By Mayank Chhaya-
Barely two days before Prime Minister Narendra Modi visits Washington in less than a month of President Donald Trump taking over his second term, trade and tariffs are expected to be at the front and center of bilateral discourse.
With a minuscule trade surplus with the United States of $32 billion India has very little leverage to stand firm against Trump’s frequent threats to impose hefty tariffs on New Delhi. The visit comes in the shadow of the president having described India as a “very big abuser” on trade. The two-way trade between the two countries is in the range of $120 billion as of 2024.
Unlike China, which had a trade surplus of $295 billion with the US in 2024 giving it a powerful bargaining chip to stand up against Trump, India has hardly any wiggle room in trade and tariffs negotiations.
Reports out of New Delhi suggest that the prime minister is preparing to offer additional tariff cuts beyond what he has already done in recent days. In her annual budget, Finance Minister Nirmala Sitharaman reduced import duty on high-end, bigger motorcycles, clearly aimed at placating Trump in particular because he has often criticized India for high import duty on Harley-Davidson bikes.
Additional tariff reduction being considered by the Modi government is spread over a dozen sectors including electronics, medical and surgical equipment, and chemicals.
On the face of it, it would seem as if Modi has caved on Trump’s tariff threats but given its thin trade surplus in contrast to Beijing, New Delhi has no option but to be prudent. This comes in contrast to even Canada and Mexico which also firmly stood their ground against the tariff threats eventually compelling Trump to postpone the levies for 30 days.
The fact that Modi has been invited within the very first month of the second Trump administration ought to boost the Modi government confidence in its bilateral dealings.
“This visit will be an opportunity to build upon the successes of our collaboration in his (Trump’s) first term,” Modi said in a state on Monday, two days before the onset of the visit on Wednesday.
Expectations are that the bilateral relations would see a deepening in the areas of defense, trade, technology, energy, and supply chain resilience.
That India is deferring to Trump in two broad areas, which obsess him currently—those of tariffs and immigration—is bound to please the president. Once again, unlike illegal immigrants from other countries, India has been quite accommodating on Trump’s aggressive campaign of deportation. Recently, a US military transport plane carried 104 unauthorized Indian immigrants back to India amid some controversy over how they were likely shackled and handcuffed onboard. There are expectations of some 18,000 to 20,000 illegal Indian immigrants to be eventually deported. There are 725,000 unauthorized Indian immigrants in America.
According to Pew Research Center, “After Mexico, the countries with the largest unauthorized immigrant populations in the U.S. in 2022 were El Salvador (750,000) India (725,000), Guatemala (675,000) and Honduras (525,000).” Mexico tops the list with 4 million as of 2022.
The 725,000 unauthorized Indian immigrants may seem small but the logistics of deporting them all, if it comes to that, are enormous and politically unpleasant for the Modi government and embarrassing for India.
It is clear that India does not want tensions with the Trump administration over either tariffs or unauthorized immigrants. The former though is easier handled than the latter.
