Negotiations between the European Union and India began in 2007, paused in 2013, and resumed in 2022. The two sides finally announced an agreement on January 27, 2026.

Brussels, the de facto administrative capital of the EU, frames the deal as the largest trade agreement either side has ever concluded, linking economic regions home to roughly 2 billion people and accounting for about a quarter of global GDP.

International trade law can be… a lot.

If you want a quick summary without delving into trade law, here are the main points for investors. If you are not doing the research, consider sharing this with your financial advisor before making any decisions.

The EU–India trade agreement is a long-term re-routing of growth and capital, not a trading opportunity. The EU and India have effectively created a more predictable investment corridor by lowering trade frictions and modernizing rules around services, digital trade, and intellectual property.
The deal does not break the U.S. economy, but it can crowd out some incremental U.S.-based capital expenditure that has supported U.S. large-cap dominance.
Likely beneficiaries: High-quality European industrials, healthcare, pharmaceuticals, medical technology, chemicals, premium autos, plus firms tied to logistics and financial services that benefit from deeper EU–India flows.
India angle: Treat India as a long-term strategic allocation tied to export capacity, supply-chain upgrading, and scalable services (again, not a tactical trade).
U.S. implication: It is not a “sell America” signal for stocks, but it adds long-term pressure on the value of U.S. currency, bolstering the dollar-debasement trade.

How the EU benefits

The EU is already India’s largest trading partner in goods. The EU’s foreign direct investment stock (the outstanding cross-border investment) in India is also significant. The European Commission estimates that EU–India trade in goods and services exceeds 200 billion U.S. dollars a year, supporting nearly 800,000 EU jobs. The agreement’s main economic function is to reduce the friction that kept those relationships from scaling faster.

The EU reports that tariffs on 96.6 percent of its goods exported to India will be eliminated or reduced, saving EU exporters up to $5 billion per year and giving them a competitive advantage in the largest trade opening India has offered any partner.

Which European sectors win? The deal encourages greater collaboration between EU and Indian companies in financial services and maritime transport. Also:

Industrial machinery and electrical equipment: Tariffs up to 44 percent move toward zero percent for almost all products over time.
Medical and precision equipment: Tariffs ranging up to 27.5 percent move toward zero percent for 90 percent of products.
Chemicals, plastics, steel, and pharmaceuticals: Tariffs in the low 20s (and 11 percent for pharma) trend toward zero percent for almost all products.
Autos: A 110 percent tariff moves toward 10 percent under a quota framework (250,000 vehicles) over time.

There will also be no duties on several EU food exports (e.g., olive oil and processed foods) and significant, staged reductions for alcoholic beverages. Tariffs, currently as high as 150 percent, will fall to 30 percent for most wines, 40 percent for spirits, and 50 percent for beer. That is good news for EU consumer brands, but it means more competition for U.S. beverage exporters.

How India benefits

The Indian government positions the agreement as “unprecedented market access” for more than 99 percent of Indian exports to the EU by trade value. The deal boosts labor-intensive sectors like textiles, apparel, leather and footwear, marine products, gems and jewelry, handicrafts, engineering goods, and automobiles. It also focuses on services and makes it easier for skilled professionals to work across both regions, betting that people will move services and wealth between them.

The U.S. cost: Crowding out happens at the margin

The deal’s framing does not outright punish the United States, but it clearly is meant to outbid America on marginal attractiveness. Over time, the deal increases the expected return for building factories, supply chains, and service centers that connect EU–India commerce. The deal supports European exporters and India’s manufacturing and services, at the expense of American businesses.

EU companies will often face lower tariffs and clearer procedures in India than their American counterparts. U.S. firms then have three choices: cut prices, accept a share loss, or relocate plant, property, and people to the EU or India to stay competitive. None of those choices is friendly to profit margins, spending, or investment for American companies.

The European Commission projects that EU annual goods exports to India will roughly double by the early 2030s and, as a swipe toward American tariff policy, frames the agreement as one of eliminated duties.

Industry implications for U.S. investors

The pressure from the EU–India tariff cuts could hit America where it had export strength:

U.S. industrials and capital goods: more incentive for U.S. multinationals to build capacity abroad rather than expand domestic plants.
U.S. medical technology and pharmaceuticals: a tougher competitive set in India as EU suppliers become structurally cheaper and intellectual property rules are reinforced.
U.S. autos (especially premium segments): Europe’s brands gain a clearer tariff pathway into India, shifting incremental platform and supply chain investment toward Europe.
U.S. financial services and maritime/logistics: EU firms gaining earlier or cleaner market access to India forces U.S. players to spend more to defend their share.

The Trump administration possibly made assessments; six days later, President Trump posted on Truth Social that he and Indian Prime Minister Narendra Modi “agreed to a trade deal between the United States and India, whereby the United States will charge a reduced Reciprocal Tariff, lowering it from 25% to 18%.” In exchange, India agreed to purchase U.S. energy and agricultural products. While helpful to those U.S. industries (energy and agriculture), by itself, it is too little too late to be as helpful to the American industries bullet-pointed above.

Asset allocation takeaways

The practical portfolio response is not to dump U.S. stocks, even though they feel less attractive. Our 2026 outlook noted that, in past years, overweighting domestic stocks was the right trade, but more recently, global markets are making foreign stocks more attractive. For some investors, that means revisiting developed ex U.S. exposure (especially high-quality European industrial, healthcare, and financial companies) and treating India as a strategic allocation tied to manufacturing, services, and supply chain upgrading. It also means being intentional about currency risk: A deeper two-way investment can support the euro and rupee at the margin, which may lengthen the dollar-debasement trade (i.e., the reduction in the U.S. dollar’s purchasing power, making non-U.S. dollar-denominated investments more attractive).

Trade deals like this rarely move the economy or the markets overnight, and this one should be no exception. The deal needs to be ratified by the European Parliament and India’s Cabinet before it becomes law. That could happen in late 2026. It is not uncommon for these deals to be held up in court, but I suspect that the regions’ irritation with America’s chaotic trade policy might play a role in seeking to salve that irritation with greater expediency. The EU–India agreement is a long tailwind for Europe and India, and (at least at the margin) a headwind for U.S. exceptionalism as the default investment setting.

Still, don’t let the deal be too much of an influence in loading up on the stocks of foreign companies; neither region will be able to replace the U.S. as a trading partner. And many herald American companies as the best-run in the world. As I have shared previously, I have been reducing my domestic large-capitalization growth stock positions at the margin in favor of foreign stocks. This deal makes me feel better about that decision.

Allen Harris is an owner of Berkshire Money Management in Great Barrington and Dalton, managing more than $1 billion of investments. Unless specifically identified as original research or data gathering, some or all of the data cited is attributable to third-party sources. Unless stated otherwise, any mention of specific securities or investments is for illustrative purposes only. Advisor’s clients may or may not hold the securities discussed in their portfolios. Advisor makes no representation that any of the securities discussed have been or will be profitable. Full disclosures here. Direct inquiries to Allen at AHarris@BerkshireMM.com.