Despite early hopes for a swift trade agreement, India and the United States have not yet finalized a tariff deal, even after six months of negotiation. The delay comes as both countries face increasing economic and geopolitical pressure — especially with China’s growing influence in the region.

High Stakes for Both Nations

India and the U.S. are strategic partners in global trade and defense. In 2024, bilateral trade between the two nations reached approximately $130 billion. But as the U.S. prepares to impose a 26% tariff on Indian goods this Friday, talks remain unresolved.

These potential tariffs could disrupt trade in key sectors, including pharmaceuticals, auto parts, electronics, and gemstones — major Indian exports to the United States.

India’s Push for a Deal with Trump

Following President Donald Trump’s re-election, Indian Prime Minister Narendra Modi was quick to engage. His government sent senior officials, including Commerce Minister Piyush Goyal, to Washington for talks. Goyal recently told Reuters that the two sides are “making fantastic progress” and hinted that a larger agreement may be reached later this year.

India even invited President Trump to attend a defense summit in the fall — a move aimed at strengthening both trade and military cooperation.

Why This Trade Deal Matters

The trade negotiations are more than just about tariffs:

• India wants full access to the U.S. market for its exports.

• American companies want greater entry into India’s fast-growing consumer economy.

• The U.S. seeks to reduce its trade deficit, and India runs a notable surplus.

• Both countries are vying to counterbalance China’s dominance in global supply chains.

Other Countries Are Moving Ahead

While India continues negotiating, other nations have already secured trade deals with the U.S. — including the United Kingdom, the European Union, Japan, Vietnam, and Indonesia. These agreements typically include 15–20% tariffs on exports to the U.S., with little to no tariffs on American goods in return.

India’s deal could follow a similar framework, but there’s growing concern that delays might cost India a competitive edge, especially in sectors like manufacturing and electronics, where it’s competing with countries like Vietnam.

Trump’s Unpredictable Role

While Trump and Modi were once seen as close allies, that relationship has cooled since May, when Trump claimed credit for a ceasefire between India and Pakistan and invited Pakistan’s military leader for a state visit. That move upset New Delhi and created uncertainty in the talks.

Trump’s negotiation style — focusing on headlines and high-level talks — has also added unpredictability. Most recent trade deals were only finalized after direct conversations with heads of state.

India’s Dilemma: Open Markets vs. Domestic Protection

Some Indian exporters are open to the idea of “zeroing out” tariffs on both sides, accepting American competition in return for greater U.S. market access.

However, others — especially in agriculture — oppose any move that would expose local farmers to low-cost imports from the U.S. They worry it could threaten food security and damage rural livelihoods.

What’s Next?

The outcome now depends heavily on President Trump’s decision. As Mukesh Aghi, President of the U.S.-India Strategic Partnership Forum, put it:

“The president wants to talk to the head of state and then say, ‘We have a deal.’ It’s about the headlines.”

He suggests India should promote any future agreement as a “trillion-dollar deal”, underlining its scale and importance to both economies.