Desi talk

www.desitalkchicago.com – that’s all you need to know 6 US ˨ INDIA July 3, 2026 Editorial note: Just a week after U.S. President Donald Trump and Indian Prime Minister Narendra Modi met on the sidelines of the G7 Summit in France, U.S. Trade Representative Jamieson Greer travelled to India to meet Piyush Goyal, India’s Minister of Com- merce and Industry, as part of the push to finish negotiations on the U.S.-India trade deal. ASPI Delhi Senior Director Akshay Mathur explains where the U.S.-India relationship stands after the Trump-Modi bilateral, outcomes from Greer’s trip to India, and what lies ahead for the relationship. S TATE OF AFFAIRS: TRUMP AND MODI AT G7, GREER AND GOYAL IN NEW DELHI When President Trump was elected to a second term, there was hope in both New Delhi andWash- ington that the previous rapport built between President Trump and Prime Minister Modi would present the op- portunity to deepen strategic alignment between the two countries. Early signals seemed to suggest the bilateral relationship was on the right path: Trump invited Foreign Minister Jaishankar to his inauguration and then Modi to theWhite House in February of 2025. But the early optimism was soon punctured by a series of disruptive tariffs against India: the 26% ‘Liberation Day’ tariffs in April 2025, sectoral tariffs on steel and aluminium in May, and an additional penalty for pur- chasing Russian oil in July. Rates reached as high as 50% before falling to today’s 10% duty, which is expected to be replaced in late July with rates resulting fromTrump administration’s Section 301 investigations into excess capacity and goods made with forced labor. Bilateral relations were further complicated byWash- ington’s warm engagement with Pakistan following the four-day India-Pakistan military conflict in May 2025. Then, just a week before Trump and Modi were set to meet on the sidelines of the recent G7 Summit, three Indian sailors were killed in the Gulf of Oman by a U.S. missile strike. Against this background, some expected a frosty encounter in France. Instead, Trump praised Modi effusively, stating upfront that “he has been a friend for a long time now,” and adding that, when it came to trade negotiations, he’s “actually a killer.” Following the G7 bilateral, U.S. Trade Representative Jamieson Greer travelled to India to meet his counterpart, Piyush Goyal, in an effort to put a ‘final touch’ on the trade negotiations that started in February of 2025. How- ever, contrary to expectations, Greer’s visit closed without a deal announced, though India’s readout assured that there has been “substantial progress” and that both sides have “confidence” in ongoing negotiations. WHY IT MATTERS: A DEEP ECONOMIC EMBRACE, BUT NEGOTIA- TIONS HAVE BEEN TOUGH Though theWhite House levied sweeping tariffs on allies and competitors alike, Trump’s measures against India came as a surprise given the signal it sent about Washington’s apparent indifference toward India’s ambi- tions as a rising democratic, manufacturing, and trading power in Asia. Certain sectors were spared, including pharmaceuticals, electronics, and services exports that underpin the U.S. economy, but the high tariffs rattled what had grown over recent years into a deepening eco- nomic embrace. The U.S. is India’s largest trading partner in goods ($132 billion), the only country in the top five trading partners with whom India has a surplus in goods. It is the primary destination for Indian exports (20% of total exports), the third largest investor in Indian capital markets (over 40% of total assets held by foreigners), and the largest source of remittances (over 25% share of the total). The economic relationship likewise benefits the U.S.: Top U.S. goods exports in FY2026 include energy prod- ucts crude oil, natural gas, coal, airplanes and digital circuits. Equally importantly, U.S.-based companies in India hold nearly $250 billion of assets and generate over $10 billion in profits annually. Recently, Indian industry leaders committed $20.5 billion in investments span- ning pharmaceuticals, advanced manufacturing, energy infrastructure, and emerging technologies. There is also growing bilateral cooperation in securing supply chains of critical minerals, semiconductor fabrication, advanced AI systems and deployment infrastructure — in Febru- ary 2026, India joined Pax Silica and, three months later, the U.S. and India announced a bilateral critical minerals agreement. A new trade agreement could bolster these trends and deepen an already substantial economic relationship. In February 2026, after a year of talks, the U.S. and the Indian government reached a framework for an interim trade agreement that involved an immediate reduction of the tariffs to 18%. The move was a reprieve and reassur- ance that both governments were committed to arriving at a deal, indicating that an understanding had been reached on specific industrial, food, agriculture, energy, aviation, auto and technology products. After the U.S. Supreme Court ruled against Trump’s Liberation Day tar- iffs (imposed under International Emergency Economic Powers Act), the tariff on India was further reduced to a flat rate of 10% (using the authority under Section 122 of the Trade Act). Agriculture has been one of the sticking points in negotiations, as India—where nearly half the popula- tion depends on farming—has defended its agricultural market, particularly from government-subsidised or genetically modified, foreign