Highlights

• India and EU finalized a landmark free trade agreement slashing tariffs on nearly all goods.
• The agreement affects 96.6% of EU exports and 99.5% of Indian goods.
• EU firms are expected to save €4 billion annually.
• Exports are projected to double by 2032.
• The deal dramatically reduces Indian auto tariffs from 110% to 10% over time.
• Europe will open to Indian textiles, gems, and chemicals.
• The agreement is praised as the 'mother of all deals' by Modi and von der Leyen.
• The agreement contains no binding framework for rare earth minerals or critical supply chains.
• While it serves as a macro trade tailwind, it is not a catalyst for breaking China's rare earth dominance.

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Is this a tariff earthquake, by the numbers? Is the India and European Union deal a Trump stunner as spin goes in European and India media? India and the EU have finalized a long-delayed free trade agreement that slashes tariffs on nearly all traded goods. According to Reuters, India will reduce tariffs on 96.6% of EU exports, while the EU will cut duties on 99.5% of Indian goods over seven years. European firms are projected to save roughly €4 billion annually in duties, with EU exports to India forecast to double by 2032.

The deal sharply lowers Indian tariffs on EU autos—from as high as 110% to 10% over time—while opening Europe to Indian textiles, gems, chemicals, leather, and marine products. Leaders including India’s Prime Minister Narendra Modi and European Commission President Ursula von der Leyen have branded it the “mother of all deals.”

What the Coverage Gets Right

Reporting from BBC (opens in a new tab) and Reuters (opens in a new tab) is largely accurate on mechanics and scale. This is India’s largest trade agreement to date, driven in part by U.S. tariffs that pushed both sides to diversify trade exposure. The pact meaningfully improves EU access to a historically protected Indian market and cushions India’s labor-intensive exporters hit by 50% U.S. duties.

Claims of job creation and export booms, however, remain projections. They assume frictionless implementation, regulatory alignment, and demand growth—conditions that rarely arrive all at once.

The Strategic Omission Investors Should Notice

For rare-earth and critical minerals observers, the silence is deafening. Despite parallel talks on security and defense cooperation, the trade text offers no binding framework on rare earth extraction, separation, magnet manufacturing, or stockpiling. At a moment when both India and Europe publicly frame rare earths as strategic vulnerabilities, this agreement liberalizes finished goods while leaving mineral chokepoints untouched.

That matters. Tariff relief does not weaken China’s dominance in rare earth midstream processing. It simply reroutes trade around tariffs, not around dependency.

Bottom Line

This is a major trade deal—real, consequential, and politically timely. It is not an industrial strategy for critical minerals. Investors should treat it as a macro trade tailwind, not a rare earth catalyst.