The high-stakes trade negotiations between India and the United States entered a new phase this week, as US Vice President JD Vance met with Indian Prime Minister Narendra Modi in Delhi. The meeting, taking place with less than three months remaining in President Trump’s 90-day tariff pause, signals growing urgency to resolve longstanding trade imbalances between the two nations.
Progress Amid Pressure
Both countries issued optimistic statements following their discussions, with Modi highlighting their commitment to “mutually beneficial cooperation” across trade, technology, defense, energy, and people-to-people exchanges. Meanwhile, US Trade Representative Jamieson Greer announced the finalization of “terms of reference to lay down a roadmap for the negotiations on reciprocal trade.”
However, the underlying tensions remain evident. Greer pointedly mentioned the “serious lack of reciprocity in the trade relationship with India,” underscoring the Trump administration’s persistent concerns. India was facing punitive 27% US tariffs before the temporary pause announced on April 9, which expires on July 9.
Strategic Concessions
India has already implemented tariff reductions on select goods in recent months and is reportedly considering broader cuts to satisfy Trump’s demands for more balanced trade. The US trade deficit with India reached $45.7 billion last year, fueling Trump’s characterization of India as a “tariff king” and “big abuser” of trade relationships.
Yet significant obstacles remain, particularly in the agricultural sector, where India maintains protective barriers against US imports despite American pressure for greater market access.
Beyond Economics: The Geopolitical Dimension
The trade negotiations exist within a broader geopolitical framework, with Modi and Vance also discussing cooperation in defense, strategic technologies, and energy. The upcoming Quad summit hosted by India later this year, which Trump is expected to attend, further elevates the importance of resolving trade disputes before that high-profile gathering.
Personal Diplomacy
The warm personal relationship between Modi and Trump remains a potential asset in the negotiations. Modi was among the first world leaders to visit Trump after his second inauguration, and the Indian Prime Minister has publicly stated he looks forward to welcoming Trump to India this year.
Vance’s visit carries its own symbolic weight, with the Vice President bringing his wife Usha, whose parents emigrated from India’s Andhra Pradesh state, and their three children dressed in traditional Indian attire—a gesture widely covered in Indian media.
The Road Ahead
February’s ambitious pledge by Modi and Trump to more than double bilateral trade to $500 billion by 2030 now faces its first major test. With total goods trade currently estimated at $129 billion, achieving this target requires resolving immediate friction points while establishing a sustainable framework for growth.
As the July deadline approaches, both sides face difficult choices. India must determine how far it will go in opening protected markets and reducing tariffs, while the US must balance its push for trade reciprocity against broader strategic interests in the Indo-Pacific region.
The outcome will not only shape economic relations between the world’s largest and fifth-largest economies but also influence the broader trajectory of the US-India strategic partnership at a time of increasing global competition and uncertainty.
