Opinion The deal is done. History will remember this moment in India-US ties
The India-US trade deal represents both an opportunity and a test. It is an opportunity to rewire the relationship and rebuild trust. What remains concerning, however, is the enduring impact of domestic churn in both countries
Trump’s announcement that India will halt its oil purchases from Russia, if borne out, would signal a significant shift in India’s economic and energy priorities. When Barack Obama defined the India-US relations as a “defining partnership of the 21st century,” it was underwritten with a long-term reassurance about the bilateral relationship. That assessment, however, was without the imagination of a stress-test for ties, least of all of the kind that the India-US relationship has undergone since the second Trump administration. The announcement of the trade deal by the leaders of the two countries brings an end to a rather tumultuous phase, which tested almost every fibre of the bilateral relationship, from trade and defence to geopolitics. While the fine print of the trade agreement is yet to come out, the announcements by both leaders suggest its broad contours. Yet, the past communication gaps between President Trump’s announcements and the official stand of the Indian government should act as a restraining factor, if not a deterrent.
The reduction of reciprocal tariffs on Indian goods from 50 per cent to 18 per cent, alongside the possibility that the 25 per cent punitive tariffs imposed for India’s purchase of Russian oil may be lifted, could suddenly place India among the least-tariffed economies in the Indo-Pacific. Bangladesh, China, Indonesia, Pakistan, and Vietnam would all face higher tariff barriers. Coming on the heels of the so-called “mother of all deals” with the European Union, this shift appears, from India’s perspective, to be a reward for holding firm in negotiations with the United States while rapidly concluding other trade agreements.
India has signed at least eight free trade agreements in recent years, with several more in the pipeline. In retrospect, Trump’s negotiating approach proved catalytic in galvanising internal reforms and accelerating a diversification strategy that may cast a shadow beyond India–US relations, extending to new geographies and strengthening economic resilience. Several factors converged to push the deal forward: India’s calibrated diplomatic restraint even when provoked; resilient economic growth despite tariff pressures; political will to pursue domestic reforms alongside external diversification; a refusal to retaliate in kind; and, above all, a commitment to keep channels of dialogue open. A further enabling factor may have been the new US ambassador to India, who hit the ground running and enjoyed the advantage of direct trust from Trump.
When the final contours of the deal become clear, key issues to watch will include India’s red lines in sensitive sectors such as agriculture and dairy, areas where New Delhi has historically shown little flexibility. Trump’s announcement that India will halt its oil purchases from Russia, if borne out, would signal a significant shift in India’s economic and energy priorities. However, if there is one consistent lesson from India’s negotiating posture with the United States and from its broader diplomatic history, it is that no bilateral relationship is ever a function of another, least of all a time-tested partnership such as that with Russia. At best, then, the trade deal with the US represents both an opportunity and a test.
It is an opportunity to rewire the relationship and rebuild trust, an imperative that is likely to drive future advances in bilateral cooperation, particularly in technology and defence. Governments often have the latitude to accelerate trust far more quickly than societies can, especially in the aftermath of recent jolts to the India-US relationship. What remains concerning, however, is the enduring impact of domestic churn in both countries.
In the United States, the rise of conservative and nativist currents is rapidly reshaping the nation’s political trajectory. In India, meanwhile, tariff measures under the Trump administration significantly eroded US favourability. While these losses are not insurmountable, much will hinge on external factors. The trajectory of America’s economic and military relationships with China and Russia, the outcome of the Russia-Ukraine war, the prospect of another Middle Eastern conflict with the US positioned against Iran, and the unresolved question of Gaza could all shift the direction of the world’s most influential power.
One thing is certain: The US’s tariff brandishing against India, and India’s demonstrated resilience, signal a shift into a new era of the bilateral relationship, one in which New Delhi is increasingly viewed as a future competitor rather than a partner in an asymmetric relationship requiring concessions. When history reflects on the moments that marked India turning a corner in its engagement with Washington, the second Trump administration is likely to stand out.
The writer is Deputy Director, Strategic Studies Programme, ORF
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