US-India Trade Relationship
US trade policies are under intense scrutiny following former President Donald Trump’s implementation of tariffs on China, its primary trading partner, and the potential for more tariffs in the future. Meanwhile, with Indian Prime Minister Narendra Modi visiting the White House this week, attention is being drawn to the trade relationship between the two countries.
So far, India has been spared from tariffs under the Trump administration. However, the former president indicated that reciprocal tariffs would be announced for any country imposing tariffs on US goods, which could include India. In response, India may be reviewing its trade policies with the aim of fostering increased trade with the US, according to several reports.
Current State of the Trade Relationship
The US is currently India’s largest trading partner, with bilateral trade reaching a record $129.2 billion in 2024. However, India ranks tenth on the list of US trading partners for the same year.
With Trump planning to impose 25% tariffs on Mexico and Canada, and a 10% tariff already in place on Chinese goods, experts suggest that India could benefit from these tensions by exporting more technology, electronics, and jewelry to the US.
Both the US and India are keen to strengthen their economic influence in the Indo-Pacific region and challenge China’s economic dominance. The time seems ripe for both countries to make a significant deal.
Trade Deficit and Its Implications
The trade deficit between the US and India has been widening, with the US importing $45.7 billion more from India than it exported there in 2024. These imports accounted for around 2.7% of all US imports.
Trump has been vocal about India’s tendency to impose tariffs, but there have been signs that the country may be open to easing some of these policies. For instance, India’s finance minister recently reduced the import duty on motorcycles, benefiting US companies like Harley Davidson.
Key Imports and Exports
Some of the main products the US imports from India include pearls, semi-precious stones, pharmaceuticals, and electrical equipment. In 2023, imports of these top products totaled over $47 billion.
Modi’s visit to Washington could open new opportunities for both countries to deepen their economic and security cooperation, particularly in the Indo-Pacific region.
