Trump: India offers US a deal with no tariffs

Trump: India offers US a deal with no tariffs

In a surprising turn of events, Prime Minister Narendra Modi of India has offered the United States a deal that could potentially eliminate tariffs between the two nations. This move comes amidst ongoing tensions over trade imbalances, with the U.S. imposing reciprocal tariffs on India starting April 2, 2025 [1].

The offer from Modi, who visited the White House last month, aims to address the U.S.'s significant trade deficit with India, which stood at US$46 billion in 2025. Trump, known for his hard stance on trade, has been critical of India's tariffs, labeling them as "unfair" and "very strong" [1]. Modi's offer to remove these tariffs could be a strategic move to mitigate the potential domestic backlash from the U.S. tariffs.

Modi's attempt to appease Trump during their meeting last month did not yield immediate results. The U.S. has yet to approve India's potential acquisition of F-35s, and the quality of defense equipment from Russia has been a point of contention [1]. The haste with which the Trump administration made the tariff announcements has also raised eyebrows, as the two nations are in talks on a bilateral trade agreement that could increase trade to US$500 billion [1].

The offer from Modi also includes administrative allocations for satellite services, which could benefit Elon Musk's Starlink over Mukesh Ambani's Reliance Jio, and the introduction of a scheme to promote the manufacturing of electric cars, aimed at attracting Tesla to invest in India [1]. These moves suggest Modi is willing to make significant concessions to secure a trade deal with the U.S.

However, the extent to which Modi will yield to U.S. demands remains to be seen. The prime minister must balance the potential benefits of a trade deal with the domestic backlash from Indian businesses and the broader political implications. The outcome of this delicate negotiation could have significant ramifications for the global trade landscape and the U.S.-India relationship.

References:
[1] https://www.lowyinstitute.org/the-interpreter/trump-s-tariffs-india-modi-will-have-step-back-move-ahead