The possibility of a meeting between Indian Prime Minister Narendra Modi and U.S. President Donald Trump at the upcoming United Nations General Assembly (UNGA) is now uncertain as trade tensions between the two countries have escalated. Diplomatic sources suggest that the two leaders may avoid a formal meeting during the global summit due to the fallout from the recent tariff war.

Escalating Trade Tensions

The U.S. has imposed a 50% tariff on Indian exports, a move that has significantly strained the once-warm diplomatic and trade ties between the two countries. The tariffs, which went into effect on August 27, 2025, are a consequence of President Trump's decision to penalize India for its continued imports of Russian oil. The White House argues that these purchases are indirectly funding Russia's war against Ukraine.

President Trump initially imposed a 25% tariff on Indian goods on August 1, 2025, and later doubled it to 50% effective August 27, 2025. He has also threatened secondary sanctions. Trump has accused India of exploiting the situation by buying large amounts of Russian oil and then selling it on the open market for substantial profits.

India has strongly criticized the U.S. tariffs as "unfair, unjustified and unreasonable," asserting that its energy policy and supply chains are independent and grounded in its strategic autonomy. The Indian Ministry of External Affairs has stated that India's imports of Russian oil are necessary to ensure affordable energy for its 1.4 billion citizens amid global supply disruptions.

Impact on India's Economy

The 50% tariff could impact a significant portion of India's exports to the U.S., potentially slashing them to $49.6 billion next year. Certain sectors, including apparel, textiles, gems, shrimp, carpets, and furniture exports, would be the most affected, potentially endangering hundreds of thousands of jobs. The Global Trade Research Initiative (GTRI) estimates that Indian exports to the U.S. could fall from $86.5 billion this year to about $50 billion in 2026 as a result of the tariffs.

Economists warn that the tariffs could erase up to one percentage point from India's GDP growth this fiscal year. Unemployment is also a concern, as a major drop in U.S. exports could hit millions of workers.

India's Response and Future Strategies

Despite the rising tensions, both Washington and New Delhi have maintained a cautiously optimistic tone, signaling openness to resolving their differences. India is also seeking new trade partners, including Brazil, China, Russia, Britain, Japan, Australia, and the EU. Indian officials are expected to host meetings with industry leaders and global trade counterparts to mitigate the impact of the new U.S. tariffs.

India aims to resume negotiations with the U.S. for the proposed bilateral trade agreement (BTA) and address the issue of the tariffs. However, the new dates for the next round of trade talks have not yet been finalized. India is hopeful that the tariff issues will be resolved to take the trade agreement negotiations forward.

Potential Impact on Modi-Trump Meeting

The strained trade relations between the U.S. and India have cast a shadow over the potential meeting between Prime Minister Modi and President Trump at the UNGA. The meeting, if it occurs, is expected to be a high-stakes trade confrontation, with Washington's tariffs threatening to turn friendly optics into tense bargaining.

The risk for Modi is dual: appearing weak under U.S. pressure or being cast as obstructing a deal that Trump can sell to his electorate. With both leaders heading into politically sensitive periods, the choreography in New York will matter.