Daybreak Why the ‘mother of all trade deals’ wasn’t enough against Trump's tariffs
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Feb 4, 2026 Markets breathed a sigh of relief when the US cut tariffs, but deeper trade terms quickly complicated that view. The conversation covers how steep US tariffs battered Indian exporters and why Europe’s gradual pact could not absorb sudden shocks. It breaks down the US deal’s purchase commitments, energy and geopolitical leverage, and what this balance of short‑term pressure versus long‑term strategy means for India’s trade choices.
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Relief Came From Easing Pressure
- Markets reacted with immediate relief when the US cut tariffs to 18% from punitive highs near 50%.
- The initial rally reflected removal of near-term pressure more than confidence in long-term gains.
EU Deal Is Long-Term, Not Instant Fix
- The EU 'mother of all trade deals' is reciprocal and rules-based, promising stable long-term market access for India.
- But its phased implementation means it cannot quickly offset immediate US-driven trade disruptions.
US Exposure Shows Up Fast
- The US is India's largest export destination for high-value goods, so tariffs there show up quickly in markets and confidence.
- Concentration of exports makes short-term US policy moves disproportionately damaging for Indian exporters.