India–US Trade Ties

Why India–US Trade Ties Are Under Stress

India–US trade relations are currently under strain, despite both nations being two of the world’s largest democracies and important economic partners.

The “Trump Tariff” episode was born out of the former US President’s flagship slogan, “Make America Great Again” (MAGA). Under this doctrine, Washington imposed enhanced tariffs on imports from almost all countries, arguing that such measures were essential to revive US manufacturing, protect American jobs, and reduce trade deficits.

But for partners like India, these tariffs became the opening spark for broader disagreements spanning agriculture, technology, subsidies, and geopolitics.

Wolverine’s View –Why India–US Trade Ties Are Under Stress

1. Trade Imbalance – The Core Issue

Bilateral trade between India and the US stands at around $135 billion. Of this, India exports about $85 billion, while imports from the US are only $50 billion. Washington perceives this $35 billion deficit as unfair and has consistently pushed New Delhi to reduce it.
👉 This imbalance remains the central driver behind tariff hikes, trade disputes, and tough negotiations.

2. Tariffs, Market Access & Lobbying Pressures

The US has long objected to India’s high import duties, especially on automobiles, electronics, and farm products. On the other hand, India has protested Trump-era tariffs on steel and aluminum, which hurt its exports.

Adding fuel to the fire are America PACs (Political Action Committees) representing powerful US corporate interests — from tech giants to agribusiness firms like Monsanto. They push Washington to demand greater access to the Indian market, pointing to restrictions on dairy, medical devices, and GM crops.
👉 These lobbying pressures have played a major role in hardening the US administration’s stance.

3. Agriculture & GM Crops

Agriculture remains a sensitive battleground. The US promotes genetically modified (GM) crops like Monsanto’s Bt cotton or GM soy, while India resists, citing food security, farmer livelihoods, and long-term health concerns.
👉 This reflects the philosophical divide in how both countries approach food systems and rural economics.

4. WTO Rules & Subsidy Battles

The WTO’s Agreement on Agriculture (AoA) restricts trade-distorting subsidies. For India, its Minimum Support Price (MSP) regime and fertilizer subsidies are non-negotiable tools to safeguard millions of small farmers.

The US argues these supports distort global trade and disadvantage its agri-exports. Washington has frequently pressed India at the WTO to roll back MSP and subsidies while demanding greater entry for US dairy, poultry, and GM crops.
👉 For India, conceding here is politically untenable, given that nearly half its population depends on agriculture.

5. Strategic Geopolitics, Sanctions & Defense Deals

Beyond economics, geopolitics complicates trade:

• India’s oil imports from Russia.

• Its purchase of the S-400 missile defense system, which risks US sanctions under CAATSA.

• Divergences over China’s Belt & Road Initiative (OBOR) and BRICS strategies.

👉 Each of these tests how far the US can count on India as a strategic ally, while New Delhi insists on maintaining an independent foreign policy.

6. Russia–India–China (RIC) & RCEP Dynamics

Russian President Vladimir Putin has urged deeper coordination between Russia, India, and China (RIC). Simultaneously, India has engaged with the Regional Comprehensive Economic Partnership (RCEP), a trade bloc dominated by Asian economies including China.

For Washington, these alignments raise fears of India tilting toward Russia and China — the very powers the US wants it to counterbalance.
👉 This balancing act by India is often read in Washington as strategic ambiguity, creating more mistrust.

7. Expansion of BRICS & the New Development Bank

BRICS, initially four economies (Brazil, Russia, India, China), has expanded into a 10-nation bloc, amplifying its global voice. Its New Development Bank (NDB) is increasingly seen as an alternative to the IMF and World Bank, institutions where the US has outsized influence.

From Washington’s view, this expansion and the NDB initiative threaten the Western-led financial system and even challenge the UN’s role in global development.
👉 India’s proactive involvement in BRICS thus becomes yet another flashpoint.

Closing Thought – Wolverine’s Take

The India–US trade story is not just about tariffs and deficits; it’s about clashing priorities, power politics, and the search for strategic space. While Washington wants New Delhi as a counterweight to Beijing, India insists on playing a multi-aligned role — protecting farmers, diversifying partnerships, and expanding influence through BRICS and RIC.

In this tug-of-war, trade becomes the battleground where economics, politics, and geopolitics collide.

Glossary of  Terms – a reader should Know 

It is pertinent to mention that reader fully understands the following key terms so that it will be easier to understand the reasons for strained ties.

1. America PAC (Political Action Committee)

• Definition: In the US, PACs is a group of organizations that raise and spend money to influence elections and policymaking. They often represent industries, corporations, or lobby groups.
• Relevance: American PACs, particularly those backed by agri-business, pharma, and tech giants, often lobby for policies that conflict with India’s trade priorities, especially in agriculture and digital regulation.

2. Elon Musk

• Definition: Billionaire entrepreneur, founder of Tesla and SpaceX, and a major player in electric vehicles, renewable energy, and AI technologies.
• Relevance: Musk has been vocal about entering the Indian EV market, often pressuring India to lower tariffs and provide policy support. His stance reflects broader US business demands for greater market access in India.

3. Monsanto

• Definition: A former American agrochemical and seed company (now part of Bayer) known for genetically modified (GM) seeds and herbicides.
• Relevance: Monsanto symbolizes US pressure on India to adopt GM crops. India’s resistance to GM food crops due to farmer, health, and environmental concerns has been a sticking point in trade talks.

