India’s rocky road to trade deal with US: The flip-flops, political pitfalls

Breakthrough Amid Turbulence

The recent announcement of a trade deal between India and the United States has sparked optimism, but the path to this moment has been anything but smooth. After months of strained talks, President Donald Trump and Prime Minister Narendra Modi revealed an agreement slashing US tariffs on Indian exports from as high as 50 percent down to 18 percent. This move eases a major burden on Indian exporters in sectors like textiles, apparel, gems, and jewelry, especially for small and medium enterprises that have felt the pinch of these duties. Stock markets in India reacted positively, with a welcome rally reflecting hopes for boosted trade and investment. Yet, beneath the surface, the journey involved flip-flops on key issues, from tariff impositions to geopolitical concessions, highlighting the rocky terrain of bilateral relations.

Talks kicked off early in the Trump administration, but progress was uneven throughout 2025. Initial enthusiasm gave way to frustrations over market access disputes and punitive tariffs slapped on Indian goods in response to New Delhi's purchases of Russian crude oil. The US viewed these imports as undermining efforts to isolate Russia amid its war in Ukraine, leading to heightened tensions. India, balancing its energy needs, resisted outright bans but signaled willingness to limit such buys to irreplaceable supplies. This back-and-forth created uncertainty for businesses, delaying investments in manufacturing and supply chains. The eventual deal signals a reset, with promises of deeper cooperation in energy, technology, and agriculture, potentially unlocking over $500 billion in bilateral trade commitments.

Navigating Political Pitfalls and Flip-Flops

Political dynamics have played a starring role in these negotiations, with personal rapport between Trump and Modi often cited as a driving force. Trump publicly praised Modi as a friend, announcing the tariff cut "out of friendship and respect" via social media. Indian officials echoed this, hailing it as the "best deal" compared to neighbors, crediting relentless diplomacy by teams led by Commerce Minister Piyush Goyal and External Affairs Minister S. Jaishankar. However, flip-flops abounded—Trump's administration first imposed steep tariffs, then rolled them back, while India navigated domestic pressures to protect farmers and industries from US imports. Geopolitical issues, like India's Chabahar port investments exempt from US sanctions, added layers of complexity. These shifts underscore how elections, global conflicts, and leader chemistry can sway trade outcomes unpredictably.

This is the best deal India has received. It is a deal for all of us, bringing positive signals for the bright future of our citizens. For months, our negotiating teams have maintained continuous dialogue with officials and ministers of the United States of America. This achievement has come under the leadership of Hon’ble Prime Minister Narendra Modi.

The deal also commits India to ramp up purchases of American energy, technology, agriculture, and coal, alongside reducing its own tariffs and non-tariff barriers toward zero on US goods. Trump emphasized India's pledge to "BUY AMERICAN" at higher levels and curb Russian oil imports, potentially shifting toward US or Venezuelan supplies. This addresses long-standing US grievances but raises questions for India's energy security and inflation concerns. Exporters cheer the immediate relief, but manufacturers worry about flooded markets from cheap US farm products. The interplay of domestic politics—protecting jobs in India while appeasing US lobbies—has forced negotiators into repeated concessions and retreats.

Uncertainties Loom Large Despite the Progress

While the tariff truce is a win, much remains unresolved. Details on product lists, phase-down timelines, rules of origin, and non-tariff measures are still being hammered out through executive orders and consultations. Industry experts caution that without clarity, the deal's full potential could stall. Sectors like defense, telecom, and aircraft may see strategic openings, but energy trade hangs in balance amid global volatility. Businesses on both sides express cautious optimism, noting restored predictability could spur delayed contracts and investments. For India, this comes after inking a major pact with the European Union, positioning it as a trade hub amid shifting alliances. Yet, implementation challenges, including cabinet approvals and regulatory tweaks, test whether this momentum endures.

In essence, India's road to this US trade deal exemplifies the highs and lows of international diplomacy—marked by tariff escalations, geopolitical bargaining, and leadership-driven breakthroughs. The reduction to 18 percent tariffs offers immediate relief and long-term promise, but political pitfalls and unfinished details mean the journey is far from over. As both nations formalize terms, the focus shifts to translating rhetoric into resilient economic ties that weather future storms.