As of late August 2025, India and the U.S. appear further from a comprehensive trade deal, with relations strained by the imposition of new U.S. tariffs. The new U.S. administration's actions mark a significant reversal from the positive trajectory of trade talks earlier in the year.
Recent
tensions and stalled progress
· New U.S. tariffs: The
Trump administration has announced a 25% tariff on Indian exports, with an
additional 25% penalty due to India's continued purchase of Russian oil, set to
take effect on August 27, 2025. This brings the total tariff burden on some Indian
exports to 50%.
· Trade deal negotiations
stalled: The aggressive tariff approach, which the U.S. calls "aggressive
economic leverage," has impacted negotiations toward a bilateral trade
agreement. While talks were ongoing and a U.S. delegation was expected in Delhi,
disagreements over issues like agriculture, e-commerce, and medical device
prices had already stalled progress.
· Strategic friction: India views the tariffs as "unjustified and unreasonable," with its ambassador to Russia stating the country will continue buying oil from the "best deal" to secure its energy needs.
Areas
of limited cooperation
Despite
the setbacks in a broad trade deal, cooperation continues in specific, more
focused initiatives.
· Critical minerals: In
February 2025, the two nations launched the TRUST initiative to build reliable
supply chains for critical minerals, including lithium. However, even this
agreement is potentially jeopardized by the new tariffs.
· Emerging technology:
The U.S.–India Initiative on Critical and Emerging Technology (iCET) also
continues, aimed at partnerships in areas like semiconductors, AI, and defense
technology.
· Defense and security: Cooperation in defense continues, with initiatives like INDUS-X, which supports partnerships between U.S. and Indian defense companies.
India's
response and options
In
response to the trade friction, India has taken steps to mitigate the impact
and explore other options.
· Hiring lobbyists: India
has hired a U.S. lobbying firm, Mercury Public Affairs, to handle government
and media relations in Washington.
· Diversifying trade
partners: India is advancing free trade agreements with other nations,
including the UK and EU, to reduce its reliance on the U.S. market.
· Increased engagement with Russia and China: Some experts believe the U.S. pressure could push India to deepen its ties with Russia and China. Indian officials have stated their improving trade ties with China are "completely unlinked" to the situation with the U.S..
While talks are ongoing, India is not closer to a trade deal with the US, and relations have soured significantly in August 2025 due to new tariffs imposed by the US. Negotiations have stalled over unresolved disagreements, prompting India to increase lobbying efforts and explore trade with other partners.
Key
recent developments
· New US tariffs: In
August 2025, the Trump administration imposed a 25% tariff on Indian goods,
citing India's continued purchase of discounted Russian oil. This was an
escalation of a broader reciprocal tariff policy that began earlier in the
year. An additional 25% is expected to take effect on August 27, 2025, bringing
the total tariff to 50% for many Indian exports.
· Negotiations
stalled: The latest round of trade talks, scheduled for August 2025 in New
Delhi, has been canceled or postponed by the US. This was confirmed by Indian
officials, although External Affairs Minister S. Jaishankar insisted that
discussions were not permanently off.
· India's "red
lines": A primary sticking point is India's refusal to open its
agricultural and dairy markets to US products, a commitment driven by the need
to protect the livelihoods of its farmers and small businesses.
· Impact on relations: The tariffs have increased tensions, with a US trade official defending the tariffs and India's ambassador to Russia calling the US move "unjustified and unreasonable". Analysts are now describing the relationship as strained and potentially at a new low.
https://www.google.com/search?q=is+India+any+closer+to+making+a+deal+with+the+us+a1
Comments
India is currently a member of BRICS, a trading group that includes Brazil, Russia, India, China and South Africa. The largest consumer of Russian Oil and Gas is China. The next largest consumer of Russian Oil and Gas is India.
Norb Leahy, Dunwoody GA Tea Party Leader
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