Trump and Modi Discuss Bilateral Trade Agreement Amid Rising Tensions

Trump and Modi will meet Thursday to discuss a bilateral trade agreement, emphasizing defense and energy cooperation. Senior officials stressed the importance of these sectors in the discussions. Strengthening ties between the U.S. and India is a key priority. Both leaders aim to solidify their strategic partnership during the talks.

Looming Tariffs Could Affect Relations

The meeting takes place against the backdrop of looming new tariffs that threaten to destabilize U.S.-India relations. Officials emphasized their goal of finalizing a trade pact by the end of the year, addressing both countries’ economic concerns.

U.S. Defense Technology and Energy Exports to India

Officials suggested that increasing India’s purchases of U.S. defense technology and natural resources could help address the trade deficit, a key concern for Trump. Boosting military sales to India and expanding U.S. energy exports are central to the discussions.

India’s Infrastructure Shortfall and Energy Needs

India’s $67 billion infrastructure shortfall is a challenge for Modi’s efforts to reduce coal dependence. U.S. liquefied natural gas (LNG) exports could play a significant role in balancing trade, though pipeline limitations in India have hindered the flow of U.S. LNG.

Trump’s Tariff Plans Loom Over the Meeting

Ahead of Modi’s arrival, Trump plans to announce reciprocal tariffs on nations with high import duties. Consequently, these tariffs will impact India. India imposes high tariffs on U.S. goods, complicating the trade dialogue. Nevertheless, this move signals Trump’s stance on trade imbalances.

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Modi’s Concessions to Address Trump’s Concerns

Modi has addressed some of Trump’s concerns by lowering duties on textiles, motorcycles, and luxury cars. Furthermore, India agreed to accept deported migrants, buy more U.S. energy, and continue using the dollar for trade. These actions demonstrate India’s commitment to strengthening the bilateral relationship.

Future Focus on Regional Partnerships and Supply Chains

Officials will also highlight India as a key regional partner. There are plans to announce efforts to strengthen global supply chains, focusing on semiconductors and critical minerals. Trump is expected to continue collaboration with the Quad—an alliance of the U.S., India, Australia, and Japan—to counter China’s influence in the Indo-Pacific.