India-US Ties Have Been Severely Undermined After Halt in Trade Negotiations

In recent weeks and months, the bottom has fallen off the US-India relationship that has been building for the past quarter century. There are no clear answers as to why the US has done what it has, but its effect has been to severely undermine the foundations of the India-US relationship.

The US under Trump has halted trade negotiations with India after imposing a 25% baseline tariff, and then imposed secondary tariffs amounting to another 25% on account of Indian oil purchases from Russia. The threat of unspecified additional tariffs arising from India’s BRICS membership remains hanging over India’s head.

In a surprise move, Trump invited the Pakistan Army Chief for lunch to the White House little over a month after Pakistan and India slugged it out in a short war arising from the April 25 terror attack in Kashmir.

Not surprisingly, the recent American actions have led to a great deal of public resentment in the country.

There are some who think that a lot of this has to do with the fabled “art of the deal” and Trump is badgering India to get the best possible trade deal through negotiations whose future is now in doubt. Others believe that India-US ties are now so dense that nothing the president does in the short term will result in lasting damage. In any case the two countries remain tied to each other through the convergence of their attitudes relating to China.

But in life, as in international politics, it is impossible to turn back the clock. A key element that has been shattered is trust. Given the unfortunate history of the two countries going back to the Pakistani military alliance with the US and the various phases of this relationship – the 1950s, the 1980s and the early 2000s – the process of building up Indo-US trust was not easy and it will certainly be difficult to reconstruct the faith the two countries had developed in each other in recent decades.

Beginning with the Strobe Talbott-Jaswant Singh dialogue in 1999, India-US ties showed a steady upward trend. This had a great deal to do with the shift in global politics on account of two major events in the previous decade – the Tiananmen massacre of 1989 and the collapse of the Soviet Union. The Tiananmen event made it clear that the Communist Party of China had no intention of allowing their country to evolve into a western style democracy. The end of the Soviet Union meant that there was not too much value for the US in pursuing a quasi-alliance with China whose main goal had been to contain it.

In this, India, which had just conducted its nuclear weapons test, was a “safe” country which appeared to be in the same kind of economic trajectory as China. The Soviet collapse meant that India needed an alternative super-power friend because its relations with China, though stabilised by the 1993 and 1996 agreements, remained competitive.

The key moves for the US and India to get closer involved military issues. In the late 1980s, they involved the US agreeing to provide India with the GE 404 engine for its nascent LCA programme. This was accompanied by Exercise Malabar, a naval drill off the eastern coast of India between the two countries.

After a blip of drastic US sanctions on India following the 1998 nuclear weapons test, the Singh-Talbott talks were initiated leading to the Next Steps in Strategic Partnership (NSPP) in 2004. India also began to negotiate the signing of four foundational agreements upon which military relations of the US are conditioned, and signed the General Security of Military Information Agreement (GSOMIA) in 2001.

A big move here was the India-US nuclear deal of 2005, which was the equivalent of spitting out the non-proliferation pill stuck in the Indo-American throats since the late 1970s. This was not an easy move, the Manmohan Singh government had to fight a bitter battle in parliament to move it forward.

Meanwhile, with the agency of Japan, the idea of QUAD made its first iteration, though it was only by 2017 that the Quadrilateral Security Dialogue was fully established during the first Trump Administration.

With Modi heading the government in New Delhi, India also moved decisively towards signing the remaining three military foundational agreements that had been hanging fire since 2001. The Logistics Exchange Memorandum of Agreement (LEMOA) was signed in August 2016, followed by the Communications Compatibility and Security Agreement (COMCASA) in September 2018 and the Basic Exchange and Cooperation Agreement to share geospatial intelligence in October 2020, after the Sino-Indian clash in Galwan.

Following the 2020 incidents in eastern Ladakh, India intensified its relationship with the United States. The Malabar Exercise had begun to include Japan in 2015 and was now extended to include the fourth Quad member, Australia. Also, its geographical scope shifted eastward with the exercise being held alternately in the Pacific Ocean and the Bay of Bengal.

