Amidst escalating trade tensions between the United States and India, President Donald Trump has asserted that India offered to "cut tariffs to nothing" on American goods. This claim surfaces just days after a key advisor expressed concerns about the slow progress of trade negotiations between the two nations. Trump's statement adds another layer of complexity to the already strained relationship, marked by the recent imposition of steep tariffs on Indian imports.
The timing of Trump's statement is noteworthy. It follows a multilateral economic summit in China, where Indian Prime Minister Narendra Modi, Russian President Vladimir Putin, and Chinese President Xi Jinping convened to discuss strengthening ties. This meeting occurred against the backdrop of escalating U.S.-India trade disputes, particularly Washington's disapproval of New Delhi's continued import of Russian oil.
The Trump administration has imposed a 50% tariff on most U.S. imports from India, a move that has significantly strained relations. The U.S. argues that India's purchase of Russian oil is indirectly funding Russia's war against Ukraine. However, Indian officials have countered that these imports are necessary to ensure affordable energy for its 1.4 billion citizens amidst global supply disruptions.
The recent tariff hike is not an isolated incident. It is the culmination of a series of trade disputes that have emerged since 2017. India's 2018 tariff on American Harley Davidson motorcycles initially sparked friction. In February 2025, Modi visited the U.S. with the goal of boosting trade, with both countries agreeing to a "Mission 500" to reach $500 billion in trade by 2030. However, this vision has been overshadowed by escalating tensions.
The impact of these tariffs on India could be substantial. Exporter associations estimate that the tariffs could affect nearly 55% of India's $87 billion worth of merchandise exports to the U.S.. Sectors like textiles, gems and jewelry, and seafood, which heavily rely on the American market, are facing shrinking order books. Economists have warned that sustained levies could push India's GDP growth below 6%. Some predict precipitous fall in trade and potential job losses in key export-driven sectors.
India's trade minister has asserted that the country will not "bow down" to the U.S. and will instead focus on capturing new markets. Despite the tensions, US-India trade talks are reportedly continuing. However, analysts suggest that Washington's aggressive tariff diplomacy and closer ties with Pakistan have created trust deficits that complicate forthcoming trade deal negotiations.
Some experts believe that Trump's actions are influenced by his personal dissatisfaction with India's rejection of his offer to mediate during tensions with Pakistan. Former White House officials have criticized Trump's tariffs, warning that they risk pushing India closer to China and damaging the reputation of the American brand.
The U.S. remains India's top export destination. While some sectors, such as pharmaceuticals and electronics, have been temporarily exempted from additional tariffs, the overall impact on Indian exports is expected to be significant. Rival exporters from countries like Turkey, Thailand, Vietnam, and Bangladesh, facing lower U.S. tariffs, are already capitalizing on the situation by offering cheaper goods.
As the trade war escalates, analysts suggest that a strategic reset is essential to restore the relationship between the two countries. This would involve empathy for India's domestic sensitivities and a collaborative long-term framework. However, with Trump's latest claim about India offering to eliminate tariffs, the future of U.S.-India trade relations remains uncertain. Some analysts believe that the shared threat of US tariffs has helped improve relations between New Delhi and Beijing.
