Washington/New Delhi: Former US President Donald Trump has hinted at a potential trade deal with India, reigniting discussions around a key economic partnership. The statement comes as he prepares to travel to the ASEAN summit, a major geopolitical gathering where a sideline meeting with Prime Minister Narendra Modi is a distinct possibility.
This development revives a long-standing negotiation between the two nations, marked by immense potential but often stalled by disagreements over tariffs and market access. Here’s a breakdown of the history, the key issues, and what a potential breakthrough could mean.
A History of Trade Friction
The foundation for the current trade dispute was laid during Trump’s own presidency. In 2019, his administration revoked India’s trade benefits under the Generalized System of Preferences (GSP), a program that had allowed billions of dollars of Indian goods to enter the US market duty-free.
Washington cited what it called a “wide array of trade barriers that create serious negative effects on United States commerce.” In a swift response, India imposed retaliatory tariffs on 28 American products, including high-value agricultural goods like almonds, apples, and walnuts.
What Are the Sticking Points?
Since then, negotiators have been working towards a “mini-deal” to resolve these issues, but progress has been slow. The core disagreements remain:
- US Demands: Greater market access for its agricultural and dairy products, lower Indian tariffs on medical devices, and reduced import duties on Harley-Davidson motorcycles.
- India’s Demands: The complete restoration of GSP benefits and a resolution on high US tariffs imposed on its steel and aluminium exports.
The Trump-Modi Factor: Can Personal Chemistry Seal the Deal?
Many analysts believe the strong personal chemistry between Donald Trump and Narendra Modi could be the catalyst needed to break the impasse. The massive “Howdy, Modi!” rally in Houston and the grand “Namaste Trump” event in Ahmedabad showcased a genuine bonhomie between the two leaders, who both project an image of decisive leadership.
A potential meeting on the sidelines of the ASEAN summit provides the perfect stage for them to cut through bureaucratic hurdles and give their negotiators the political mandate required to finalize an agreement.
The Bigger Picture: China and the Indo-Pacific
The strategic context for a deal is more compelling than ever. Amid a realignment of global supply chains and shared concerns over an assertive China, both the United States and India have a vested interest in strengthening their economic and strategic partnership.
A trade deal, even a limited one, would send a powerful signal of their commitment to the Indo-Pacific alliance. For Trump, securing an agreement with the world’s fastest-growing major economy would be a significant foreign policy achievement. For PM Modi, it would provide a major boost to Indian exports and reinforce India’s status as a reliable global partner.
While a “hint” is not a signed agreement, Trump’s statement has significantly raised expectations. As leaders gather in Southeast Asia, the business communities in both nations will be watching closely to see if warm handshakes can finally translate into a concrete trade deal.
