement as the “mother of all deals,” noting its vast economic scope.
If fully implemented, the pact would affect nearly two billion people and eliminate or sharply reduce tariffs on roughly 97% of European exports to India — including automobiles and wine — while opening the EU market to about 99% of Indian goods such as textiles and pharmaceuticals.
Analysts say the timing is as significant as the scale. Garima Mohan, a senior fellow at the German Marshall Fund, argued that Europe and India have long viewed closer cooperation as a way to balance China’s economic rise, but that recent strains in U.S.–European relations helped push negotiations across the finish line.
“This movement toward diversification, looking for new partners as well as building self-reliance, was precipitated by tensions with China and really driven home by the fracture of the trans-Atlantic partnership,” Mohan said. “The deal only came to pass at this particular geopolitical juncture, and that says something about the world we live in.”
The agreement follows July’s trade pact with Indonesia and a long-awaited accord with the Mercosur nations, signed two weeks ago, that would create a free-trade zone of more than 700 million people.
Von der Leyen has said the European Commission has the authority to proceed with the Mercosur deal despite resistance from some lawmakers in the European Parliament.
Beyond commerce, Brussels has also upgraded strategic ties with countries including Japan, South Korea and Australia — all wary of China’s expanding influence and unsettled by volatility in U.S. politics.
“There is a hope that things will change given the importance of the U.S. for us,” said Ivano di Carlo, a senior policy analyst at the European Policy Centre. “But there is a realization now that we are a bit more alone in this world.”
Security concerns have further accelerated Europe’s reassessment. Russia’s invasion of Ukraine prompted the EU to establish new financial tools to strengthen its defense industry and modernize transport infrastructure critical for military mobility. Pressure from Washington over Europe’s historically low defense spending, however, gave those efforts fresh urgency.
Denmark’s prime minister has warned that Russia could pose a credible threat to the EU by the end of the decade, urging closer integration between European and Ukrainian defense manufacturers. France has long championed the idea of “strategic autonomy,” and support for that vision has grown since U.S. officials signaled last year that American security priorities were shifting.
Shortly after Trump began his second term, EU leaders agreed to raise defense budgets, earmarking about 150 billion euros ($162 billion) in loans for air and missile defense systems, artillery, ammunition, drones, transport aircraft, cyber capabilities, artificial intelligence and electronic warfare.
Still, industry executives caution that achieving genuine military self-sufficiency will take years, requiring Europe to overcome both its reliance on U.S. technology and the fragmentation of its own defense sector along national lines.
Investor confidence has surged in the meantime, with shares in major European arms manufacturers — including Italy’s Leonardo, Germany’s Rheinmetall, France’s Thales and Sweden’s Saab — climbing steadily.
Energy security has become another focal point. As the EU reduced its dependence on Russian supplies, it turned increasingly to U.S. oil and liquefied natural gas, according to the Institute for Energy Economics and Financial Analysis. That shift carries its own risks, European officials say.
At a North Sea energy summit in Hamburg on Monday, European Commissioner for Energy and Housing Dan Jørgensen warned against trading one reliance for another. EU data show the bloc now imports about 14.5% of its oil and 60% of its LNG from the United States.
“We do not want to replace one dependency for another — we need to diversify,” Jørgensen said, pointing to potential suppliers in the eastern Mediterranean and the Gulf. Negotiations are already underway for a free trade agreement with the United Arab Emirates as part of that strategy.
Forging new partnerships across trade, defense and energy will not eliminate geopolitical rivalries, Mohan noted, but it may give Europe greater leverage in dealing with Washington, Beijing and Moscow alike.
“Decoupling is easier said than done,” she said, “but building a broader network of global relationships strengthens Europe’s hand in a far more contested world.”
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