The strategic partnership and geopolitical compulsions of both India and the United States could significantly contribute to clinching a long-awaited trade deal, laying the foundation for future cooperation. While President Donald Trump has positioned himself ideologically closer to Xi Jinping, Vladimir Putin and Kim Jong Un-thus isolating European nations-his administration saw the need to counter China’s growing influence in the Asia-Pacific, making India a crucial ally.
US Demands and India’s Position
US Commerce Secretary, Howard Lutnick has stressed the necessity of India opening its agriculture market, asserting that this sector could not be “off the table” in trade negotiations. He advocates a broad, macro-level trade pact rather than product-specific agreements, arguing that aligning India’s tariff policies with the US would be more beneficial for both nations.
Commerce Minister Piyush Goyal recently concluded productive trade discussions in Washington with US counterparts, including Trade Representative Jamieson Greer and Secretary Lutnick. The talks hold significance as both nations move towards negotiating a bilateral trade deal. During Prime Minister Modi’s recent US visit, India and America committed to doubling bilateral trade to $500 billion by 2030, targeting the completion of the first phase of a trade pact by fall 2025.
In 2023, US-India trade in goods and services reached $190.08 billion, with India enjoying a $43.65 billion trade surplus. Trump, echoing Lutnick’s optimism, emphasised that a trade deal is within reach, underlining its strategic importance.
The Indian Diaspora’s Growing Influence
Reports suggest that the Indian diaspora in the US has emerged as a significant economic and political force, subtly shaping US-India trade policies. Indian-Americans, one of the most prosperous and educated ethnic groups in the US, have wielded considerable influence in strengthening bilateral ties. In a shift, a notable portion of the Indian diaspora supported Trump in the November elections, affecting the political calculus. As of 2021, the average household income for Indian-Americans was $123,700-surpassing all other ethnic groups.
Between 1995 and 2005, they founded more technology and engineering companies than immigrants from the UK, China, Taiwan, and Japan combined, contributing significantly to innovation and job creation.
The Indian-American population has grown from 2.3 million in 2005 to approximately 4.4 million by 2023, making them the second-largest immigrant group in the US. Their increasing economic and political clout has played a pivotal role in strengthening US-India relations , including current on-going trade deal dialogue.
Trump’s Foreign Policy and Its Impact on India
Trump’s foreign policy has been defined by an “America First” approach, often at the cost of traditional alliances. His controversial actions-isolating European allies, supporting Russia in the UN by refusing to name it as an aggressor, and potentially attempting to pull Russia away from China-signal a major shift in global geopolitics. These moves could have far-reaching consequences, impacting not just Europe and Asia but also India’s strategic positioning.
If Trump successfully distances Russia from China, India stands to benefit. Moscow has historically been a key defense and energy partner for New Delhi.
Europe’s Strategic Shift under Trump
Trump’s presidency has been marked by tensions with European allies over defense spending, trade policies, and multilateral agreements like the Paris Climate Accord. His criticism of NATO and demands for Europe to shoulder more security costs have strained US-Europe ties
Trump’s questioning of NATO’s Article 5 (the mutual defense clause) could leave Eastern European nations vulnerable. Europe might be forced to increase defense spending and coordination, but a lack of American support would weaken the alliance’s deterrence against Moscow.
Indo-Pacific Security Dynamics
In the Indo-Pacific, key US allies like Japan, South Korea, and Australia rely on Washington to counterbalance China. If Trump reduces support for alliances like AUKUS and Quad, these nations may strengthen security ties with India and European powers like France and the UK. Trump’s retreat from alliances could create a vacuum that China might exploit. Beijing has been expanding its Belt and Road Initiative (BRI), offering economic and military incentives to countries in Asia, Africa, and Latin America. If US allies feel abandoned, China might step in, further eroding American influence.
Trump’s Alignment with Russia
On the third anniversary of Russia’s invasion of Ukraine, US support for Moscow at the UN exposed a growing rift with European allies. Washington sided with Russia, North Korea, and Belarus in opposing a Europe-backed resolution condemning Moscow. The motion still passed 93-8, with 73 abstentions, including China. Furthering this shift, the US pushed a UN Security Council resolution calling for an end to the war-conspicuously avoiding any reference to Russia’s invasion.
Trump’s alignment with Moscow signals a potential unravelling of America’s transatlantic security commitments. His pivot to Russia, ostensibly to end the war, side-lines Kyiv and Brussels, making lasting peace unlikely, though pressure tactics may yield results. Meanwhile, China sees a strategic advantage in this shift, hoping to mend its strained ties with Europe and Washington as the global order tilts towards an authoritarian axis.
The Future of India-US Trade Relations
While Trump may attempt to realign US-Russia relations, Russia’s deep economic and strategic ties with China make a complete pivot unlikely. However, his policies could still reshape global trade and security dynamics in ways that affect India. A trade deal between India and the US remains a strong possibility, driven by economic and geopolitical imperatives.
The Indian government will need to carefully navigate these complexities to safeguard its trade interests while ensuring strategic autonomy. As the global power balance shifts, India’s ability to leverage its relationships with the US, Russia and China will determine its long-term geopolitical and economic standing.