4. Crony Capitalism

• Definition: An economic system where businesses thrive not through merit or competition but via close ties with politicians and government officials.
• Relevance: The US often accuses India of protecting local business groups (sometimes seen as “crony capitalism”) through trade barriers, subsidies, and preferential regulations — creating friction in negotiations.

5. GM Crop (Genetically Modified Crop)

• Definition: Crops whose DNA has been altered using genetic engineering to improve yield, resistance, or durability.
• Relevance: The US promotes GM crops (like soy, corn, cotton) for trade and market expansion, while India has largely resisted food-related GM adoption, citing farmer livelihoods and food safety — a major flashpoint in trade discussions.

        6. Agriculture Subsidy in India

1. Definition: Financial support given by the Indian government to farmers (fertilizers, MSP, irrigation, electricity) to protect rural livelihoods and food security.
2. Relevance: The US views India’s subsidies as “trade distortions” under WTO rules, while India argues they are essential for farmer survival. This clash has frequently derailed WTO and bilateral trade negotiations.

       7. Imports of Oil from Russia

1. Definition: Since the Russia–Ukraine war, India has increased discounted crude oil imports from Russia to ensure affordable energy.
2. Relevance: The US wants its allies to reduce dependence on Russian oil, but India prioritizes economic stability. This energy–geopolitics conflict directly impacts trade ties and trust between New Delhi and Washington.

       8. MAGA

• Definition: Political slogan popularized by former US President Donald Trump, symbolizing protectionist trade policies and prioritizing American jobs and industries.
• Relevance: MAGA-style policies revived US pressure on India for greater market access while restricting Indian exports (like IT services). It set the stage for today’s more transactional, less cooperative trade ties.

       9.Skyline

• Definition: Often used to describe the urban silhouette of tall buildings; metaphorically, it represents the rise of powerful corporations dominating global trade.
• Relevance: In this article, “Skyline” can be used symbolically — showcasing how US big corporates (tech, finance, defense) tower over negotiations, shaping Indo–US trade dynamics.

        10.BRICS (Brazil, Russia, India, China, South Africa)

• Definition: A bloc of emerging economies promoting multipolar world order, trade in local currencies, and alternatives to Western financial institutions.
• Relevance: India’s deepening role in BRICS often clashes with US expectations. Washington fears BRICS initiatives (like a common currency or de-dollarization) could dilute American influence in global trade.

         11.GM Crop (Genetically Modified Crop) (already explained earlier, adding nuance)

• Definition: Crops whose genes are artificially modified to increase yield, pest resistance, or durability.
• Relevance: The US pushes GM crops globally through agribusiness giants. India’s hesitation (over safety, farmer rights, and ecological impact) remains a recurring trade tension.

          12.BT Cotton (Bacillus Thuringiensis Cotton)

• Definition: A GM cotton variety containing genes from Bacillus thuringiensis, making it resistant to certain pests.
• Relevance: BT Cotton was India’s first large-scale GM crop adoption, influenced heavily by US-linked agribusiness (Monsanto). Its mixed results fuel India’s cautious stance on other GM crops — frustrating US exporters     

           13. Cry Gene

• Definition: A gene from Bacillus thuringiensis used in GM crops to produce proteins toxic to insect pests.
• Relevance: India’s scientific and political debates around Cry genes in food crops (beyond cotton) highlight resistance to US biotech demands, creating flashpoints in trade policy.

              14.AoA – Agreement on Agriculture (WTO)

• Definition: A WTO treaty aiming to reform global agricultural trade by reducing subsidies, tariffs, and trade barriers.
• Relevance: The US accuses India of violating AoA through high subsidies and MSP (minimum support prices). India argues the treaty is biased toward developed nations, making AoA disputes central in Indo–US WTO fights.

             15. S-400 Deal with Russia

• Definition: India’s purchase of advanced Russian missile defense systems (S-400 Triumph) despite US opposition.
• Relevance: This defense deal complicates trade ties because the US views it as undermining its sanctions on Russia, spilling geopolitical rivalry into Indo–US economic relations.

             16. THAAD (Terminal High Altitude Area Defense)

• Definition: A US-made anti-ballistic missile defense system.
• Relevance: Washington pressured India to consider THAAD instead of Russia’s S-400. India’s choice of Russia reinforced US concerns that New Delhi resists American influence in strategic defense trade.

            17. CAATSA (Countering America’s Adversaries Through Sanctions Act)

• Definition: A US law mandating sanctions on countries engaging in major defense deals with Russia, Iran, or North Korea.
• Relevance: India’s S-400 deal risks triggering CAATSA sanctions. Even if waived, it highlights the vulnerability of Indo–US trade and defense ties to US domestic laws.

           18. RCI Proposal by Putin (Regional Comprehensive Integration – contextual)

• Definition: Though not a standard global acronym, Putin has floated various integration initiatives for Eurasia, such as greater economic and energy cooperation. (RCI here likely refers to regional integration frameworks with Russia at the center).
• Relevance: India’s cooperation with Russia on such proposals — from energy corridors to local currency trade — runs against US interests, deepening friction in Indo–US trade relations.

           19. OROB (One Road One Belt / Belt & Road Initiative, BRI)

• Definition: China’s ambitious infrastructure and trade project spanning Asia, Africa, and Europe.
• Relevance: While India has rejected OROB citing sovereignty concerns (esp. projects through Pakistan-occupied Kashmir), its opposition aligns partly with the US. However, the India–China–US triangle under OROB adds complexity to trade and geopolitical positioning.