U.S. Trade Representative Jamieson Greer concluded a trip to New Delhi in late June, meeting with Indian Commerce Minister Piyush Goyal as the two sides sought to finalize a trade deal. They had reached a tentative agreement in February—before a U.S. Supreme Court decision invalidated President Donald Trump’s sweeping tariffs that necessitated negotiations in the first place.
Last Tuesday, U.S. Ambassador to India Sergio Gor said they were “in the final steps on this deal. … It’s in the last 1 percent.”
Two main issues still need to be resolved. India still faces some U.S. tariffs, and its negotiators are trying to persuade the United States to impose levies lower than those on Asian competitors such as Bangladesh, Malaysia, Pakistan, Sri Lanka, and Vietnam. Washington, in turn, wants New Delhi to provide guarantees that it is not relying on forced labor to obtain a competitive export advantage.
The progress toward a deal comes after Trump and Indian Prime Minister Narendra Modi held a conversation on the sidelines of the G-7 summit in Èvian-les Bains, France, in mid-June. In the wake of the meeting, reports suggested that the two leaders discussed bilateral trade, the situation in the Middle East, the safety of Indian seafarers in the Strait of Hormuz, and the possibility of Trump visiting New Delhi.
Whether U.S.-India relations are truly thawing remains uncertain. Ties are unsettled because the mutual trust that the two sides nurtured over decades is waning amid Trump’s second-term policy shifts. Among other issues, since Trump’s visit to China in May—where he met with President Xi Jinping—Indian policymakers have had doubts about New Delhi’s role as a possible counterweight to Beijing and its strategic significance to Washington.
Modi was among the first heads of state to visit Trump after he returned to the White House. At the time, the bonhomie that had characterized the two leaders’ ties during Trump’s first term seemed mostly in place, despite some concerns about India’s trade imbalance with the United States. But this affable relationship quickly unraveled, particularly in the wake of the May 2025 military conflict between India and Pakistan.
The conflict ended in less than a week, and Trump asserted that he had induced the two parties to reach a cease-fire using the threat of trade sanctions as leverage. India, long allergic to foreign involvement in its dispute with Pakistan, roundly challenged this claim; Pakistan embraced Trump’s position and even called for him to receive a Nobel Peace Prize.
The U.S.-India relationship deteriorated from there, as Trump imposed draconian tariffs on New Delhi; hefty fees on H-1B visa applicants, of which India was the greatest beneficiary; and sanctions on India for its purchases of Russian oil. Acutely vulnerable on these fronts, India had few options but to endure their adverse effects. To compound matters, this year Trump embraced Pakistan as an interlocutor in negotiations to end his Iran war.
As a result, U.S.-India ties have not seen much tangible improvement, despite U.S. Secretary of State Marco Rubio’s visit to the country in May. Indeed, some commentators have pointed to a seemingly inexorable downward slide, especially as Washington appeared oblivious to New Delhi’s concerns about the harsh effects of the Iran war on India.
There is little question that Trump’s mercurial policies and ham-fisted tactics have done significant damage to the bilateral relationship. The rhetoric of some of Trump’s cabinet members, the continued U.S. dalliance with Pakistan, and the Trump administration’s callous view of the collateral damage to India from the ripple effects of the Strait of Hormuz crisis are all troubling. India’s criticism of these choices is entirely understandable.
Still, it is possible to point to a series of Indian foreign-policy choices over the years that either contributed to the U.S. approach or worsened its effects. To begin with, for decades, India was oblivious to U.S. concerns about both tariff and nontariff barriers. These included but were not limited to: an unpredictable regulatory environment, varying legal expectations across India’s states, and exceedingly high tariffs on certain products.
Such hurdles have been the subject of contentious trade negotiations with past U.S. administrations, too. More than two decades ago, Robert Blackwill—the U.S. ambassador to India during the first George W. Bush administration—rather disparagingly characterized bilateral trade as “flat as a chapati.”
In the most recent negotiations, the United States reportedly secured commitments from India on matters of market access, the sale of some agricultural products, and digital trade. New Delhi’s insistence on lower tariffs than those of its regional rivals and the questions around Section 301 of the 1974 U.S. Trade Act, under which Washington is conducting forced labor investigations of its trading partners, still need to be resolved.
Trump no doubt brought a blunt instrument to bear to induce India to make trade concessions. But U.S. frustrations with India’s unwillingness to forthrightly tackle trade issues for years did little to endear New Delhi to U.S. trade officials. Even once Modi—widely seen as market-friendly—was elected in 2014, India still adopted an unyielding stance at a major multilateral trade negotiation forum that year.
In the intervening years, despite external pressures, India’s government mostly refused to budge from its stated positions. Had India demonstrated some flexibility on matters of market access, it may have been able to fend off some of the more draconian pressures from the Trump administration.
Another bugbear for Washington is the obstacles to investing in the Indian market. India has made significant progress in this area since it fitfully embraced market-oriented reforms after an unprecedented fiscal crisis in 1991. Despite significant policy changes and a more favorable investment climate, though, hidden barriers remained. Foreign investors have complained about these obstacles—including fluctuating tax policies, bureaucratic red tape, the protection of intellectual property rights, and foreign ownership restrictions.
If Indian governments hadn’t adopted a lackadaisical approach to these issues, New Delhi could have had a better hand when faced with Trump’s abrupt policy shift. India’s approach was halting mostly because of the power of domestic corporate lobbies that remained hostile to foreign competition. In contrast, China managed to ride out recent U.S. tariff threats with greater ease because it enjoyed considerable economic leverage over the United States, having built considerable trade advantages and attracted vast amounts of U.S. investment.
Finally, in the diplomatic realm, India could have displayed more nimbleness—especially in the wake of the conflict with Pakistan last year. To its credit, New Delhi abandoned its total commitment to nonalignment after the end of the Cold War. But Indian policymakers replaced it with the nebulous concept of so-called strategic autonomy, which is hardly a viable lodestar for an emerging global power.
India’s insistence on strategic autonomy has done little to bolster U.S.-India strategic ties; New Delhi has seemed averse to getting too close to Washington because of both historical legacies and contemporary domestic politics. More to the point, India’s continued dependence on Russia for arms and the mistaken belief that it remained a feasible strategic partner did not help it strengthen ties with the United States. Nor did this shibboleth help India step up to the plate to mediate between the United States and Iran at a pivotal moment, as Pakistan did.
Significantly, India displayed little or no flexibility when Trump—with his characteristic bombast—insisted that his skillful diplomacy had defused the crisis with Pakistan. India may have a long-standing aversion to external mediation of the Kashmir issue, but brushing off the suggestion that Trump could have played a useful role amounted to rigidity. Unsurprisingly, this unwavering stance placed India in Trump’s bad books.
The downturn in U.S.-India ties is not in the interest of either country, and the relationship need not remain stalled indefinitely. For all the difficulties, India remains the United States’ 10th-largest trading partner. Until recently, India was increasingly acquiring advanced weapons from the United States and seeking to reduce its dependence on Russia.
Furthermore, the two countries’ navies have deepened their cooperation for years, with the U.S. Navy expanding its presence in the annual Exercise Malabar. New Delhi and Washington also maintain a significant and growing technology partnership.
Unlike during the Cold War years, the U.S.-India relationship today has considerable substance. Both the United States and India share a democratic ethos—and this political culture should enable them to find common ground despite their currently strained ties. If they can forge a trade deal, if ongoing tensions in the Strait of Hormuz abate, and if Modi can find ways to placate Trump, there is every reason to believe the partnership can again be placed on an even keel.
