A deal, no deal or some deal? Clarity eludes Trump’s ‘trade deal’ with India

Both US President Donald Trump and Prime Minister Narendra Modi have shied away from mentioning the words ‘trade deal’ in their respective tweets welcoming the agreement they reached over a phone call on Monday, 2 February. While no details were made available to Parliament on Tuesday, Union commerce minister Piyush Goyal claimed outside Parliament that Indian red lines on agriculture and dairy were still drawn.

PM Modi extended a "big thanks" to the US president from 140 billion Indians, said how wonderful it was to talk to his friend, and how delighted he was at the reduction of tariff on goods ‘Made in India’ to 18 per cent, from the earlier 25.

More importantly, he added, “President Trump’s leadership is vital” for global peace, stability and prosperity and that “India supports his efforts for peace”. The PM was being careful, not willing to repeat the mistake of not recommending the US president for the Nobel Peace Prize earlier..

Trump, typically, was more forthcoming. Modi, he posted on Truth Social, had agreed to stop buying oil from Russia and buy more from the US and Venezuela. At Modi’s request and ‘out of friendship and respect’ for him, he went on to add, he was reducing US tariff on Indian goods to 18 per cent with immediate effect. “The Prime Minister also committed to BUY AMERICAN” at a much higher level ‘in addition to’ over $500 billion of US energy, technology, agriculture and coal’

Since deals need to be signed and ratified, details and the fine print are missing at the moment and will have to wait for the formalities to be completed. There is both relief and a sense of foreboding over the posts, with relief over the end of suspense and foreboding over the undisclosed and hitherto unknown details.  

The sense of foreboding has only grown following a social media post by US agriculture secretary Brooke Rollins thanking Trump and posting, “New US-India deal will export more American farm products to India's massive market, lifting prices, and pumping cash into rural America.”

There was also a sense of disbelief because $500 billion translates to Rs 45 lakh crore in Indian currency, whereas the Indian government’s entire budget this year is Rs 53 lakh crore. There is also an agreement that the Indian PM was unlikely to have mentioned the figure in his conversation with POTUS. While both leaders were careful in avoiding any mention of agriculture and dairy products, Rollins' exultant tweet was greeted in India with dismay as it would mean that Indian farmers have been thrown under the bus.

The disbelief is also because the US has agreed to a 10 per cent tariff on UK and a 15 per cent tariff on the European Union. If the vast Indian consumer market is so vital for American exports, why has the tariff on India not been lowered from 18 per cent?

India has already been arm-twisted into stopping purchase of oil from Iran and withdraw from the Chabahar port project there. It has also considerably reduced purchase of oil from Russia. Now if the Indian PM has indeed promised to lower tariff on US goods and services to zero, it would certainly amount to an abject surrender to bullying.

However, even without a trade deal, India facilitated import of US cotton, ethanol and soybean oil in 2025. It is not clear if India has actually agreed to grant greater market access to American corn, ethanol and agricultural products or relaxed restrictions with regard to imports of genetically modified produce and dairy.

However, until November 2025, the US exported agricultural produce worth $2.85 billion to India, a 34.1 per cent jump over the $2.13 billion for the same period in 2024. The exports to India for the whole of 2025 are set to top $3.1 billion, which would be an all-time high.

US imports of Indian farm produce during the same period have risen by only 5.1 per cent from $5.62 billion from January-November 2024 to $5.91 billion from January-November 2025. The US benefited from India allowing duty-free imports of cotton from 18 August to 31 December. The duty has been restored to 11 per cent from January 2026. Crude soybean oil exports by the US to India have, likewise, zoomed following India reducing its effective import duty from 27.5 per cent to 16.5 per cent with effect from 31 May 2025.