US-India trade relations over the years
According to data, the total goods trade between India and US reached $129.2 billion in 2024. US exports to India amounted to $41.8 billion while imports from India stood at $87.4 billion. A substantial increase from 2023. Also, the US trade deficit with India reached $45.7 billion. A major contention for the Trump administration.
New Delhi: The economic relationship between the United States and India has undergone transformations over the years, especially since the start of the 21st Century. The relations which nosedived after India carried out nuclear tests in Pokhran was not only rebuilded but also taken to new heights. The trade relations between the countries have evolved into a multifaceted partnership.
India, which has adopted a protectionist measure to safeguard its local industries and farms have faced repeated attacks from US President Donald Trump. He has often described India as "King of Tariffs”. While, the imbalance between the US and India is not that big as with China and other countries, a US first policy by Trump has India worried. Trump has advocated reciprocal tariffs on Indian products.
According to data, the total goods trade between India and US reached $129.2 billion in 2024. US exports to India amounted to $41.8 billion while imports from India stood at $87.4 billion. A substantial increase from 2023. Also, the US trade deficit with India reached $45.7 billion. A major contention for the Trump administration.
US exports to India
The United States exports to India include a wide array of products:
- Aircraft and aerospace equipment: Both civilian and defense-related aircraft and components. In fact, the US has emerged as a major defence partner for India, which is the largest exporter of arms in the world.
- Machinery and industrial equipment: Essential for manufacturing and infrastructure sectors.
- Medical devices and pharmaceuticals: India imports most of the raw materials for its pharmaceutical and healthcare industry.
- Energy products: Crude oil, LNG, and coal. Trump wants India to import more energy products from the US.
- Agricultural products: Fruits, nuts, and other specialised food items.
| Category | Key Products |
|---|---|
| Aircraft & aerospace equipment | Civilian and military aircraft components |
| Machinery & industrial equipment | Manufacturing and infrastructure machinery |
| Medical devices & pharmaceuticals | Advanced medical equipment, drugs |
| Energy products | Crude oil, LNG, coal |
| Agricultural products | Fruits, nuts, specialised food products |
India's exports to the US
India’s exports to the US include:
- Information technology (IT) services: A major contributor to US businesses.
- Textiles and apparel: Traditional and modern textile products.
- Gems and jewellery: Diamonds, gemstones, and handcrafted jewellery.
- Pharmaceuticals: Generic medicines and APIs cater to the US healthcare industry.
- Automotive parts: Essential components for the automobile sector.
| Category | Key Products |
|---|---|
| IT services | Software services, IT solutions |
| Textiles & apparel | Clothing, garments, fabric products |
| Gems & jewellery | Diamonds, gemstones, handcrafted items |
| Pharmaceuticals | Generic medicines, APIs |
| Automotive parts | Vehicle components, spare parts |
Trump's advocacy for tariff reduction
During his earlier presidency and in his second term too, Trump has pushed for a more balanced trade relationship with India. Key motivations behind his stance included:
- Trade imbalance: The US sought greater market access in India.
- High tariff rates: India imposed tariffs as high as 50% on motorcycles and 150% on bourbon whiskey.
- Reciprocal trade practices: The Trump administration demands equal market access.
- Strategic economic interests: Strengthening cooperation in defense and energy sectors.
Developments and negotiations
To address trade concerns, India has implemented tariff reductions in the last couple of weeks:
| Measure | Change |
|---|---|
| Motorcycle Tariff | Reduced from 50% to 30% |
| Bourbon Whiskey Tariff | Reduced from 150% to 100% |
| Trade Negotiations | High-level meetings for further adjustments |
| Focus Sectors | Agriculture, industrial goods, technology |
Challenges and considerations
Despite progress, key challenges remain between the Washington and New Delhi:
- Agricultural tariffs: India is reluctant to reduce tariffs due to concerns over domestic farmers.
- Non-tariff barriers: Regulatory standards and intellectual property rights create hurdles.
- Global trade policies: Evolving international policies impact bilateral trade dynamics.
India would like to maintain its trade relations with the US and it has taken various measures in this regard but experts have said that it should not add reciprocal tariffs on the US if Trump does it. They argue that India is in a position to absorb the turbulence for the time being while weighing its options.