Trump, responding to a question on the talks, said India had “taken advantage” of US policies and charged “tremendous tariffs”, arguing that his administration’s trade actions were intended to reverse a long-running imbalance. He also described Modi as a “good friend” and said Washington and New Delhi were likely to reach a trade deal, placing public criticism and diplomatic reassurance side by side as negotiators work through the final stages of an interim pact.
The remarks came as a US trade team held discussions in New Delhi on a proposed bilateral trade agreement covering tariff reductions, market access, customs procedures, non-tariff barriers and wider economic security issues. Officials on both sides have described the talks as advanced, though politically sensitive sectors including agriculture, dairy, digital trade, medical devices, alcoholic beverages, automobiles and labour-linked supply chains remain central to the bargaining.
Washington has long argued that India’s tariff structure disadvantages US exporters, particularly in farm goods, premium consumer products and some manufactured items. New Delhi has maintained that tariff policy must protect farmers, small businesses and strategically important domestic industries, while also recognising the need to expand trade with the world’s largest economy. The two sides have been trying to balance those interests through a phased agreement rather than a single comprehensive free trade pact.
The dispute has gained urgency because the US goods trade deficit with India widened sharply in 2025. Two-way goods trade stood at about $149.4 billion, with US exports to India at $45.6 billion and imports from India at $103.8 billion. That left Washington with a goods deficit of $58.2 billion, a rise of more than a quarter from the previous year. India, however, remains an important market for US energy, aircraft, defence equipment, technology services and agricultural products, while the US is a major destination for India’s pharmaceuticals, gems and jewellery, textiles, engineering goods and IT-linked services.
The latest talks are being shaped by a framework announced earlier this year that envisaged tariff relief and wider market-opening commitments. Under that framework, India was expected to eliminate or reduce duties on a range of US industrial goods and several food and agricultural products, while the US was expected to apply a lower reciprocal tariff rate on goods from India and remove duties on selected products once the interim agreement was completed.
A fresh complication emerged this week after the US Trade Representative proposed additional tariffs of up to 12.5 per cent on imports from India and several other economies over alleged weaknesses in enforcing restrictions on goods made with forced labour. The proposal is subject to a public comment process and a hearing before any final action, but it has added a new layer of uncertainty to negotiations already affected by Trump’s broader tariff agenda.
New Delhi has said it remains engaged with Washington on the issue, treating the proposed labour-linked tariff action as separate from the bilateral trade negotiation. That distinction matters because India is trying to secure predictable access to the US market at a time when exporters face rising compliance demands on labour standards, traceability and supply-chain transparency. Export sectors such as textiles, apparel, gems, chemicals and pharmaceuticals are watching the talks closely because even small tariff changes can affect margins in highly competitive markets.
