Hyderabad: If 2025 had assumed the contours of a nightmare year for global trade thanks to Donald Trump’s tariffs, it appears that the year could transform into a year of big leaps for trade deals. In his zeal to reset world trade because he believed the United States had been taken for a ride for decades by nations that traded with it on favourable terms while imposing prohibitively protectionist tariffs on American goods, Trump had caused turmoil in trade. The need to diversify their markets in the wake of the Trump tumult may have pushed India and the UK to sign a Free Trade Agreement that had got bogged down on sticky issues in talks and lain virtually dormant for three years before a dramatic announcement came on the deal being concluded. With Trump said to be poised to announce a trade deal with the UK any time now, it is possible the real aim of his turbulent double-or-triple digit tariffs may be achieved after all.The big question that arises now is whether the US President wants a deal with China or an embargo on bilateral trade. Having sent many nations scrambling to sign trade deals to lower their dependence on the favourable trading terms with the US that led to the likes of India and the EU enjoying huge trade surpluses, the Trump administration may be plumping for a trade deal with China. A trade war between the two top economies will benefit no one and can only damage their economies while causing chaos in others. If things do pan out as trade deals have become the flavour of the season, the US President might be up for a medal for resetting world trade. Whether that happens or not, India and the UK will stand to gain from their FTA that includes lower tariffs on many things, including Scotch whiskey and gin and bring in automobile quotas. And the sweet-toothed in India might have something to look forward to as well as cheaper chocolates are in the offing. For two nations with ties a long way down history, the trade figures are not impressive enough and India is only the 11th largest trading partner of the UK. That may change if projections of a 40 per cent growth annually come true. India has more to look forward to in the FTA as it also envisages a bilateral investment treaty taking shape besides greater access to the UK for skilled Indians in terms of visas to work in IT/ITES and financial services and education, etc. Keir Starmer’s government may be facing awkward questions in parliament on the India FTA, but its exporters stand to gain substantially even as its firms will gain preferential access to public sector contracts in India. The background of the UK struggling to get its economy right after quitting the EU and needing ties with the world beyond and India wanting to clinch the FTA after opting out of a trade pact with the Asian bloc must be considered while explaining the speed at which the agreement came through. It does appear the FTA will be win-win for the old colonial master that has run into economic crosswinds since Brexit and the jewel in the crown of its old empire that has grown leaps and bounds to be the world’s fifth largest economy with rising purchasing power that is set to benefit from tariff reductions and greater market access. And all this just as an India-US trade deal is on the anvil even if it may not finally be as accommodative of India as the UK FTA appears to be.
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