Prime Minister Narendra Modi’s recent summit with former US President Donald Trump reinforced efforts to expand bilateral trade to $500 billion. However, a full-fledged India-US Free Trade Agreement remains unlikely. Washington prefers sector-specific tariff deals over broad reductions and is reluctant to ease visa norms, limiting India’s gains in services. Many trade issues are already covered under the Indo-Pacific Economic Framework, which India is a member of. Despite their trade deal, President Trump’s past tariffs on Mexico and Canada highlight his scepticism toward comprehensive agreements. Instead of pushing for an overarching deal, India could focus on sectoral partnerships in technology, defence, energy, space, and supply chains. A key opportunity lies in joint solar manufacturing, which could reduce reliance on China. Meanwhile, President Trump's claims that India enjoys a $100 billion trade surplus with the US are overstated. The actual figure for 2024 is $41 billion, with total trade at $170 billion. As India and the US navigate these complexities, targeted economic cooperation may yield faster gains than a sweeping trade pact. In the near term, both sides should be expected to deepen engagements in strategic sectors while balancing domestic political concerns. So, some calm can be expected.Weekend
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