U.S.-India Trade Relations Under Trump

By Shivangi Acharya and Krishn Kaushik
NEW DELHI (Reuters) – India is open to offering easier market access for U.S. firms if Washington reciprocates under President-elect Donald Trump, who has criticized New Delhi for its high tariffs.

Trump, having made a political comeback, recently labeled India a "very big abuser" of trade ties and vowed to increase tariffs on all U.S. imports during his campaign.

During his first term (2017-2021), Trump clashed with India over tariffs but maintained a positive relationship with Prime Minister Narendra Modi. As his term ended, India and the U.S. agreed to negotiate a limited trade accord to bridge their differences.

"India is open to lowering tariffs for U.S. companies if that means better trade terms for Indian goods," said a source familiar with the government's perspective. The South Asian nation may reduce import tariffs in sectors like automobiles.

Harsh Vardhan Shringla, India's former ambassador to the U.S., stated, "We had a fairly good convergence during his first term. I think his second term will be even better due to mutual understanding between the leaders."

India almost finalized a mini trade deal during Trump's first term but was interrupted by the COVID-19 pandemic. A senior government official indicated potential for a free trade agreement under Trump II. New Delhi is not overly concerned about trade relations under Trump's second term, given that his tariff threats are primarily aimed at China.

Trump's transactional approach to trade, which India finds favorable, may facilitate discussions, the official remarked prior to Trump's election victory.

STEADY PROGRESS

Modi, eager to maintain favorable ties with Trump, was one of the first leaders to congratulate him post-election. While criticizing India on trade, Trump referred to Modi as "fantastic" during his campaign.

Modi also has good relations with Democratic presidents like Barack Obama and Joe Biden. The White House welcomed Modi last year, highlighting deals on defense and commerce, as Washington sees New Delhi as a counter to China's growing influence.

Despite leadership changes, U.S.-India trade relations have steadily advanced over the last decade. In 2023, the United States remains India's top export destination, with goods and services exports totaling $120 billion.