US-India Strategic Economic Partnership: Trade and Tariffs

The United States imposed 50% tariffs on Indian textiles, pharmaceuticals, and engineering goods on August 27, 2025. This action triggered an immediate trade crisis and prompted India to seek urgent negotiations. The move signaled a major shift in U.S. trade policy. By May 2026, Ambassador Sergio Gor announced that only 1% of the bilateral trade deal remained unfinalized. However, the USTR complicated these negotiations on June 3, 2026, by proposing additional 12.5% tariffs under Section 301. The U.S. cited India's failure to prevent goods made with forced labor. Negotiations regained momentum in mid-June 2026. Prime Minister Modi and President Trump met at the G7 summit in France to report significant progress. This meeting followed a period of slowdown after the U.S. Supreme Court struck down previous tariff measures. The leaders set a goal to reach $500 billion in bilateral trade by 2030. As of late June 2026, the first phase of the trade deal nears completion. Implementation of this phase is expected by mid-July. Despite the imminent signing, persistent challenges and unresolved issues continue to complicate the finalization of the agreement.