On the Mat: How India Negotiated a Bad and Avoidable US Trade Deal

After a year of desperate attempts to secure a trade deal with US President Donald Trump, the Narendra Modi government finally arrived at a framework for an interim agreement. The question now is whether India has walked into a trade deal that is damaging in the present and disastrous in the long term.Prime Minister Modi secured an early meeting with Trump after his swearing-in. Ahead of this visit, India offered several concessions on US products in the Union Budget 2025-26 before Modi travelled to the US and signed the India-US Joint Leaders' Statement on 13 February 2025.The joint statement exposed India’s weak bargaining position, recording tariff concessions to the US while offering little more than recycled assurances in return.Announced, Not Explained: India-US Trade Deal Leaves Much to the ImaginationIndian leadership’s weakness against a rampaging Trump on the trade front was quite visible in the joint statement.In the statement, the US acknowledged, "India’s recent measures to lower tariffs on US products of interest in the areas of bourbon, motorcycles, ICT [Information and Communication Technology] products and metals, as well as measures to enhance market access for US agricultural products, like alfalfa hay and duck meat, and medical devices."As the US had done little to reciprocate, the statement nevertheless expressed appreciation for American measures to enhance exports of Indian mangoes and pomegranates—products that had already been opened for export as early as 2012.Indian negotiators seemed satisfied with a hollow assurance in the statement that 'leaders' announced plans to negotiate the first tranche of a mutually beneficial, multi-sector Bilateral Trade Agreement (BTA) by fall of 2025.Trump brought out his destructive reciprocal tariff hammer on 2 April 2025, instead of taking any steps towards concluding mutually beneficial and multi-sectoral BTA. Applying a completely unlawful and artificial concept of US trade deficit divided by US imports, Trump threatened India with a 26 percent reciprocal tariff (half of a 52 percent trade deficit-to-import ratio) unless India took measures to eliminate its export surplus with the US. For this, Trump and his trade team demanded that India grant duty-free access to all US exports, including agricultural products such as dairy, genetically modified (GM) soybeans, corn, and poultry. India found itself in a bind: it not only maintained some of the world’s highest tariffs on these products but had also imposed numerous non-tariff barriers, including a ban on dairy imports on the grounds that American cattle are fed non-vegetarian feed.Quite curiously, Indian negotiators continued to naively believe—perhaps on the personal rapport of Modi’s friendship with Trump—that they would be able to keep agricultural products off the trade deal. Their misplaced confidence was so high that Modi publicly declared that India would never compromise on “farmers’ interests”, despite clear evidence that opening up these agricultural sectors had little to do with protecting farmers.Quite understandably, the trade talks stalled—and made no progress before the deadline expired.Trump Announces India-US Trade Deal, Reduces Reciprocal Tariffs From 25% To 18%A big shock was delivered on 31 July 2025.While peer economies secured lower reciprocal tariffs, India emerged with higher duties that hit its labour-intensive exports the hardest.Countries such as Japan, Vietnam, and Indonesia concluded agreements with the US that limited reciprocal tariffs to between 15 and 20 percent. India, by contrast, was slapped with a 25 percent reciprocal tariff on all exports except those specifically exempted by Trump, such as smartphones and pharmaceuticals. Labour-intensive sectors—accounting for nearly half of India’s exports and explicitly promised coverage under the February joint statement—including textiles, leather, fisheries, and gems and jewellery, were subjected to the full 25 percent tariff.Indian negotiators had lost both face and negotiating space. Nonetheless, the Commerce Minister and officialdom kept pretending that negotiations were on, and India would have a successful deal with the US without compromising on farmers’ interest.Trump wielded a sledgehammer on 6 August 2025, effective from 27 August. The US imposed an additional 25 percent tariff on India’s exports (subject to 25 percent reciprocal tariffs), to punish India for aiding Russia by importing petroleum products and making money on discounted Russian crude.This was a body blow to India’s trade and foreign policy negotiators. In response, they attempted to present a brave face and began cozying up with China—a country that was itself tightening the screws by restricting exports of rare-earth modules, critical fertilisers, and other inputs to India. Predictably, little came of this.An increasingly irritated Trump responded by imposing sanctions against Indian companies importing Russian crude, which soon led to more than halving of Russian crude import. Trump achieved his objective while leaving India burdened with tariffs totalling 50 percent.This theatre of the absurd continued even as the autumn of 2025 passed.With PM Modi Likely To Skip ASEAN, Diwali Diplomacy Won't Lead to a Trump MeetIt seems India’s bravado finally ebbed as 2026 dawned. Modi called Trump, as duly noted in Trump’s post on 3 February. He further noted that Modi had "agreed to stop buying Russian oil, and to buy much more from the US and, potentially, Venezuela."He rubbed it further by stating that, as per Modi’s request, both he and Modi had "agreed to a trade deal whereby the US will charge a reduced reciprocal tariff, lowering it from 25 percent to 18 percent."Trump’s claims of zero tariffs and massive US purchases underscored a deal where India conceded far more than it gained.In a further devastating blow, Trump said that India would "move forward to reduce their tariffs and non-tariff barriers" to "zero"—and that the Prime