The rhetoric around high tariffs is unlikely to weigh down talks between Prime Minister Narendra Modi and US President Donald Trump during the Indian premier’s ongoing visit to the US, according to senior government sources.
One can’t grudge him (Trump) for removing immigrants or bringing industry back... our deficits are not so large... other countries have more to worry about... PM Modi and Trump have worked very well... confident that India will do well with Trump," said a senior source in the government.
India is also likely to take up the India-US Free Trade Agreement this time around. The FTA did not find much traction under the Biden administration, and the hope is that Congress under Trump would be more open to a pact. The US has a trade agreement with Japan and Australia, and India also has agreements with both countries. An FTA with the US has the potential to create a single large market and ensure a smooth global supply chain between the two countries.
India believes in pushing for bilateral ties with the US but “on fair terms”, the senior government official said. “Every country cannot be sufficient on its own… but the terms of the trade should be fair and transparent,” he added.
Trump is likely to announce reciprocal tariffs after his meeting with Modi.
Modi will be among the first few leaders from a major country to meet Trump after he took office as the US President for the second time. Trump has had meetings with Israeli and Jordanian leaders and with the Japanese PM.
Modi’s visit to the US comes at a time when the Trump administration has been very vocal on its stance on tariffs and Trump has referred to India as a “tariff abuser”.
The discussion agenda
PM Modi has the task of steering talks on a whole host of issues including trade, immigration, defence ties and the QUAD-a grouping of India, the US, Australia and Japan. Both leaders had expressed their commitment to advance the QUAD partnership in their first phone call after Trump assumed office. India will be hosting QUAD leaders for the first time later this year.
Weeks after taking charge, Trump’s Chief Economic Advisor had said in an interview that India has “enormously high” tariffs that lock out imports.
Tariff war
The Trump administration has since levied 25 percent tariffs on all steel and aluminium imports to America. While higher tariffs on steel and aluminium are bad news for India, the country is not among the top ten suppliers of either iron or aluminium to the US.
It’s also being taken into account that Trump can be whimsical and unpredictable – in the first three weeks of his Presidency Trump is already amid a tariff war with Canada with the latter vowing a “retaliation to unjustified” Trump tariffs.
The Trump administration is likely to continue putting pressure on India to reduce tariffs on US imports, India has already initiated a reduction in tariffs through Budget 2025-26, which saw a cut in import duties on a host of items including electronics, premium motorcycles and textiles.
The US is India’s largest trading partner – the bilateral trade between the two countries was at $129.2 billion in 2024. America’s top trading partners are Mexico, Canada and China. There are hopes that as America unleashes a tariff war on Mexico and Canada, India could stand to gain.
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