India-US trade deal: Despite strong strategic ties, a comprehensive India-US trade deal remains elusive. The probability of getting it inked in the near term looks dicey after the imposition of Trump’s tariffs on India. In retaliation, the Indian government is also considering levying a digital tax on US companies like Microsoft, Google, Meta, Amazon, etc. However, both countries, especially US President Donald Trump, remain committed to continuing talks for a possible India-US trade deal.
According to experts, Trump’s tariff on India is expected to hit Indian exports by $33 billion. The Indian government may compensate by imposing reciprocal taxes on US imports. They said the Indian government may think of reimposing digital tax on US companies after removing it from 1st April 2025. However, they maintained that after Trump’s tariffs on India, the Narendra Modi government may go tough on the negotiations, especially on the US government’s demand to provide Access to the Indian dairy and agriculture segment. They said that penalties on Russian crude oil imports, an unpredictable trade negotiation environment, mutual mistrust, etc., are some other roadblocks that may arise in the India-US trade deal after Trump’s tariffs on India.
India-US trade deal post-Trump’s tariffs
Speaking on the roadblocks in the India-US trade deal, especially after Trump’s tariffs on India, Utsav Verma, Head of Research — Institutional Equities at Choice Broking, said, “India-US trade negotiations are less about tariffs and more about reconciling fundamentally divergent policy philosophies. For any forward movement, establishing a permanent consultative mechanism, calibrated concessions in sensitive sectors, and depoliticized trade diplomacy are prerequisites.”
Verma said that future progress will likely depend on the outcome of upcoming leadership cycles, alignment on digital trade rules, and a reimagining of economic partnership beyond WTO-era thinking.
“Biggest roadblock in the India-US trade deal post-imposition of Trump’s tariffs on India is India’s loss of around $33 billion in exports. To compensate for those losses, the Indian government may develop reciprocal taxes, which may become a roadblock in the India-US deal. The Indian government may go tough on the US demand for Access to the dairy and agriculture segment. At the same time, the US may not comply with the Indian demands on the Russian crude oil imports,” said Avinash Gorakshkar, a SEBI-registered fundamental analyst.
On the reciprocal taxes India may levy on the US, Avinash Gorakshkar said, “The way the US government has raised tariffs on Indian imports, the Indian government may also raise tariffs on US imports. They may also think of reimposing the digital tax on income from online digital advertisements from US companies. If they do so, it would be highly detrimental for US tech giants like Microsoft, Meta, Alphabet, Google, Amazon, etc.”
India-US trade deal: Top 5 roadblocks
Experts said the most-awaited deal may face some major roadblocks, including mutual mistrust, an unpredictable negotiation environment, US demand for Access to the dairy and agriculture segment, strategic autonomy against geopolitical alignment, and a penalty on Russian crude oil imports.
1] Mutual mistrust: “India-US trade tensions have been shaped by over 90 WTO disputes since 1995 (WTO, 2024). The 2019 end of GSP benefits affected $5.6 billion in Indian exports (USTR, 2020). In 2024, the US reported a $27.4 billion trade deficit with India (US Census Bureau), fueling calls for better Access. India, however, sees these demands as imbalanced. A 2023 Brookings survey found only 41% of Indian policymakers viewed US trade policy as mutually beneficial. Still, trust has grown in defence, pharma, and tech. During COVID-19, both nations collaborated, and US FDI in India reached $8.3 billion in FY23 (DPIIT),” said Utsav Verma of Choice Broking.
2] Russian crude oil imports: “Even though Trump’s tariffs have left Indo-Russian crude oil business untouched, the uncertainty around the implementation of penalties due to the import of Russian crude persists. Already, Indian refineries have started to reduce imports, which can increase the cost of crude and impact currency and inflation,” said Vinod Nair, Head of Research at Geojit Investments.
3] Unpredictable negotiation environment: “US policy shifts—from Obama to Biden—have made trade negotiations volatile. Tariffs on steel (25%) and aluminium (10%), renewed in 2025, worsened uncertainty. Talks during 2023–25 were delayed thrice due to political cycles. Unlike the EU or ASEAN, India and the US lack a formal negotiation council. Utsav Verma said the Trade Policy Uncertainty Index rose 32% for India-US trade post-2022, compared to 18% for EU-US (EPU Project, 2024).
4] Access to dairy, agriculture segment: “Agriculture supports 58% of India’s rural workforce (NABARD, 2023). Opening dairy markets could expose smallholders to subsidized US imports. The US seeks entry for poultry, corn, ethanol, and hormone-treated dairy, raising safety and religious concerns. India’s average agri-tariffs stand at 39.5%, with bound rates at 113.1%, against the US’s 5.4% (WTO, 2024). A NITI Aayog-CRISIL study shows a 10% US dairy entry could cut Indian prices by 17%. India exported $4.3 billion in agri-products to the US in FY24 but imported only $860 million (APEDA, 2024). Still, partnerships in agritech and sustainable farming—like joint ethanol blending and improved standards —suggest opportunities, said Verma.
5] Geopolitical divergence: Pointing towards the strategic autonomy against the geopolitical alignment, Utsav Verma of Choice Broking, said, “India’s $10 billion defence ties with Russia challenge US alignment goals (SIPRI, 2024). India resists being cast solely as a counterweight to China and maintains sovereignty—as seen in its completion of the S-400 deal despite CAATSA threats. Defence trade with the US reached $20 billion in 2024 (US DoD), yet digital cooperation lags due to India’s focus on data sovereignty. With elections looming (India in 2029, US in 2028), nationalism may complicate compromise. Nonetheless, shared interests in Indo-Pacific security, climate tech, and resilient supply chains provide buffers that keep strategic engagement intact.”
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