In the Biden period, India-US defence ties grew exponentially. The QUAD was raised to the ministerial and then summit-level exercise. India became an associate member of the US-led and Bahrain-based Combined Marine Task Force, joined the Indo-Pacific Economic Framework (IPEF), the Israel, India, UAE, US (I2U2) grouping and also joined the US-led initiative on the India-Middle East Europe Corridor (IMEC).

A high point of sorts was the creation of the Initiative for Critical and Emerging Technologies (iCET), aimed at linking US and Indian defence R&D systems. This also led to the bilateral Defence Acceleration Ecosystem (INDUS-X), linking the two defence ministries to promote strategic technology and defence industrial cooperation.

India purchased several American defence systems such as the AH-64D Apache attack helicopters, MH-60R multi-mission helicopters, Hellfire missiles, an integrated air defence weapon system, Sea Guardian drones and Boeing P-8I maritime reconnaissance aircraft. A key agreement at this point was for the license manufacture of the GE-414 jet engine to power the Tejas Mark II as well as, possibly, the AMCA – the future fifth generation fighter.

By the time the Trump II Administration arrived, it appeared that India was well on its way to becoming a major partner of the United States and could have, in the future, been integrated into its National Technology Industrial Base (NTIB). A US State Department fact sheet termed the India-US relationship as “one of the most strategic and consequential of the 21st century.”

But the warning signals were already there, despite the “Howdy Modi” and “Ab ki Bar Trump Sarkar” slogans. In March 2018, Trump had imposed 25% tariffs on Indian steel and aluminum, and a year later announced the end of India’s GSP benefits. Trump had already used the term “tariff king" for India.

New Delhi made a special effort to reach out to the second Trump Administration and agreed to relook at its tariffs and was the first to begin trade negotiations with the US. At the same time, it signaled that it was open to facilitate the return of nearly 700,000 undocumented migrants.

Prime Minister Modi was one of the early visitors to Washington DC in February 2025 and both sides appeared ready to sign a comprehensive trade deal and said they would double bilateral trade to $500 billion by 2030.

In the first flush of the relationship, when things appeared to be going well, the two countries signed a US-India COMPACT (Catalyzing Opportunities for Military Partnership, Accelerated Commerce and Technology). They planned to sign a new framework of their Major Defence Partnership for the 2025-2035 decade and expand their defence sales and co-produce the Javelin Anti-tank missile and acquire more P-8I aircraft. The iCET was rebranded as the TRUST (Transforming the Relationship Utilizing Strategic Technology) and it aimed to focus on semiconductors, quantum computing and AI.

But soon things soured. In the first round of reciprocal tariffs, India was listed at 25% while Pakistan was 19 %. This was a time when India-US negotiations were continuing and the 90-day pause of the US for all its reciprocal tariffs appeared helpful. But then, on July 30, instead of announcing the deal, Trump put 25% tariffs on Indian goods and declared, “India’s tariffs are far too high, among the highest in the world, and they have the most strenuous and obnoxious non-monetary trade barriers in any country.”

The very next day he made the remark about India and Russia being “dead economies”. On August 6, he signed an executive order imposing an additional 25% tariffs on Indian goods bringing the total to an unconscionable 50%.

Clearly, the India-US estrangement went beyond the issue of tariffs. Entangled with tariffs was the India-Pakistan question and India’s refusal to accept Trump’s insistent claims to have brokered the ceasefire and offered mediation on the Kashmir dispute. Another strand in the tangle was the issue of Russia, which refused to cooperate with Trump, despite his bending over backward to accommodate Putin. In the American view, the only leverage left was that of blocking sales of Russian oil to India, something that Washington had itself encouraged during the Biden Administration. Yet another thread was linked to BRICS, an institution that Trump feared could lead to the de-dollarisation of the global economy and hitting America’s global hegemony.

India and the US may yet deal with the tariff mess, but it’s doubtful if they will be able to easily untangle the knotty issue of India’s ties with Pakistan, Russia or the BRICS.

Manoj Joshi is a distinguished fellow with the Observer Research Foundation in Delhi.

This piece was first published on The India Cable – a premium newsletter from The Wire & Galileo Ideas – and has been updated and republished here. To subscribe to The India Cable, click here.

The Wire is now on WhatsApp. Follow our channel for sharp analysis and opinions on the latest developments.