By R. Suryamurthy
By the time President Donald Trump sits across the table to finalize what is being marketed as the first phase of an India-US trade agreement next month, New Delhi should have already absorbed the most important lesson from his administration’s recent foreign-policy success. That lesson has nothing to do with trade. It comes from Iran.
After four months of military confrontation that pushed oil prices above US$100 per barrel, disrupted global shipping, rattled financial markets and threatened to drag the Middle East into a wider war, Washington did not secure peace because it had defeated Iran. Nor did it reach an agreement because of any sudden diplomatic awakening. It negotiated because the costs of continuing the conflict had become too high.
For all the rhetoric about military superiority, economic sanctions and strategic pressure, the United States eventually confronted a reality that every great power encounters sooner or later: leverage works both ways.
Iran’s ability to disrupt the Strait of Hormuz, through which roughly one-fifth of global oil and gas trade flows, imposed costs not only on its adversaries but on the global economy itself. Energy prices surged, inflation fears resurfaced, shipping costs climbed and political pressure mounted. The result was not capitulation by Tehran but negotiations.
That reality should resonate in New Delhi as India faces mounting pressure from Washington to conclude a bilateral trade agreement before Trump’s self-imposed July deadline. The timing is revealing.
On one hand, the Trump administration is publicly describing India as a critical strategic partner, indispensable to supply-chain diversification, Indo-Pacific stability and efforts to balance China’s rise. On the other, the Office of the United States Trade Representative has proposed a fresh round of Section 301 tariffs of up to 12.5 percent on imports from India and 53 other economies.
The contradiction is striking. The proposed tariffs are not even based on allegations that Indian exports are produced using forced labour. Instead, Washington is seeking to penalize India because it allegedly does not impose sufficiently restrictive controls on imports from third countries suspected of using forced labour.
In effect, the United States is attempting to export its domestic trade preferences and regulatory framework to sovereign nations through unilateral tariff measures. This should alarm every country that values an independent trade policy.
Historically, Section 301 investigations were designed to address barriers that restrict market access for American firms. They were not conceived as instruments through which Washington could dictate what products another country may import, from whom it may import them, or under what standards those imports should be assessed.
As the Global Trade Research Initiative (GTRI) correctly argues, the current investigation stretches the legal boundaries of Section 301 beyond recognition. If accepted without challenge, it would establish a precedent under which the United States could impose tariffs not because another country discriminates against American products, but because it fails to align fully with American geopolitical and regulatory preferences. The implications extend far beyond trade.
The proposed tariffs expose the fundamental imbalance that often characterizes contemporary US trade diplomacy. Washington increasingly presents commercial arrangements not as reciprocal economic agreements but as instruments for advancing broader strategic objectives. This is where the debate surrounding the Bilateral Trade Agreement becomes critical.
For months, Indian policymakers have portrayed the proposed deal as an economic opportunity that will deepen commercial ties with the world’s largest economy. Yet the question that has received remarkably little scrutiny is whether the United States is offering India anything proportionate to the concessions it seeks. The answer appears increasingly uncertain.
According to GTRI, the original rationale for rushing into a trade agreement weakened considerably after the US Supreme Court’s February ruling struck down the reciprocal tariff framework that had formed part of Trump’s trade strategy. If the legal foundation underpinning those tariff threats has already been weakened, why should India feel compelled to negotiate under artificial deadlines?
Indeed, Washington’s urgency appears driven less by economics than by politics. Trump needs victories. The approach of the 2026 midterm election cycle, growing scrutiny of his tariff-heavy trade policies, persistent inflation concerns and intensifying competition with China have created a political environment in which headline-grabbing agreements matter. A trade deal with India allows the White House to claim that aggressive tariff tactics force major economies to make concessions.
The narrative is politically attractive. Threaten tariffs, create pressure, secure negotiations, declare victory. The problem is that India’s interests are not identical to Trump’s political needs. New Delhi must therefore ask a simple question: if the United States is threatening new tariffs while simultaneously demanding rapid progress on a trade agreement, is this negotiation taking place between equals or under pressure? The Iran episode offers a useful answer.
Washington negotiated with Tehran only after discovering that pressure alone could not secure its objectives. Costs mattered. Consequences mattered. Leverage mattered. India possesses considerably more leverage than many policymakers appear willing to acknowledge.
It is the world’s fastest-growing major economy. It is projected to become the third-largest economy within a few years. It represents a market of more than 1.4 billion people. It is central to global pharmaceutical supply chains, digital services exports, technology partnerships and manufacturing diversification strategies.
Most importantly, the United States needs India almost as much as India needs the United States. Washington’s Indo-Pacific strategy cannot succeed without Indian participation. Efforts to reduce dependence on China require Indian manufacturing capacity. Technology cooperation, semiconductor resilience and critical mineral partnerships all increasingly depend upon India.
These realities should inform India’s negotiating posture. Instead of rushing to meet an American political deadline, New Delhi should insist that trade negotiations proceed according to Indian economic interests and Indian timelines. If that means accepting temporary Section 301 tariffs while pursuing legal and diplomatic challenges, so be it. Many countries have done precisely that. Malaysia recently demonstrated that walking away from an unsatisfactory arrangement is sometimes preferable to accepting a bad one. The broader issue is strategic autonomy.
For decades, India has sought to preserve decision-making independence while maintaining productive relationships with competing powers. That principle should not be abandoned simply because trade negotiations are underway. Strategic partnership does not require strategic submission.
The irony is that Trump’s peace deal with Iran illustrates exactly why. The world’s most powerful nation ultimately negotiated when confronted with sufficient costs and constraints. Strength did not eliminate the need for compromise; it merely altered the terms under which compromise occurred.
India should remember that lesson. A country negotiating from confidence seeks mutually beneficial outcomes. A country negotiating from anxiety accepts deadlines created by others. One protects its policy space. The other surrenders it incrementally.
As July approaches, the central question is not whether an India-US trade agreement can be signed. It is whether India is prepared to negotiate from the position its economic and geopolitical weight deserves. The answer will shape not merely the next trade deal, but the character of India’s engagement with the United States for years to come. (IPA Service)
