{"id":44450,"date":"2026-02-27T14:04:49","date_gmt":"2026-02-27T13:04:49","guid":{"rendered":"https:\/\/www.roncucciandpartners.com\/?p=44450"},"modified":"2026-09-04T11:57:48","modified_gmt":"2026-09-04T09:57:48","slug":"trumps-great-paradox","status":"publish","type":"post","link":"https:\/\/www.roncucciandpartners.com\/en\/2026\/02\/27\/trumps-great-paradox\/","title":{"rendered":"Trump’s Great Paradox"},"content":{"rendered":"

How US tariffs built the market they wanted to destroy<\/em><\/p>\n

There is an almost theatrical irony in the way the great trade battle of winter 2026 unfolded.<\/p>\n

Donald Trump, convinced that he could use tariffs as a weapon to reshape world trade to the advantage of the United States, unwittingly triggered a sequence of events that produced exactly the opposite: a free trade agreement between Europe and India<\/strong> (two billion people, a quarter of global GDP<\/em>) built on binding, institutional, and lasting rules. A structured market that Washington does not control.<\/strong><\/p>\n

The paradox is not only intellectually elegant. For European and Italian companies, it is a concrete strategic opportunity. But to understand where we are headed, we need to reconstruct precisely what happened and why.<\/p>\n

The Starting Shot: The US-India Tariff Escalation<\/strong><\/h2>\n

The crisis began in the summer of 2025<\/strong>. The Trump administration, frustrated by India’s continued purchases of Russian oil despite diplomatic pressure and India’s participation in BRICS, first imposed 25% tariffs on Indian goods on August 1, 2025, then doubled them to 50% effective August 27.<\/a><\/p>\n

The 50% threshold is historic: it is the highest tariff level ever applied by the US to a non-declared adversary, comparable to the tariffs imposed on China (145%) during the acute phase of the 2025 trade war, and higher than those imposed on Brazil (40%) or Vietnam (20%)<\/a>.<\/p>\n

The sectors most affected (textiles, leather goods, jewelry, shrimp and seafood, furniture, industrial chemicals) account for over 55% of Indian exports to the US, putting $87 billion in annual trade at risk<\/a>.<\/p>\n

Indian trade was already structurally exposed before the crisis: the US was New Delhi’s main trading partner, with bilateral trade worth over $212 billion annually. The concentration on a few destination markets, seen as a weakness by economists such as Shashi Tharoor, suddenly becomes urgent to correct.<\/p>\n

India would not ‘bow down’ to the United States. We will instead focus on attracting new markets<\/em><\/strong>.<\/p><\/blockquote>\n

Piyush Goyal, Indian Minister of Commerce, August 2025<\/em><\/p>\n

India’s reaction is measured but unequivocal.<\/strong> New Delhi is not yielding to Washington’s demands on the issue of Russian oil, which the government defines as \u201cenergy needs for 1.4 billion citizens.\u201d At the same time, Modi is launching an intense diplomatic offensive: he is meeting with Putin and Xi Jinping, strengthening relations with the Persian Gulf, and accelerating trade negotiations with Brussels.<\/strong><\/p>\n

European Convergence: Tariffs, Greenland, and Strategic Autonomy<\/strong><\/h2>\n

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Europe has its own reasons to speed things up. In January 2025, Trump threatens tariffs of up to 25% on eight EU countries for failing to support the plan to buy Greenland, a Danish territory and therefore part of the EU.<\/a><\/strong> The European Parliament starts infringement proceedings; Von Der Leyen’s \u201cstrategic autonomy\u201d doctrine finds fertile ground.<\/p>\n

The accumulation of pressures (tariff, diplomatic, and the perception of an increasingly unreliable Atlantic alliance) pushes Brussels to multiply alternative trade agreements. In 2025, the EU signs treaties with Mercosur, Mexico, and Indonesia<\/a>. India, the world’s fourth largest economy with 1.45 billion consumers and an annual GDP growth rate of over 6%, is the most coveted prize.<\/strong><\/p>\n

