MARY LOUISE KELLY, HOST:
The European Union and India finalized a landmark trade deal today. India's prime minister, Narendra Modi, called it the mother of all deals. For Europe, the move seeks to hedge against its unpredictable ties to the U.S. under the Trump administration. NPR Berlin correspondent Rob Schmitz is here to go over the details. Hi, Rob.
ROB SCHMITZ, BYLINE: Hey, Mary Louise.
KELLY: The mother of all deals.
SCHMITZ: Oh, yeah.
KELLY: Just how big a trade deal is this?
SCHMITZ: So in monetary terms, this deal is historic. I mean, it could have economic reverberations across the world. And once this deal is signed - and we expect it to be signed in the coming weeks - the 27 member states of the EU will cut tariffs on 99.5% of nearly all goods imported from India over the next seven years. That means Indian textiles, chemicals, rubber, base metals for automobiles. All of this will suddenly be cheaper inside of the EU. Now for the EU's part, India will reduce tariffs on nearly 97% of European goods, leading to a savings of nearly $5 billion and an expectation that European exports to India will double over the next six years. European leaders were ecstatic about this today. Here's European Council President Antonio Costa.
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ANTONIO COSTA: At a time when the global order is being fundamentally reshaped, the European Union and India stand together as a strategic and reliable partners. Today, we are taking our partnership to the next level.
KELLY: Rob, what about there in Germany? You're sitting in Europe's largest economy. What could this mean for German industry?
SCHMITZ: Well, this could be just what the doctor ordered for Germany's very lackluster economy. German automakers have been shedding jobs and revenue for years now due to competition from China and rising energy costs. German Chancellor Friedrich Merz has yet to make an official visit to China, unlike his predecessors. He decided instead to visit India. He did that earlier this month as part of these trade discussions, and he brought German business leaders like Volkswagen CEO Oliver Blume, who spoke to German newspaper Die Welt today about how he is feeling about this.
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OLIVER BLUME: (Speaking German).
SCHMITZ: And Mary Louise, he's saying here that India is now the third-largest car market in the world. It's developing rapidly, and this deal means big opportunities for Volkswagen. And it's worth pointing out here that this trade deal will mean India slashes tariffs from as high as 110% to just 10% over a five-year period on European cars, so that is a very big deal for Volkswagen. And Blume also said VW has invested heavily in the U.S. market these past years but that his company cannot keep opening factories there if President Trump continues to impose tariffs on European goods.
KELLY: Well, I was going to ask. It prompts the question, how much of the timing of this deal happening now - how much does it have to do with President Trump's tariffs and the threats to seize Greenland and all of that?
SCHMITZ: Yeah, so the EU and India have been working on this deal for two decades, but economists are telling me that they think the timing of this has everything to do with Trump's threats. It's also not a coincidence that the EU also signed a trade deal with the South American bloc, Mercosur, this month as well. The EU is looking elsewhere to sell its products because it's becoming clear that it can no longer trust the United States if President Trump keeps threatening tariffs whenever the EU pushes back on him for political reasons, the most recent being his desire to take Greenland. So as we're seeing, the EU, which is, as an economy, among the top three in the world, is now looking past the United States to make historic trade deals like this one.
KELLY: Wow. NPR Berlin correspondent Rob Schmitz - thank you, Rob.
SCHMITZ: Thank you.
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