By K Raveendran
The sharp note of disappointment sounded by Scott Bessent over the India–European Union free trade agreement says less about a single deal and more about a changing geometry of power in the global economy. At one level, Washington’s frustration reflects a familiar concern that sanctions and trade penalties are losing their bite in a world where alternatives are multiplying. At another, deeper level, the India–EU pact cuts across the logic of weaponised tariffs that has come to define the second presidency of Donald Trump. If countries can secure access to vast non-American markets on favourable terms, the threat of exclusion from the United States ceases to be the decisive lever it once was.
The agreement between India and the European Union has been framed by both sides as the “mother of all deals”, not merely because of its scale but because of its symbolism. Together, the two partners account for more than a quarter of the world’s population and a formidable share of global output and consumption. An accord that lowers tariffs, aligns standards and opens services and investment channels between them creates a market ecosystem large enough to stand on its own. From Washington’s vantage point, this undermines the premise that access to the American consumer can be used as a toll gate to discipline the behaviour of allies and competitors alike.
Bessent’s remarks have been read in New Delhi and Brussels as a signal that the United States is uneasy about losing its centrality in trade diplomacy. Under Trump’s second term, tariffs have been recast less as bargaining chips and more as permanent fixtures designed to encourage domestic production. The message has been blunt: foreign producers can sell into the American market, but only at a price that reflects Washington’s priorities. That approach assumes, however, that the United States remains the indispensable market. The India–EU deal directly challenges that assumption by offering firms and governments another pole around which to organise supply chains and investment decisions.
For India, the agreement marks a calculated assertion of strategic autonomy. New Delhi has long resisted being boxed into exclusive alignments, preferring a posture that maximises flexibility across great-power rivalries. Concluding a sweeping trade pact with the EU while Washington presses partners to conform to its sanctions regime is a clear signal that India will not subordinate its economic choices to American geopolitical imperatives. In that sense, the deal stands out as perhaps the most consequential snub delivered to Washington since Trump returned to office, not because it is overtly anti-American, but because it demonstrates India’s confidence in charting its own course.
The EU’s motivations are equally telling. Brussels has spent years seeking to reduce its exposure to unilateral trade actions by the United States, whether in the form of tariffs, export controls or extraterritorial sanctions. By anchoring itself more firmly in the Indian market, the bloc diversifies its economic partnerships and reinforces its claim to strategic autonomy. The pact allows European firms to hedge against policy volatility in Washington and Beijing alike, while positioning the EU as a central node in a multipolar trade order.
From the American perspective, the timing is particularly awkward. Trump’s economic doctrine rests on the belief that tariffs can be used both to revive domestic manufacturing and to coerce foreign governments. Sanctions, trade penalties and the threat of market exclusion are meant to work in tandem. Yet these tools are only effective when alternatives are limited. The India–EU agreement enlarges the menu of options available to countries that might otherwise feel compelled to comply with US demands. If exporters can pivot to Europe or India, the cost of defying Washington falls, and with it the credibility of tariff threats.
This does not mean that US power evaporates overnight. The American market remains vast, technologically sophisticated and financially deep. The dollar continues to dominate global finance, and US firms sit at the apex of many high-value supply chains. But the direction of travel matters. Each major trade agreement concluded outside Washington’s orbit marginally dilutes the leverage derived from size alone. Over time, these marginal shifts accumulate, reshaping incentives and expectations.
The India–EU pact also carries implications for the broader architecture of globalisation. It suggests a move away from a hub-and-spoke system centred on the United States towards a more networked arrangement with multiple hubs. In such a system, power is diffused, and influence depends less on the ability to punish and more on the capacity to attract. Rules, standards and market access become tools of persuasion rather than coercion. For countries wary of being caught in the crossfire of great-power competition, this is an appealing prospect.
Washington’s unease is therefore as much psychological as material. For decades, the United States has been the agenda-setter in trade, shaping norms through its own agreements or blocking those it opposed. Watching two major economic actors strike a far-reaching deal without American involvement highlights the limits of that role. It underscores a reality that US policymakers have struggled to reconcile: in a world of rising economic powers, influence must be earned continuously, not assumed.
There is also a domestic political dimension to the disappointment voiced by Bessent. Trump’s tariff-first strategy has been sold to voters as a way to restore American jobs and bargaining power. Evidence that other countries are finding ways around US pressure risks undercutting that narrative. If tariffs fail to deliver compliance abroad or prosperity at home, their political appeal diminishes. The India–EU agreement becomes, in this context, a cautionary example of how global partners may adapt to American assertiveness.
For India, the benefits extend beyond trade flows. The pact strengthens its hand in negotiations with other partners, including the United States, by demonstrating that it has credible alternatives. It reinforces India’s ambition to become a manufacturing and services hub integrated with multiple markets, rather than a junior partner tethered to any single power. For the EU, it validates a strategy of diversification and engagement with fast-growing economies as a counterweight to geopolitical uncertainty. (IPA Service)
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