Examining the India-US Trade Relationship in Anticipation of PM Modi’s Visit to Washington
Prime Minister Narendra Modi’s Visit to Washington to Meet President Trump
Prime Minister Narendra Modi is scheduled to arrive in Washington on Wednesday for a two-day visit to meet with US President Donald Trump. This visit marks Modi’s first bilateral visit to the US since Trump began his second term in the White House. The meeting between the two leaders is expected to focus on strengthening India-US strategic ties, particularly in the areas of trade cooperation.
Importance of the Meeting
The meeting between Prime Minister Modi and President Trump is significant, as it is the earliest in an American President’s term that an Indian Prime Minister is visiting him. The two leaders share a certain personal rapport, which was evident during Trump’s first term. From New Delhi’s perspective, a face-to-face meeting between Modi and Trump is crucial for enhancing bilateral relations.
Trade Relationship Between India and the US
As of 2024, the US was India’s largest trade partner, with trade amounting to nearly $120 billion. However, India ranked tenth in the list of US trading partners. The bilateral trade between the two countries reached $129.2 billion in 2024, setting a new record for their partnership. The US imports products such as pearls, semi-precious stones, pharmaceuticals, and electrical equipment from India, while India imports crude oil, gems, nuclear reactors, and electrical and medical equipment from the US.
Potential Impact of Tariffs
President Trump has indicated plans to impose tariffs on America’s major trade partners, including Mexico, Canada, and China. Amidst these strained trade relationships, India could benefit by exporting more technology, electronics, and jewelry to the US. Both the United States and India are interested in enhancing their economic influence in the Indo-Pacific region to counter China’s economic dominance.
Trade Deficit Concerns
The trade deficit between the US and India has been widening, with India exporting $45.7 billion more to the US than it imports from the country in 2024. Trump’s announcement of reciprocal tariffs on countries with tariffs on US goods could also impact India. However, India has been reviewing its trade policies to attract more trade with the US and potentially avoid additional taxes.
Efforts to Address Trade Imbalances
President Trump has criticized Prime Minister Modi’s tariff policies, but India has shown willingness to reduce tariffs. In a recent move, Indian Finance Minister Nirmala Sitharaman slashed import duties on motorcycles and electric vehicles, benefiting American companies like Harley-Davidson and Tesla. This gesture could be a step towards addressing trade imbalances and fostering better economic relations between the two countries.
In conclusion, the upcoming meeting between Prime Minister Modi and President Trump holds promise for deepening India-US ties and addressing trade challenges for mutual benefit.