Modi, Trump agree to seal early trade deal after US calls India’s tariffs ‘unfair’

The direction for an early trade agreement means that negotiators have 7-8 months when Trump is expected in India for a summit of the Quad leaders — Japan and Australia are the two other countries in the grouping. This is the first firm deadline for a bilateral deal — the deal was being negotiated in Trump’s first term but could not materialise.

Trump said he was “thrilled to welcome… my friend” Modi back to the White House: “There is truly a special bond between the United States and India, the world’s oldest democracy and the world’s largest democracy.”

He said they have reached an agreement that includes India importing more US oil and gas to narrow the trade deficit between the two countries.

Modi said the US and India have set a target of doubling their bilateral trade to $500 billion by 2030. “We have set ourselves the target of more than doubling our bilateral trade to attain $500 billion by 2030… Our teams will work on concluding, very soon, a mutually beneficial trade agreement.”

The two leaders also decided to renew the 10-year defence framework. Trump said, “Starting this year, we will be increasing military sales to India by many billions of dollars. We are also paving the way to ultimately provide India with the F-35 stealth fighters.”

On the extradition of Mumbai terror attack accused Tahawwur Rana, Trump said, “I am pleased to announce that my administration has approved the extradition of one of the plotters, and one of the very evil people of the world… of the horrific 2008 Mumbai terrorist attack to face justice in India. So he’s going to be going back to India to face justice.”

Later, while answering questions, he said: “We are giving a very violent man, it seems to me. I mean, I don’t know that he’s been convicted yet, or will be, but let’s assume he’s a pretty violent person. We are giving him back to India immediately, and there are more to follow, because we have quite a few requests. So we work with India on crime, and we want to make it good for India, and it’s very important. So that kind of a relationship is very important to us.”

Modi said India and the US will stand strongly together in the fight against terrorism. “We agreed that in order to eliminate cross-border terrorism, we need concrete actions.”

He said he was “very grateful to President Trump” for handing over somebody “who carried out genocide in India”. “That criminal is now going to be handed over to India, and I am grateful to President Trump for this, and appropriate action will be taken in the court in India,” he said.

On the hot-button issue of tariffs, Trump said: “As we deepen our defence partnership, we will also strengthen our economic ties and bring greater fairness and reciprocity to our trading relationship as a signal of good faith. Prime Minister Modi recently announced reductions to India’s unfair, very strong tariffs that limit us access into the Indian market, very strongly. And really, it’s a big problem.”

“I must say, India imposes a 30 to 40 to 60 and even 70% tariff on so many of the goods, and in some cases, far more than that. And as an example, a 70% tariff on US cars going into India, which makes it pretty much impossible to sell those cars today, the US trade deficit with India is almost $100 billion and Prime Minister Modi and I have agreed that we will be getting negotiations to address the long running disparities that should have been taken care of over the last four years. But they didn’t do that in the US-India trading relationship, with the goal of signing an agreement,” he said.

Batting for a level-playing field, Trump said, “We can make up the trade difference very easily with the sale of oil and gas. LNG, of which we have more than anybody in the world. The Prime Minister and I also reached an important agreement on energy that will restore the United States as a leading supplier of oil and gas to India. It will be, hopefully, their number one supplier.”

The other hot-button issue of illegal migration also came up. Prime Minister Modi said this is not limited to India alone, and that they will work on cracking down on the “ecosystem” which is involved in “human-trafficking”.

“This is not a question about India only but it is a global issue,” he said. “We are of the opinion that anybody who enters and lives in another country illegally, they have absolutely no legal right or authority to live in that country.”

As far as India and the US are concerned, Modi said, “We have always said that those who are verified Indian citizens and who are living in the US illegally, India is prepared to take them back.”

“However, for us, the issue doesn’t stop there. These are children of very ordinary families, and they are lured by big dreams and promises,” he said, adding that a lot of them are being led astray and misguided by human traffickers.

“Our bigger fight is against this ecosystem and I am confident that President Trump will also fully support India in ending this ecosystem,” Modi said.

Asked about China, Trump said there were “skirmishes” on the India-China border and that should be “stopped”, and if he could be of help, he would help.

“I think we are going to have a very good relationship with China. I got along with President Xi very well, until Covid. That was a bridge too far. But until then, I got along with President Xi, very, very well. We were very close. As leaders go, I don’t want to be naive, but as leaders go, I think we were very close. And I think that China is a very important player in the world. I think they can help us get this war over with Ukraine and Russia. And I look at India, I do see the skirmishes on the border, which are quite vicious, and I guess they continue to go on. If I could be of help, I would love to help, because that should be stopped. That’s been going on for a long time, and it’s quite violent. It’s quite violent, but I would hope that China and India and Russia and us, and all of us, can get along. It’s very important,” he said.

On the Indo-Pacific, Trump said the “partnership between India and the US strengthens democracy and strengthens democratic values and systems. We will work together to enhance peace, stability and prosperity in the Indo-Pacific, the Quad will play a special role in this. During the Quad summit scheduled to be held in India this year, we will expand cooperation in new areas with our partner countries.”

He also mentioned the India-Middle-East Europe Economic Corridor. “Under the IMEC and I2U2, we will work together for the development of economic corridors and in the area of connectivity,” he said.

“We agreed to work together to help build one of the greatest trade routes in all of history. It will run from India to Israel to Italy and onward to the United States, connecting our partners by ports, railways and undersea cables. Many, many undersea cables. It’s a big development. It’s a lot of money going to be spent, and we spent some, but we are going to be spending a lot more in order to stay advanced and stay the leader,” he said.