Modi-Trump talks today: Will India’s concessions prevent a tariff clash with the US? | 5 key points

Modi-Trump talks today: Prime Minister Narendra Modi, on a two day trip to the US, will meet President Donald Trump on February 13. Modi will be among first foreign leaders to visit Washington since the Trump took office as 47th President of United States on January 20.

India under Modi is expected to rely on quick concessions to prevent a tariff clash with the US in President Trump's second term. On February 12, President Trump committed to announcing ‘reciprocal tariffs’ on other countries, saying he could sign an order for them within a day, a move that could open new fronts in a trade war.

For decades, US presidents have prioritised building ties with India. India-US relations have always been seen through the prism of a rising China, and hence, India is seen as a natural partner.

Ups and downs in trade relations

The two-way trade between the two countries exceeded $118 billion in fiscal 2023-2024, with India posting a surplus of $32 billion. Yet, trade relations between the two countries have seen ups and downs even during Trump’s first term. Having imposed tariffs on Canada, Mexico, and China, Trump has described India as a ‘tariff king’ and ‘abuser’ of tariffs in the past.

In May 2019, he terminated India's preferential market access – the Generalised System of Preferences– to the United States, accusing India of not giving the US reasonable access to its markets. He also raised import duty on Indian steel and aluminium products. Trump has, however, never criticised Modi directly.

On February 10, Trump announced a 25 per cent tariff on aluminium and steel imports with ‘no exceptions’ for any country. Indian companies fear a downward pressure on domestic steel prices due to the risk of losing out in the US steel market, the largest in the world, according to a report in the Indian Express.

India’s concession efforts

So, how is India aiming to prevent a tariff clash with the US?

Union Finance Minister Nirmala Sitharaman slashed import tariffs, including those on high-end motorcycles and electric batteries in her Budget 202 last week. The decision taken days ahead of Modi’s US trip can come as a boost to Harley-Davidson, the iconic US company whose struggles in motorbike-loving India has captured Trump's attention, news agency AFP said.

“India has done its groundwork and has already taken positive steps to set a good tone with Trump,” Lisa Curtis, the National Security Council director on South Asia during Trump's first term told AFP. Curtis, who is now senior fellow at the Center for a New American Security, said Modi has prepared for this, and that the Indian Prime Minister is seeking to preempt Trump's anger.

Additional tariff cuts

PM Modi is preparing additional tariff cuts ahead of his meeting with Trump that could boost American exports to India and avoid a potential trade war, government officials told news agency Reuters.

President Trump's top economic adviser Kevin Hassett told CNBC earlier this week that India has high tariffs that lock out imports and Modi would have a lot to discuss with Trump when the two leaders meet. Hassett focused on the topic of tariffs, and said this will be a major issue that PM Modi will need to address during his upcoming visit to Washington.

"If they go down, we'll go down,” Hassett told the news portal. “Almost every trading partner has much higher tariffs than we do.”

Modi is expected to propose increased energy and defence imports during a two-day US visit that begins Wednesday.

India, the Reuters report said, is considering tariff cuts in at least a dozen sectors, from electronics to medical and surgical equipment, and chemicals, to boost US exports in line with New Delhi's domestic production plans.

Fighter jet engine deal

India is in talks with the United States for the purchase and co-production of combat vehicles as well as finalising a fighter jet engine deal, the report said.

Modi's US visit aims to avoid a "trade war-like situation that is happening between the United States and China," an official was quoted as saying in the Reuters report.

Trump has already imposed sweeping 10 per cent tariffs on imports from China, spurring Beijing to respond with duties on American energy.

Deportation Row

The Modi-Trump meet comes close on the heels of the US sending back a first batch of 104 Indian illegal immigrants in shackles on a military aircraft, triggering a political row in India. India's acceptance of undocumented citizens is also seen as a concession towards the US ahead of Modi's visit.

There are about 7.25 lakh illegal Indian immigrants in the US. Some reports suggested that 20,000 of these have already been identified for deportation.

India has been receiving illegal immigrants before, but the images of them in handcuffs in military planes triggered a political row in India, with the opposition calling the treatment an ‘insult’ and accusing PM Modi of weakness toward Trump.