India and the U.S. will resolve trade disputes after talks between Trump and Modi

India and the United States reached an agreement on Thursday to initiate discussions aimed at finalizing an early trade deal and addressing their ongoing tariff disputes. New Delhi has committed to increasing its purchases of U.S. oil, gas, and military equipment, as well as tackling illegal immigration.

These agreements were established following a meeting between U.S. President Donald Trump and Indian Prime Minister Narendra Modi at the White House. This occurred shortly after Trump expressed concerns regarding the business environment for U.S. companies in India and presented a framework for reciprocal tariffs on nations imposing duties on U.S. imports.

“Prime Minister Modi has recently announced reductions to India’s excessively high tariffs that restrict our access to the Indian market, which is a significant issue,” Trump stated. India’s Foreign Secretary Vikram Misri indicated that a resolution to trade issues could be achieved within the next seven months.

A joint statement released after the meeting noted that Washington appreciated New Delhi’s recent actions to lower tariffs on certain U.S. products and enhance market access for U.S. agricultural goods, with the aim of negotiating the initial components of a trade agreement by the fall of 2025.

While both leaders had differing views on tariffs, Misri emphasized that the more significant development is the establishment of a path forward on this matter. Some of the agreements made by the leaders are ambitious, with India aiming to significantly boost its purchases of U.S. defense equipment and potentially position Washington as its primary supplier of oil and gas, as stated by Trump during a joint press conference with Modi.

Delhi aims to double its trade with Washington by 2030, as stated by Modi. The leaders also addressed long-standing collaboration on nuclear energy, which continues to encounter legal hurdles.

Trump mentioned, “We are also working towards ultimately supplying India with the F-35 stealth fighters.” However, Misri, the Indian official, clarified that the F-35 deal is currently just a proposal, with no formal negotiations in progress. The White House did not provide any comments regarding the potential deal.

TRUMP’S OBJECTIVES

Despite having a cordial relationship with Modi during his first term, Trump reiterated on Thursday that India’s tariffs are “very high” and indicated a willingness to impose equivalent tariffs, following his previous tariffs on steel and aluminum that significantly impacted India’s metal industry.

“We are reciprocating with India,” Trump stated at the press conference. “Whatever India imposes, we will impose in return.” Modi assured that he would safeguard India’s interests.

“I greatly value and learn from President Trump’s approach of prioritizing national interest,” Modi remarked. “Like him, I also place India’s national interest above all else.” The two leaders commended each other and agreed to enhance security collaboration in the Indo-Pacific, subtly referencing their competition with China, as well as to initiate joint production in areas such as artificial intelligence.

In discussions prior to the meeting regarding India’s initiatives, one source characterized the actions as a “gift” for Trump aimed at alleviating trade tensions. An aide to Trump indicated that the president views defense and energy transactions with India as a means to reduce the U.S. trade deficit.

According to India’s Misri, energy imports from the U.S. could rise to $25 billion in the near term, up from $15 billion last year, which could aid in diminishing the trade deficit. Richard Rossow, who leads the India program at the Center for Strategic and International Studies, noted that tariffs will remain a significant factor in the bilateral relationship. “It’s going to be a boxing match,” he remarked. “India is prepared to endure some challenges, but there are limits.”

Currently, the U.S. faces a $45.6 billion trade deficit with India. The average trade-weighted tariff rate in the U.S. is approximately 2.2%, as reported by the World Trade Organization, in contrast to India’s 12%.

ADDRESSING ILLEGAL IMMIGRATION

Trump is seeking increased cooperation from India regarding unauthorized immigration. India is a significant source of immigrants to the U.S., particularly in the technology sector, where many enter on work visas, while others are undocumented.

The joint statement indicated that both nations have committed to tackling illegal immigration and human trafficking through enhanced law enforcement collaboration. India may play a crucial role in Trump’s strategy to counter China, which is perceived by many in his administration as the primary U.S. adversary. India remains cautious of China’s military expansion and competes for similar markets.

Modi expresses concern that Trump might negotiate an agreement with China that leaves India out, as noted by Mukesh Aghi, president of the U.S.-India Strategic Partnership Forum.

Meanwhile, India has maintained its relationship with Russia amid the ongoing conflict in Ukraine, continuing to be a significant consumer of Russian energy, even as Western nations strive to reduce their own consumption since the onset of the war.

“There is a perception that India is neutral in this situation,” Modi stated. “However, this is not accurate. India has a stance, and that stance is one of peace.”