Bilateral negotiations, which were relaunched in 2022 after being suspended in 2013 due to differences over industrial tariffs, geographical indications, and the opening of services markets, suddenly find a political accelerator that was previously lacking. As Al Jazeera notes, it is Trump’s aggressive tariff policy that is giving \u201cnew impetus\u201d to the negotiations<\/strong>, removing resistance on both sides.<\/a><\/p>\n

Dominoes: Twenty-Seven Days that Rewrote the Map<\/strong><\/h2>\n

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The announcement on January 27, 2026, at Hyderabad House is the culmination of this process<\/a>. Von Der Leyen, Modi, and European Council President Ant\u00f3nio Costa (guests of honor at the Indian Republic Day celebrations the previous day) formalize the conclusion of the negotiations at a joint press conference<\/a>.<\/p>\n

The agreement is described by Von Der Leyen herself as the \u201cmother of all deals<\/a>\u201d: it eliminates or reduces tariffs on 96.6% of European exports to India and 99.3% of Indian exports to the EU<\/a><\/strong>, includes chapters on intellectual property, digital trade, sustainable development, financial services, and transport, and establishes binding dispute resolution mechanisms.<\/p>\n

Washington’s response was not long in coming. On February 2, 2026, six days after the European announcement, Trump reduced tariffs on India from 50% to 18% in a \u201cframework\u201d agreement that included Indian commitments on imports of American agricultural products and purchases of Russian oil.<\/strong> The speed of the move says it all: Washington perceived the European FTA as a threat to its strategic position in India and reacted with unusual promptness.<\/strong><\/p>\n

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The FTA negotiations got a new impetus after U.S. President Donald Trump’s strong-arm trade tactics<\/em><\/strong><\/p><\/blockquote>\n<\/blockquote>\n<\/blockquote>\n

PBS NewsHour, January 2026<\/em><\/p>\n

Two Agreements, Two Philosophies<\/strong><\/h2>\n

Comparing the EU\u2013India FTA with the US\u2013India agreement unveiled on February 2 highlights the structural difference between the two approaches, and why the EU agreement offers a more solid platform for European companies.<\/p>\n\n\n\n\n\n\n\n\n\n\n\n
Parameter<\/strong><\/td>\nFTA EU\u2013India<\/strong><\/td>\nUS\u2013India Agreement<\/strong><\/td>\n<\/tr>\n<\/thead>\n
Type<\/strong><\/td>\nBinding international treaty<\/td>\n“Interim Framework Agreement”<\/td>\n<\/tr>\n
Tariff liberalization<\/strong><\/td>\n96,6% export EU; 99,3% export India<\/td>\nReduction to 18% (conditional)<\/td>\n<\/tr>\n
Stability<\/strong><\/td>\nRequires parliamentary ratification \u2192 permanent<\/td>\nSubject to presidential changes<\/td>\n<\/tr>\n
Dispute mechanism<\/strong><\/td>\nBinding, international arbitration<\/td>\nNot specified<\/td>\n<\/tr>\n
Coverage<\/strong><\/td>\nGoods, services, IP, digital, financial services<\/td>\nMainly goods; reciprocal duties<\/td>\n<\/tr>\n
Start<\/strong><\/td>\nEarly 2027 (estimate)<\/td>\nImmediate (framework)<\/td>\n<\/tr>\n
Negative flexibility<\/strong><\/td>\nMinimum (requires formal renegotiation)<\/td>\nHigh (autonomous tariff snapback)<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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For businesses, this distinction is not academic: it is operational. A binding, ratified agreement with definite tariff schedules allows them to plan investments, restructure supply chains, and renegotiate supply contracts. Uncertainty paralyzes long-term decisions.<\/p>\n

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Sectoral Opportunities for European Companies<\/strong><\/h2>\n

The European Commission estimates that the agreement will eliminate around \u20ac4 billion per year in tariffs on European exports to India, with the aim of doubling EU exports by 2032<\/a>.<\/p>\n

Key sectors:<\/p>\n