As the final trade deal approaches, are ties thawing?

U.S. Trade Representative Jamieson Greer concluded a trip to New Delhi in late June meeting with Indian Commerce Minister Piyush Goyal as the two sides sought to finalize a trade deal. They reached a tentative agreement in February, before a U.S. Supreme Court ruling struck down President Donald Trump’s drastic tariffs that required negotiations in the first place.

Last Tuesday, the American ambassador to India, Sergio Gor said they were “in the final stages of this deal…It’s in the bottom 1 percent.”

Two main questions still need to be resolved. India still faces some U.S. tariffs and its negotiators are trying to persuade the United States to impose lower taxes than those imposed on its Asian competitors such as Bangladesh, Malaysia, Pakistan, Sri Lanka and Vietnam. Washington, in turn, wants New Delhi to guarantee that it will not use forced labor to gain a competitive advantage in exports.

The progress toward a deal comes after Trump and Indian Prime Minister Narendra Modi held a conversation on the sidelines of the G7 summit in Évian-les Bains, France, in mid-June. The day after the meeting, reports suggested that the two leaders discussed bilateral trade, the situation in the Middle East, the safety of Indian sailors in the Strait of Hormuz and the possibility of Trump’s visit to New Delhi.

It remains unclear whether relations between the United States and India are actually thawing. Relations are unstable because the mutual trust that the two sides have maintained over decades is fading because of Trump’s policy changes during the second term. Among other issues, since Trump’s visit to China in May – where he met President Xi Jinping – Indian policymakers have had doubts about New Delhi’s role as a possible counterweight to Beijing and its strategic importance to Washington.

Modi was one of the first heads of state to visit Trump after his return to the White House. At the time, the bonhomie that had characterized relations between the two leaders during Trump’s first term seemed largely in place, despite some concerns about India’s trade imbalance with the United States. But this affable relationship quickly collapsed, particularly following the May 2025 military conflict between India and Pakistan.

The conflict ended in less than a week, and Trump claimed he pushed both sides to reach a ceasefire by using the threat of trade sanctions as leverage. India, long allergic to foreign involvement in its dispute with Pakistan, strongly disputed this assertion; Pakistan adopted Trump’s position and even demanded that he be awarded the Nobel Peace Prize.

Relations between the United States and India subsequently deteriorated, when Trump imposed draconian tariffs on New Delhi; high fees for H-1B visa applicants, of which India has been the biggest beneficiary; and sanctions against India for its purchases of Russian oil. Extremely vulnerable on these fronts, India had no choice but to bear the ill effects. To make matters worse, this year Trump chose Pakistan as his interlocutor in negotiations to end his war in Iran.

As a result, US-India relations have not seen any tangible improvement, despite US Secretary of State Marco Rubio’s visit to the country in May. Indeed, some commentators pointed to a seemingly inexorable fall, especially as Washington appeared indifferent to New Delhi’s concerns about the serious effects of the Iran war on India.

There is no doubt that Trump’s mercurial policies and heavy-handed tactics have caused significant damage to bilateral relations. The rhetoric of some Trump cabinet membersthe United States’ continued alliance with Pakistan and the Trump administration’s callous view of the collateral damage caused to India by the fallout from the Strait of Hormuz crisis are all troubling. India’s criticism of these choices is entirely understandable.

It is nevertheless possible to highlight a series of Indian foreign policy choices over the years that have contributed to the American approach or worsened its effects. First, for decades, India ignored US concerns on both issues. tariff and non-tariff barriers. These Understood but are not limited to: an unpredictable regulatory environment, varying legal expectations across Indian states and extremely high customs duties on certain products.

Such obstacles have also been the subject of contentious trade negotiations with previous US administrations. More than two decades ago, Robert Blackwill – the US ambassador to India during the first administration of George W. Bush – rather disparagingly referred to bilateral trade as “dish like chapati.”

During the most recent negotiations, the United States would have secured commitments from India on issues of market access, sales of certain agricultural products and digital trade. New Delhi’s insistence on lower tariffs than its regional rivals and questions around Section 301 of the US Trade Act of 1974, under which Washington investigates forced labor among its trading partners, have yet to be resolved.

Trump undoubtedly used a blunt instrument to pressure India into making trade concessions. But U.S. frustrations with India’s reluctance to frankly address trade issues for years have done little to endear New Delhi to U.S. trade officials. Even after the election of Modi – widely seen as pro-market – in 2014, India still took a hardline stance on a major issue. multilateral trade negotiations forum that year.

In the years since, despite external pressure, the Indian government has essentially refused to deviate from its stated positions. Had India shown some flexibility on market access, it may have been able to fend off some of the Trump administration’s more draconian pressures.

Another problem for Washington concerns barriers to investment in the Indian market. India has made significant progress in this area since intermittently adopting market-oriented reforms after an unprecedented fiscal crisis in 1991. Despite significant policy changes and a more favorable investment climate, hidden obstacles remained. Foreign investors have complained about these obstacles, including fluctuating tax policies, red tape, intellectual property rights protection and foreign ownership restrictions.

Had Indian governments not adopted a lackadaisical approach on these issues, New Delhi might have had a better hand in dealing with Trump’s abrupt policy shift. India’s approach was halted, mainly due to the power of domestic business lobbies which remained hostile to foreign competition. In contrast, China was able to more easily overcome recent U.S. tariff threats because it had considerable economic leverage over the United States, having gained considerable trade advantages and attracted vast amounts of U.S. investment.

Finally, in the diplomatic field, India could have shown more agility, particularly following the conflict with Pakistan last year. Admittedly, New Delhi abandoned its total commitment to non-alignment after the end of the Cold War. But Indian policymakers have replaced it with the nebulous concept of so-called strategic autonomy, which is hardly a viable model for an emerging global power.

India’s insistence on strategic autonomy has done little to strengthen US-India strategic ties; New Delhi appears reluctant to get too close to Washington due to both its historical legacy and its contemporary domestic politics. Specifically, India’s continued dependence on Russia for arms and erroneous belief The fact that it remains a viable strategic partner has not helped it strengthen its ties with the United States. This shibboleth also did not help India play the role of mediator between the United States and Iran at a pivotal moment, as Pakistan did.

Significantly, India showed little or no flexibility when Trump – with his characteristic pomposity – insisted that his skillful diplomacy had defused the crisis with Pakistan. India may have a long-standing aversion to external mediation on the Kashmir issue, but dismissing the idea that Trump could have played a useful role amounted to inflexibility. Unsurprisingly, this unwavering stance has put India in Trump’s bad books.

Slowing relations between the United States and India is not in the interests of either country, and relations need not remain at a standstill indefinitely. Despite all the difficulties, India remains the most powerful country in the United States. 10th trading partner. Until recently, India was increasingly acquiring advanced weapons from the United States and seeking to reduce its dependence on Russia.

Additionally, the two countries’ navies have deepened their cooperation for years, with the U.S. Navy increasing its presence during the annual Malabar exercise. New Delhi and Washington also have a significant and growing technology partnership.

Unlike the Cold War years, U.S.-India relations today have considerable substance. The United States and India share a democratic philosophy – and this political culture should allow them to find common ground despite their currently strained ties. If they can reach a trade deal, if the current tensions in the Strait of Hormuz ease, and if Modi can find ways to appease Trump, there is every reason to believe that the partnership can be balanced again.