India & US Push For Trade Deal Amid Tariffs

India is navigating escalating US tariffs under the Trump administration with a strategy of diplomatic engagement and calculated economic adjustments, diverging from the retaliatory approaches of other nations. While countries like China and Canada responded to US tariffs with reciprocal measures, India has opted for a path of absorption and negotiation, aiming to minimize the impact on its exporters and secure a favorable trade deal.

New Delhi’s approach centers on continued trade talks with Washington, seeking a “win-win” agreement that addresses tariff concerns. This strategy appears to be gaining traction, evidenced by a recent phone conversation between External Affairs Minister S. Jaishankar and US Secretary of State Marco Rubio, where both leaders emphasized the importance of finalizing a bilateral trade agreement soon.

India’s confidence stems from its proactive engagement with the US, having initiated trade pact discussions before the imposition of tariffs. Furthermore, officials point to a clause within the US tariff order that offers potential relief to trading partners demonstrating efforts to address trade imbalances. This positions India favorably compared to other Asian nations heavily impacted by the tariffs. A target date of autumn 2025 has been set for finalizing a comprehensive trade deal.

However, India is also subtly recalibrating its negotiating stance. With tariffs now in effect on both sides, New Delhi believes it has gained leverage, potentially diminishing the pressure to concede on longstanding US demands regarding subsidies in sectors like pharmaceuticals and agriculture.

Simultaneously, India is making goodwill gestures, including lowering tariffs on US goods like high-end motorcycles and bourbon whiskey, and repealing a digital services tax that affected major US tech companies. These moves, coupled with ongoing assessments of the tariff impact by the Commerce Ministry and engagement with affected exporters, demonstrate a multifaceted approach.

The robust India-US relationship, built on shared democratic values and converging strategic interests, provides a solid foundation for these negotiations. Bilateral trade currently exceeds $190 billion, with a goal of reaching $500 billion by 2030. Significant investment flows in both directions further underscore the strength of this partnership. US foreign direct investment in India reached $4.99 billion in the fiscal year 2023-24, while Indian companies have invested over $40 billion in the US, creating over 425,000 American jobs.

India’s strategy, while nuanced, appears to be a pragmatic response to a complex trade situation. By prioritizing dialogue, demonstrating flexibility, and leveraging its strong bilateral ties, New Delhi is attempting to mitigate the negative effects of US tariffs and secure a mutually beneficial trade agreement. It’s a calculated gamble, betting that engagement and negotiation will prove more effective than confrontation in navigating the turbulent waters of international trade under the Trump administration.