crops. Modi would like to negotiate a balanced and fair agreement that defends the Indian market from U.S. agricultural imports like corn and soybeans. Establishing new rules of origin, removing barriers to digital trade and addressing non-tariff barriers in licensing and standards, have also been high on the agenda. President Trump’s quip during the G7 bilateral that Prime Minister Modi is a “tough negotiator” may have been a genuine indicator of India’s hard position on topics like agriculture. Prime Minister Modi’s mission of diversifying exports by fast-tracking FTAs with other countries may have also given his team further leverage in negotiations with the U.S. While trade with the U.S. floundered, since 2025, India has concluded negotiations with the UK, EFTA, Oman, New Zealand and the Euro- pean Union and launched fresh negotiations with GCC, Israel, EAEU, Chile and Canada. At the G7 bilateral, prompted by reporters, President Trump reiterated that India has a “great friend in the White House.” Mirroring this positivity, India’s read- out confirmed that both leaders noted with “particular satisfaction the significant progress made in negotiations towards an interim bilateral trade agreement.” Still, as Greer and Goyal met in New Delhi this week, Goyal pre- sumably sought assurances that the interim agreement reached will not be upended later by findings from the ongoing Section 301 investigations initiated by the U.S. or outstanding Section 232 investigations. Ultimately, In- dia wants a final tariff rate that enables it to outcompete manufacturing rivals in Asia like Vietnam, which secured a tariff rate of 20% in its own deal with the US. Speculation about a possible announcement of the interim trade deal by the end of Greer’s visit to India was fueled by remarks yesterday from a senior U.S. official that a deal was “very, very close”. Still, as of writing, no deal has been announced. While we wait on the U.S.’ readout from the meeting, India’s indicated that “path- ways to conclude an interim agreement” were on the table. In a video posted by the U.S. Embassy, Greer stated that there are exciting opportunities for the U.S. and India to collaborate on AI and that the bilateral relation- ship is “only going to a higher and higher level with every passing week.” The possibility of a formal announce- ment in the coming days remains, especially if the deal is waiting for a review by both leaders who would like to retain the privilege of declaring the interim deal. WHAT TO WATCH • Section 301 Investigations: USTR has proposed an addi- tional 12.5% tariff duty on India following its Section 301 investigation into enforcement of forced labor rules (which involved 54 other countries). A separate Section 301 probe into industrial excess capacity — covering 21 broad manufacturing sectors, including automobiles, chemicals, electronics, energy goods, solar modules, and steel —may also have implica- tions for India when findings are announced (along- side 15 other economies). Watch how the resulting tariff rates from both investigations, which are likely to be implemented in late July, reshape India’s final tariff burden and trajectory of the bilateral trade agreement negotiations if a deal is not announced before then. • Expanding trade channels beyond the deal: Alongside the sectors covered by the trade deal, broader geoeco- nomic opportunities are opening between New Delhi andWashington, particularly around securing sensitive supply chains. Disruptions to India’s energy and commodities imports fromWest Asia have highlighted the United States as a potentially reliable alternative source for crude oil, LPG, petrochemicals, and ethylene glycol, pointing to areas of cooperation beyond the current trade negotiators track. • Leveraging the Quad: The Quad itself is mobilising near- ly $20 billion to support for critical minerals supply chains, collaborating on Next-Gen Communica- tion Standards, and now working to stabilise energy markets in the Indo-Pacific, for both upstream and downstream energy products. Watch if the Quad can sustain this momentum and open up new areas of U.S.-India cooperation beyond the bilateral relation- ship. • G20 Summit in Miami: The next meeting between Modi and Trump will be the G20 Summit in December hosted by President Trump in Miami. For the ‘Fi- nance Track’ agenda, the U.S. has prioritised finan- cial regulation, global imbalances, debt transparen- cy, digital assets, cross-border payments, payments fraud, and financial literacy—all subjects the G20 has covered before and India has supported. For the Sherpa Track, the U.S. has prioritized regulatory bar- riers, energy supply chains, and AI. Prime Minister Modi has always advocated for the G20 to be guided by ‘people-centric’ economic development and human-centric, global, non-exclusive technology—a mantra which he is likely to take to Miami with the goal of shaping US approach to global economic governance. -This article appeared on the Asia Society Policy Institute substack June 24, 2026 @ https://asiapolicy.asiasociety.org/p/trump-modi-and- final-touches-on-the. (Usedwith express permission from Asia Society) By Akshay Mathur, Senior Director, Asia Society Policy Institute, Delhi Asia Policy Brief: Trump, Modi, And “Final Touches” On The U.S.-India Trade Deal PHOTO: REUTERS/EVELYN HOCKSTEIN U.S. President Donald Trump attends a bilateral meeting with Indian Prime Minister Narendra Modi during the G7 Summit in Evian-les-Bains, France, June 17, 2026.