Trump, Modi agree to talk in bid to resolve trade impasse

“I am pleased to announce that India, and the United States of America, are continuing negotiations to address the Trade Barriers between our two Nations,” Trump wrote on social media Tuesday. “I look forward to speaking with my very good friend, Prime Minister Modi, in the upcoming weeks. I feel certain that there will be no difficulty in coming to a successful conclusion for both of our Great Countries!,” he added.

Modi responded shortly after with a post on X, saying that he was looking forward to speaking with Trump and that the U.S. and India are “close friends and natural partners.”

“I am confident that our trade negotiations will pave the way for unlocking the limitless potential of the India-U.S. partnership,” Modi said. “Our teams are working to conclude these discussions at the earliest.”

As tensions ratchet down, a team of Indian trade negotiators is discussing plans to travel to Washington in coming days, perhaps as early as next week to resume trade talks, a person familiar with the matter said, asking not to be identified as the details aren’t public. 

Later in the day, Commerce and Industry Minister Piyush Goyal said at an event that India is in active dialogue toward a trade deal with the U.S.

In order to agree a trade deal, New Delhi wants the U.S. to address the 25% reciprocal tariff on Indian exports to America and the 25% additional levy imposed as a penalty for buying Russian oil, the person said.

A spokesperson for the Ministry of Commerce and Industry didn’t immediately respond to an email seeking further information. 

Trump’s comments offering a positive appraisal of relations between Washington and New Delhi come even as the U.S. president is pressuring European Union leaders to join him in ratcheting up tariffs on India and China to punish the countries for Russian energy buys.

Trump told EU officials during a meeting earlier Tuesday that he’s prepared to join them if they impose sweeping new tariffs on India and China in a bid to raise pressure on Russian President Vladimir Putin to join ceasefire talks with Ukraine, according to people familiar with the discussions. The U.S. is willing to mirror tariffs imposed by Europe on either country, one of the people said.

That move threatens to further complicate efforts to resolve Trump’s trade dispute with India, exacerbated last month by the U.S. doubling the tariff rate on many goods from the country to 50% over India’s purchases of Russian oil. 

Trump appeared to soften his rhetoric on India last week, saying there was “nothing to worry about” in ties between the two countries. Officials in New Delhi said at the time they viewed the comments with caution, and would wait for more signals from the White House. 

Sonal Varma, an economist at Nomura Holdings Inc., said comments from both the leaders represent positive signals and increases the chances of India’s 50% tariff rate being lowered in coming months. 

However, Trump’s willingness to impose sweeping new tariffs on India and China for buying Russian oil “suggests that the U.S. wants the EU to initiate the next step on Russia-related pressures.” The EU and India are currently negotiating a free trade agreement, which would need to be considered in any decision around additional tariffs, she said. 

China, Russia ties

While India was one of the first countries to open talks with Trump on trade, the imposition of high levies on their exports shocked officials in New Delhi. U.S. officials have expressed frustration with India’s high levies on imports and other non-tariff barriers.

Trump hit India with a 25% rate before doubling that to address New Delhi’s continued Russian energy buys. India has assailed the tariff hikes and insisted that it will continue to buy Russian oil as long as it is financially viable. India has been the largest buyer of Russian seaborne crude as the discounted barrels have helped the world’s third largest oil consumer keep its import bill in check.

The positive signals from Trump and Modi come a week after the Indian leader’s trip to China, where he held talks with Putin and Chinese President Xi Jinping. The U.S. president had criticized the meeting at the time and said India had been “lost” to China. 

“The U.S. is India’s largest export market by a wide margin—the value of it is higher than all of the shipment to BRICS’ countries combined,” said Trinh Nguyen, senior economist at Natixis. “As such, the U.S. and India are natural trade partners given complimentary comparative advantages. Both Modi and Trump have strong reasons to mend ties.”