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BUSINESS & TRADE NOVEMBER 07, 2025 | The Indian Eye 34

India–US Trade Deal: Big Promises, Bigger

Problems as Talks Enter a Critical Phase

As Washington and New Delhi inch closer to a long-awaited trade pact, optimism is tempered by structural imbalances, tariff
politics, and shifting global alliances that threaten to complicate one of the world’s most important economic relationships

OUR BUREAU
Washington, DC / New Delhi
t the Asia-Pacific Economic Cooperation
(APEC) CEOs Luncheon in Gyeongju,
ASouth Korea, US President Donald Trump
made headlines not just for his flamboyant remarks
about Prime Minister Narendra Modi — whom he
called “the nicest-looking guy” and “a killer” — but
for hinting at an “imminent” trade deal between
the world’s largest and fifth-largest economies. His
comments, a mix of praise, personal anecdotes,
and geopolitical posturing, reflected the high-
stakes complexity that now defines India–US trade
negotiations.
Trump’s speech came laced with characteristic
bravado. He claimed to have personally defused a
potential nuclear confrontation between India and
Pakistan earlier this year, linking his intervention
directly to trade talks. “I called Prime Minister
Modi and said, ‘We can’t make a trade deal with
you if you’re starting a war with Pakistan.’ He said,
‘No, no, we must make a trade deal,’” Trump re-
counted, framing diplomacy and trade as part of U.S. President Donald Trump speaking on the aircraft carrier USS George Washington during his visit to the U.S. Navy’s
the same power equation. Yokosuka base, in Yokosuka during his Asian tour (Reuters/ANI Photo)
While the theatrics caught global attention,
beneath the surface lies a serious and long-run-
This shift underscores India’s growing role
ning economic negotiation. The United States and as both a trade partner and a competitor in the firmness toward Modi adds a human dimension
to an otherwise technical negotiation. “He looks
India have been locked in trade discussions for post-China global economy. For Washington, the like you’d like to have your father,” Trump said of
several years, attempting to reconcile differences
over tariffs, market access, digital commerce, and data serves as both a warning and an opportunity: Modi, before quickly adding, “but he’s a killer —
tough as hell.”
a warning that tariffs alone cannot rebalance trade,
agricultural goods. Each round of talks has raised and an opportunity to engage India as a manufac- This blend of admiration and aggression en-
hopes of a breakthrough but ended with incremen- turing alternative in the global supply chain. capsulates how Washington views New Delhi: a
tal progress at best. India continues to seek greater access for its partner too important to alienate, yet too indepen-
BALANCE OF TRADE exports — especially in pharmaceuticals, textiles, dent to easily bend. Modi’s image as a nationalist
Meanwhile, a recent report by the State Bank and IT services — while the US pushes for reduc- reformer has made him popular with Indian vot-
of India (SBI) underscores the changing contours tions in tariffs on goods like Harley-Davidson mo- ers and credible on the global stage — but it also
of the economic relationship. Despite Washing- torcycles, dairy products, and agricultural imports. makes concessions to foreign powers politically
ton’s aggressive tariff strategy, the US trade deficit Washington also wants stronger commitments on sensitive.
with several top partners — including India — has intellectual property rights and data localization The potential benefits of a comprehensive
widened. rules, issues on which New Delhi has stood firm to trade agreement are enormous. For India, greater
Between April and July 2025, America’s over- protect domestic interests. market access in the US could boost exports, at-
all trade deficit shrank by USD 42 billion. Yet, its Economists argue that both nations are pursu- tract investment, and strengthen its position as a
deficit with key partners such as India, Mexico, ing “asymmetric goals”: India seeks to safeguard global manufacturing hub. For the US, the deal
Vietnam, and Taiwan actually rose by USD 9 bil- its developing economy and local industries, while could help diversify supply chains away from Chi-
lion, reaching USD 257 billion in total trade value. the US is driven by domestic political imperatives na, open up India’s vast consumer market, and ce-
For India alone, the deficit jumped from USD 17 and the need to showcase export gains. Trump’s ment strategic influence in South Asia.
billion to USD 23 billion within just a few months. tariff-driven policies, though popular among some But the obstacles remain formidable. Differ-
The numbers tell a complex story. The tariffs American manufacturers, have failed to deliver ences over agricultural subsidies, data regulation,
imposed by Washington may have succeeded in uniform results across markets — particularly with labour standards, and environmental commit-
curbing the overall deficit, but they have also shift- partners that are structurally different from China. ments have repeatedly stalled progress. India’s
ed trade imbalances rather than resolving them. insistence on protecting its farmers and small
While the US reduced deficits with traditional POLITICS OF PERSONALITY businesses clashes with Washington’s demands for
partners like China and Switzerland, new gaps In many ways, the trade equation between In- open markets. Likewise, US tech companies re-
have emerged with emerging economies — India dia and the US mirrors the chemistry between their main wary of India’s tightening digital sovereignty
included. leaders. Trump’s unpredictable mix of flattery and laws, which require data to be stored locally.

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