Trump and Modi move toward reviving trade talks despite tariff disputes. Image: India Today.
(The Post News)– U.S. President Donald Trump on Tuesday announced that the United States and India will resume negotiations on a much-pending trade agreement, signaling a potential turning point after weeks of diplomatic discord on tariffs and purchases of Russian oil by India.
I am pleased to announce that India and the United States of America are currently pursuing further negotiations to settle the trade impediments between our two nations,” he wrote. “I believe that there will be no issue in arriving at a winning outcome for both of our two great nations.”
The letter is a contrasting statement from Trump’s more bitter tone last week, when he attacked India for not lowering tariffs sooner.
Trump Tariffs Heighten Tensions
In late August, Trump imposed an additional 25% tariff on Indian goods as punishment for New Delhi’s continued purchases of Russian oil, raising overall tariffs to 50%. India defended the imports as necessary to meet the energy demands of its 1.4 billion citizens.
Analysts warn that Trump’s tariff escalation may have pushed India closer to Russia and China. Modi recently met with Russian President Vladimir Putin and Chinese President Xi Jinping, underscoring New Delhi’s balancing act between major powers.
Prime Minister Modi responded warmly to Trump’s latest comments, calling the U.S. and India “close friends and natural partners.” On Wednesday, he said, “Our delegations are engaged in working out these negotiations as soon as possible.” I also eagerly look forward to meeting President Trump. We will work together towards a brighter and better future for both our countries.” The message of conciliation by the two leaders boosted Indian shares by over 0.5% on Wednesday.
Trade at a Crossroads
Two-way merchandise trade between the U.S. and India amounted to $129 billion in 2024, as Washington ran a deficit of $45.8 billion, according to U.S. Census Bureau data. Trump has been urging India to reduce tariffs for years, arguing the balance of trade hurts American companies.
Talks between commerce officials had collapsed in August after Washington called off a planned visit to New Delhi, but Indian and US negotiators will reportedly set new dates in September, Indian media reported.
Trump has also urged the European Union to impose 100% tariffs on India and China as part of broader efforts to starve Russia’s war in Ukraine of money. EU officials have so far avoided such measures, focusing instead on energy diversification and targeted sanctions.
Although Trump and Modi have been conciliatory in tone this week, analysts are not convinced. “With Trump, we will have to wait for more definitive indications that a deal is in the pipeline,” economist Madhavi Arora of Emkay Global said.
Washington and New Delhi appear determined to revive trade talks, at least in the near future, but whether geopolitics or tariffs again halt progress is uncertain.
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