Trump Signals Optimism on US-India Trade Deal Amid Tariff Tensions, Targets November Resolution
Washington/New Delhi, September 10, 2025 – US President Donald Trump expressed cautious optimism on Tuesday, September 9, 2025, about concluding a trade deal with India by November, despite ongoing tensions over steep 50% tariffs imposed on Indian exports. Speaking at a White House press briefing, Trump hinted at progress in negotiations, stating, “India’s talking, and we’re talking. They know what we want, and I think we’ll have something big by November.” The announcement follows months of strained relations, exacerbated by a 25% tariff on Indian goods effective August 7 and an additional 25% penalty for India’s continued purchase of Russian oil, set to take effect on August 27. Indian Commerce Minister Piyush Goyal echoed Trump’s optimism, affirming India’s commitment to a “fair and balanced” agreement, while External Affairs Minister S. Jaishankar criticized linking trade to geopolitical issues, signaling a complex path to resolution.
Background of the Tariff Row
The US-India trade relationship, once a cornerstone of strategic partnership, has faced significant strain since Trump’s second term began in January 2025. Under his “America First” trade policy, Trump imposed sweeping tariffs, raising the average US tariff rate from 2.5% to 18.6% by August 2025, with India facing a punitive 50% rate—the highest among major trading partners. The initial 25% tariff, announced on July 30, targeted India’s high import barriers, particularly in agriculture (39% average tariffs) and dairy, which Trump blamed for the $45.7 billion US trade deficit with India in 2024. An additional 25% tariff, effective August 27, was imposed as a penalty for India’s $52.7 billion oil trade with Russia, a move critics argue unfairly singles out New Delhi while sparing larger Russian energy buyers like the EU and Turkey.
Negotiations, ongoing since April 2025, hit a roadblock in July when India’s offer to reduce tariffs fell short of Trump’s demand for near-zero rates, as seen in deals with countries like Indonesia. Indian Prime Minister Narendra Modi’s refusal to directly engage Trump, fearing a public rebuke, and India’s insistence on protecting its agriculture and dairy sectors—key to millions of farmers’ livelihoods—further stalled talks. The collapse of a potential deal in August led to Trump’s declaration that no further negotiations would proceed until the tariff issue is resolved, a stance he softened on September 9.
Trump’s Optimism and India’s Response
Trump’s latest remarks suggest a shift from his earlier hardline rhetoric, where he labeled India’s trade practices a “one-sided disaster” and accused it of “killing” the US with high tariffs. On September 9, he acknowledged India’s willingness to lower tariffs “substantially,” stating, “They’re coming to the table, and we’re working on something great for both sides.” He cited recent US deals with Japan and the EU, which secured zero or near-zero tariffs, as a model, but emphasized flexibility, noting, “India’s a big market, and we don’t want to lose that.” The White House also announced that a US trade delegation, led by Trade Representative Jamieson Greer, is scheduled to visit New Delhi in late September to resume talks.
Indian Commerce Minister Piyush Goyal, addressing a press conference in New Delhi, confirmed ongoing discussions, stating, “India remains committed to a fair, balanced, and mutually beneficial trade agreement. We’re hopeful for a resolution by November.” Goyal highlighted India’s recent trade agreements with the UK and the European Free Trade Association (EFTA) as evidence of its openness to global trade, while stressing that sensitive sectors like agriculture and dairy, which support 60% of India’s workforce, cannot be fully opened. He noted that bilateral trade, valued at $191 billion in 2024, could double to $500 billion by 2030 with a successful deal.
External Affairs Minister S. Jaishankar, speaking at a think-tank event, criticized the US for linking trade to India’s Russian oil purchases, calling it “unfair and extraneous” to bilateral economic ties. “India’s energy security is a sovereign matter, and we’ve made this clear to our partners,” he said, pointing out that the US itself imports enriched uranium from Russia. Jaishankar emphasized India’s multi-alignment strategy, noting advanced trade talks with the EU and Maldives as a hedge against US pressure.
Economic Impact and Domestic Reactions
The 50% tariffs have significantly impacted Indian exports, valued at $87 billion in 2024, with sectors like textiles, gems, jewelry, pharmaceuticals, and electronics facing steep declines. A State Bank of India report estimates that prolonged tariffs could reduce India’s GDP growth by 0.8%, with exports to the US potentially dropping by $35 billion this fiscal year, threatening jobs in labor-intensive industries. The Federation of Indian Export Organisations (FIEO) warned that small and medium enterprises, particularly in garments and leather, are at risk, with some exporters pivoting to markets like the EU and UK.
In response, India has implemented measures to cushion the blow. Finance Minister Nirmala Sitharaman announced GST rate cuts and consumption-boosting fiscal stimuli worth $20 billion, aimed at supporting rural demand and mitigating tariff impacts. RBI Governor Sanjay Malhotra expressed confidence in minimizing economic fallout, projecting a GDP growth revision of only 0.2% downward due to the tariffs. Industry leaders, including FICCI president Harsha Vardhan Agarwal, urged a swift resolution, stating, “A trade deal is critical to maintain India’s competitiveness and access to the US market.”
Opposition parties, including Congress and Trinamool Congress, criticized the Modi government’s handling of the tariff row, accusing it of failing to protect exporters. Congress leader Jairam Ramesh called for a parliamentary debate on the issue, arguing that the government’s “overconfidence” in negotiations led to the current impasse. Meanwhile, BJP leaders defended the government’s stance, with Union Minister H.D. Kumaraswamy asserting that India’s firm position on agriculture reflects its commitment to farmers.
Global Context and Strategic Implications
Trump’s tariffs are part of a broader trade war, with the US imposing reciprocal tariffs on nearly 100 countries under the International Emergency Economic Powers Act (IEEPA) and Section 232 of the Trade Expansion Act. The policy, outlined in a white paper by Trump’s economic adviser Stephen Miran, aims to weaken the US dollar and boost manufacturing, but critics argue it risks global economic instability. India’s continued purchase of Russian oil, which constitutes 35% of its oil imports, has drawn particular ire, with Trump citing it as a violation of Western sanctions, despite India’s compliance with the $60 per barrel oil cap.
India’s diversification strategy, including a $100 billion EFTA deal and advanced EU negotiations, provides leverage, but analysts warn that shifting export markets is costly and slow. “Finding new customers in unfamiliar markets is challenging, especially with specialized product lines,” trade expert Srividya Jandhyala told the BBC. The BRICS alliance, including Brazil, has rallied against Trump’s tariffs, with Brazilian President Luiz Inácio Lula da Silva discussing a joint response with PM Modi, though India remains cautious about aligning too closely with anti-US blocs.
Looking Ahead
The resumption of talks in late September offers a window to resolve the tariff dispute, with both sides eyeing November as a deadline. Trump’s executive order on September 6, granting tariff exemptions for partners agreeing to industrial export deals, could provide a framework for
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