Minister had also committed to buying more, in addition to over $500 billion dollars of US energy, technology, agricultural, coal, and many other products.This was nothing short of a sell-out deal.As India committed to stop buying Russian oil, 25 percent additional tariff would have gone anyway. The only ‘concession’ India got was seven percent reduction on reciprocal tariffs on about 50 percent of India’s exports.This was nothing short of a complete surrender of a desperate Modi administration. Understandably, all hell broke loose.The US Supreme Court has heard cases against reciprocal tariffs imposed by Trump misusing US emergency laws.The Supreme Court is most likely to declare the reciprocal tariffs illegal. It is perhaps delaying delivering the judgment to give more time to Trump to convert reciprocal tariffs into agreed tariffs with countries like India. The ruling will not hit agreed tariffs, even as it strikes down reciprocal tariffs. As India has done the deal now, 18 percent reciprocal tariffs against India would stand.It is noteworthy that no major country has done a trade deal on reciprocal tariffs with the US in last few months. Why did India have to rush in at this eleventh hour?It is clear from the interim agreement that there is nothing that India has gained in the last one year. If at all this deal was to be done, why was it not done between April and June?As Trump’s announcement met with unprecedented criticism in India, the government negotiators hummed and hawed. For the first time, India is witnessing a spectacle of ministers passing the buck to each other.Foreign Minister S Jaishankar asked reporters to check with Commerce Minister Piyush Goyal regarding the trade deal as he knew nothing about it. Goyal, in turn, asked them to ask Jaishankar about the ‘monitoring arrangement’ on Russian importers.It could not have been uglier.'PM Modi Didn't Compromise on Farmers' Interests': Piyush Goyal on India-US DealThe US-India Joint Statement released by the White House on 6 February 2026 announced conclusion of 'a framework for an Interim Agreement regarding reciprocal and mutually beneficial trade'. This is not a BTA.India’s sweeping tariff concessions opened its market to US goods while leaving labour-intensive exports exposed to permanently higher reciprocal duties.India has agreed to 'eliminate or reduce tariffs on all US industrial goods and a wide range of US food and agricultural products', including ‘dried distillers’ grains’, red sorghum for animal feed, fresh and processed fruit, soybean oil, wine and spirits, additional products’. There is no specific exclusion for GM soybean oil. Does additional products cover corn, dairy, and poultry products? Most likely.India’s labour-intensive products, specifically mentioned in the Interim Agreement—textile and apparel, leather and footwear, plastic and rubber, organic chemicals, home décor, artisanal products and certain machiner—will be subject to 18 percent reciprocal tariff, in addition to principal tariff of zero to three percent. As India has agreed, these unprecedented high tariffs will remain in place permanently now.India, on the other hand, will not levy a tariff on any product of the US, which used to be taxed heavily earlier.What a massive turnaround of fortunes our negotiators have achieved!A poor and developing India would pay 18 percent tariffs on its export to the rich and commandeering America and allow imports at zero tariff. There is a lot of sinister stuff hidden inside other paragraphs of the joint statement.It notes that India agreed to address the long-standing barriers to trade in US medical devices and many other products. Most specifically, it records that India agreed to ‘address long-standing non-tariff barriers to the trade in US food and agricultural products’. Is the giveaway on agriculture only postponed a little bit? It seems India would allow free imports, without any quantitative restrictions, of chicken legs and dairy products soon.The Commerce Minister’s claim of India getting access to $30 trillion US market is hogwash as that market was always available to India. Likewise, no duty on 50 percent exports to US has been all along. Nothing new has been gained.Worse, India has got nothing on its other real interests: high fees on H1-B visas, action against Indian immigrants, and so on.What makes the Interim Agreement most sinister is the monitoring arrangement that the US has put in place regarding India’s imports of Russian oil.A committee of American secretaries and officials would monitor (India would be asked to submit details of all its import of crude oil and petroleum products) whether India is importing, directly or indirectly, any Russian oil.The White House Statement further threatened reimposition of additional duties of 25 percent, in case any evidence is found that India was importing Russian oil.This is complete humiliation.The Interim Agreement done with the US reveals utter bankruptcy of the Indian leadership and negotiators. They have accepted a disastrous deal, after delaying it for months, and at a time when reciprocal tariffs are about to be declared unlawful.This will hurt and haunt India for years.(Subhash Chandra Garg is the Chief Policy Advisor, SUBHANJALI, and Former Finance and Economic Affairs Secretary, Government of India. He's the author of many books, including 'The $10 Trillion Dream Dented, 'We Also Make Policy', and 'Explanation and Commentary on Budget 2025-26'. This is an opinion piece, and the views expressed above are the author’s own. The Quint neither endorses nor is responsible for the same.) 'To Be Revered, Not Feared': India’s Sacred Pact with Snakes in a Warming World

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On the Mat: India’s Self-Inflicted Trade Deal With Trump Will Haunt it for Years

Trump’s claims of zero tariffs & major US purchases underscored a deal where India conceded far more than it gained.

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Topics: Donald Trump Narendra Modi India-US Trade