Last Updated:July 16, 2025, 18:14 IST
For Trump, tariffs are not just a means to an end — they are the end. India understands Trump’s psychology and motivations and harbors no illusions in negotiations
Prime Minister Narendra Modi (left) speaks as US President Donald Trump listens during a news conference in the East Room of the White House in Washington. (AP File)
In recent weeks, questions have swirled: Is the India-US trade deal still on? Will India get a tariff letter too? The answers lie in Trump’s tariff playbook — his tariff psychology and domestic political motivations, and the good news is, India seems to have cracked it, staying clear-eyed and unshaken.
The much-anticipated trade deal between India and the United States is yet to be finalised. Initially, it was believed that the agreement would be announced a day before July 9 — marking 90 days since US President Donald Trump announced new tariffs on April 2. That was when the tariffs were originally scheduled to come into effect.
However, no announcement was made. Instead, President Trump extended the tariff deadline to August 1. In the weeks that followed, Trump issued a series of “tariff letters” to countries including Japan, South Korea, Vietnam, Indonesia, and Bangladesh — but notably, not to India. This omission signalled that negotiations with India remained on track.
Talks have since continued, with an Indian delegation visiting the United States for the second time this month. A deal is now expected by July 31, a day before the revised deadline. But uncertainty remains.
Key sticking points have emerged during the talks. India has shown resistance in sectors like automobiles and pharmaceuticals. In areas such as agriculture and dairy, India has taken a firm stance. The country has never opened up its dairy sector to foreign nations and is unlikely to make an exception for the United States. Another critical issue is genetically modified foods; India’s GMO-free reputation provides it with an export advantage, especially in European markets. While Trump wants the deal to benefit American farmers, India has domestic agricultural interests of its own to safeguard.
According to sources, India has already made its best possible offer to the US, and the ball is now in Trump’s court. The Indian side has maintained a consistent message throughout: it will not negotiate under pressure or on imposed deadlines. India has stated it will only agree to a deal that is mutually beneficial, asserting its red lines and keeping retaliatory measures on the table. For instance, India has reserved its rights under World Trade Organization norms to impose retaliatory duties on products such as steel, aluminum, and automobiles.
In light of these complexities, expectations around the deal have been scaled down. A “mini trade deal” is now being discussed, involving tariff reductions below 20%. This would revise the 26% tariff rate announced on April 2 and avoid a public confrontation or a dramatic tariff letter from Trump. A reduced tariff scenario, even in an interim agreement, would offer India a competitive edge — as most other countries are facing tariffs exceeding 20%.
Japan’s Shocker
Despite the contentious atmosphere surrounding global trade, India appears to have received relatively careful treatment. In contrast, President Trump has adopted a more combative posture toward traditional allies and partners. Japan is a case in point. A long-standing security ally and the largest holder of U.S. Treasury bonds, Japan had expected preferential treatment. Instead, Trump targeted its auto sector and pressured it to purchase American rice — both sensitive sectors for Japan.
Frustration mounted on the Japanese side over the disjointed approach of U.S. negotiators. Prime Minister Shigeru Ishiba, who was the first foreign leader to offer a deal to Trump’s second-term administration, found himself the first to receive a tariff letter — a 25% tariff effective August 1. Trump has since referred to Japan as “spoiled” and derisively called Prime Minister Ishiba “Mr Japan.”
With elections approaching in Japan, Trump’s actions have had a direct political impact. Japan is now reassessing its strategic reliance on the United States. This raises broader concerns — particularly within the Quad grouping — about what such treatment of allies signals to adversaries like China.
Japan is not alone. Nearly every US ally or partner — including the European Union, Canada, South Korea, Mexico, and the Philippines — has faced tariff action, alongside countries like Bangladesh, Cambodia, Libya, and Myanmar. Since July 7, Trump has issued approximately 26 tariff letters. India, however, remains an exception. This indicates that negotiations are ongoing and have not broken down as they have with other nations.
Still, India is not under any illusion about receiving special treatment. The Trump administration has shown that even close allies are subject to hardline tactics. Moreover, there is a broader credibility issue. Even if a deal is signed, there is little guarantee that it will be honored or last.
India’s Approach Clear-Eyed And Pragmatic
India entered negotiations with a clear-eyed understanding of these dynamics. It has remained pragmatic, avoiding emotional or reactive moves, and has set firm boundaries while maintaining mutual respect. This approach has thus far prevented a hostile outcome.
Unlike others, India has not provoked an aggressive response from the U.S. This demonstrates a carefully managed and calibrated strategy — arguably one of the most measured among U.S. trade partners. India has avoided the pitfalls of unrealistic expectations as seen with Japan and political discord as with the EU or Canada. It has remained unambiguous, unemotional, and prepared for all possible outcomes — deal or no deal.
This strategy is rooted in a clear understanding of Trump’s trade doctrine. For the U.S. President, no relationship is sacred; symbolic and financial gains take precedence. A country’s leverage with Trump depends not on historical ties but on current strength — strong leadership and economic clout. In this respect, both the Modi-Trump personal rapport and India’s growing economic heft have helped sustain dialogue.
Trump’s tariff approach is also shaped by domestic political motivations. Tariffs are more than a tool to reduce trade deficits. They serve as a source of government revenue that can finance future tax cuts or economic subsidies. Tariffs are also being used to pressure companies to move manufacturing to the U.S., thereby boosting domestic employment and industry. For Trump, tariffs are not just a means to an end — they are the end.
Yet, unpredictability persists. Trump is often accused of “TACO” — Trump Always Chickens Out — a phrase referring to his tendency to retreat from threats at the last minute, as seen in repeated delays of tariff implementation, including against China.
He has also used tariffs for arguably unjustified actions. The 50% tariff imposed on Brazil, despite a US trade surplus with the country, was justified by citing the ongoing trial of former President Jair Bolsonaro. Brazilian President Lula’s assertive response at the BRICS Summit only heightened tensions. Trump has even threatened to impose a 10% tariff on all BRICS member states.
Tariffs remain Trump’s weapon of choice — and they are here to stay. Given this, the prudent course is to protect core interests, remain firm, and avoid hasty or unfavorable agreements. Trade deals, after all, can be either game-changers or back-breakers. Once signed, they are difficult to reverse.
Thus far, India’s leadership has navigated Trump’s tariff threats more effectively than most. The trade negotiations remain alive, and a peaceful, win-win outcome is still possible — despite the challenges. That’s a striking performance by India’s negotiators, one that signals the emergence of a more confident India opening doors for a new era in trade not just with the US, but with the world.
Shubhangi Sharma
Shubhangi Sharma is News Editor – Special Projects at News18. She covers foreign affairs and geopolitics, and also keeps a close watch on the national pulse of India.
Shubhangi Sharma is News Editor – Special Projects at News18. She covers foreign affairs and geopolitics, and also keeps a close watch on the national pulse of India.
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